Military > 15 years - High 3 or REDUX?

[Sailor Sam]

Despite having my commission for 10 years, I'm only now researching how my retirement might work if I stick the 20. My research has made me curious, did you chose High 3 or REDUX? If you want to include your math / logic that would be extra cool.

Sam (Tore my ACL, not fit for sea duty, booted off my ship. I'm beached Sam for the next 12 months.)

[Nords]

Despite having my commission for 10 years, I'm only now researching how my retirement might work if I stick the 20. My research has made me curious, did you chose High 3 or REDUX? If you want to include your math / logic that would be extra cool.

High Three.  REDUX gives up too much future value for a pitifully-small inflation-eroded chunk of (taxable) cash.

http://the-military-guide.com/2012/08/16/over-a-decade-later-redux-still-sucks/
http://the-military-guide.com/2011/03/14/effect-of-inflation-on-a-redux-military-pension/

If, after reading those posts, you still think REDUX is a viable alternative, either contact me or post your thoughts here.  Seriously.  We'll go into the details for your rank/community and we'll do the math.  Then I think you'll favor High Three.

REDUX is about as anti-Mustachian as you can get.

Did I mention that High Three is a better deal than REDUX?

Sam (Tore my ACL, not fit for sea duty, booted off my ship. I'm beached Sam for the next 12 months.)

Every knee injury is different, but here's some unsolicited thoughts.

I tore both of my ACLs back in 2001, and I've never had them repaired.  I spend a lot of my time exercising my quads and hamstrings to stabilize the knee joints.  I had to give up my aspirations of NBA point guard and Olympic giant slalom, but I bicycled thousands of miles and I went all the way in taekwondo to 2nd dan.  My surfing skills are just as good without ACLs as they were with them.

A few years ago, a very small study (184 patients) examined the success rate of ACL repairs.  Patients literally volunteered to let a doctor dig into their knee joints with an arthroscope, but only half of them were actually repaired.  Even the doctors didn't know which they'd be doing until the patient was under anesthesia and the doctor opened the instructions envelope.  A different doctor (who had not done the surgery) supervised the post-op recovery.  Even if this study is considered ethical, it's darn hard to do more of them.

Anyway there was no difference between the two groups of patients.  That convinced me to put off any surgery as long as possible.

To add to my confirmation bias, I've heard from several people with ACL repairs who are not happy.  They're not despondent, but they are not even 90% pre-injury.  Personally I feel that I can do anything without my ACLs that I could do with them, but I'm not willing to take the risk of screwing up.

Ideally you're already doing the physical therapy.  If you've had the surgery, then keep up with the PT and keep doing knee-stabilization exercises (including weights).  It may take a couple years for you to regain full mobility of the joint (let alone to do 100-pound full squats) but it's worth the results. 

And if you haven't done the surgery yet, then keep up with the therapy.  You may be in better shape without the surgery, although every ACL injury is different and it's difficult to predict outcomes.

In either case, keep good records and copious notes.  This will be a VA claim with a potential 30% disability rating.  Per ACL.

As far as your warfare community, feel free to PM or e-mail  me.  I know a couple of Navy docs who can proffer anonymous advice, and you can certainly complete a 20-year career without going back to sea.

[Sailor Sam]

Hi Nords, I feel a little bit like a celebrity has answered my post. When I first started researching the two retirement systems, everyone told me that it was a Big Life Decision(!). I ran some very preliminary numbers, and got pretty puzzled. REDUX was obviously a terrible idea. But when I mentioned that REDUX was terrible during an investment training, I got another round of Big Life Decision with lots of handwaving. The Decision Brigade were so widespread and adamant, that I got worried. Maybe I'd misinterpreted something...?

Anyway, the articles you linked made me feel sane again. Thanks very much. I've attached a basis spreadsheet for High Three vs REDUX. Take a look and critique mistakes if you've got an interest. I stopped at my 62nd year, because some COL magic happens that I don't understand yet. But unless the COL adjustment really is magic, the math clearly supports High Three.

Also, thanks for the info about ACL surgery. I'm proceeding with great caution and no one is pushing surgery. In fact, they push the fact that surgery is optional, and requires 6 month of PT and recovery before consideration. Great PT's in NAVSTA Bremerton. Very happy. Smile while they torture.

[Nords]

Hi Nords, I feel a little bit like a celebrity has answered my post.

Thanks!  I get a lot of material for blog posts (and books) from the forums.

When I first started researching the two retirement systems, everyone told me that it was a Big Life Decision(!). I ran some very preliminary numbers, and got pretty puzzled. REDUX was obviously a terrible idea. But when I mentioned that REDUX was terrible during an investment training, I got another round of Big Life Decision with lots of handwaving. The Decision Brigade were so widespread and adamant, that I got worried. Maybe I'd misinterpreted something...?

I usually hear justifications like:
- "I'll pay off all my debt" or
- "I'll start my business and be earning profits by the time I retire" or
- "Pfft, I can invest that in the stock market and beat my High Three pension any day!" or
- "Yeah, but I'm stayin' for 30 and making E-9 anyway."

My answers:
- You have to change the habits that got you into debt.
- If you need $30K to start your business, why did you wait for the CSB?  You could have taken out a personal loan from a bank for a much lower rate.
- (They're not listening to me anyway.)
- Seriously?  You already know at 15 years that you're going to make E-9? 
It turns out that CSB/REDUX math works well for an E-9>30... as long as they make E-9.  And stay for 30.  I wouldn't expect anyone with 15 years of service to be able to make that decision.

Anyway, the articles you linked made me feel sane again. Thanks very much. I've attached a basis spreadsheet for High Three vs REDUX. Take a look and critique mistakes if you've got an interest. I stopped at my 62nd year, because some COL magic happens that I don't understand yet. But unless the COL adjustment really is magic, the math clearly supports High Three.

A couple of tweaks:
- The $30K is taxed.  DFAS will probably withhold 20% that you might get back on your tax return (or might not) but you'll want to start with the after-tax amount instead of $30K.
- Yes, the COLA is magic.  DFAS presumably keeps a table of COLA history (and I wish they'd make it a public table!).  When you reach age 62, they recompute your starting REDUX pension amount (from the day you retired) by applying the full retiree COLAs (instead of the "COLA minus a percentage point") and they reset your pension to that new higher amount.  But then the following year your COLA reverts to COLA-1%, so the erosion starts all over again.

If you really want to geek out on the spreadsheet details, at O-5>22 you'd use the >22 longevity column from the pay tables.  As you've noted, though, REDUX still lags the High Three pension.

As an aside, for years I've been hoping to hear from a REDUX military retiree who can explain how REDUX turned out to be a better deal for them.  I've heard plenty of retiree regrets, but no success stories.  Well, I guess the success stories are actually happening at DFAS, where DoD got out of decades of future pension obligations for just $30K.

Also, thanks for the info about ACL surgery. I'm proceeding with great caution and no one is pushing surgery. In fact, they push the fact that surgery is optional, and requires 6 month of PT and recovery before consideration. Great PT's in NAVSTA Bremerton. Very happy. Smile while they torture.

That sounds outstanding.  That sounds like a big philosophical change from 10 years ago, too.  Good to see.

If you work really hard at the PT then they'll "let" you start using weights for the squats & lunges... but it took me nearly two years to feel comfortable doing a full squat.  The good news is that the sweat equity is eventually rewarded, and today I'm fine with squatting two Gs on a surfboard.