I don't for a second think they will do away with it totally, and I do believe he will be grandfathered...HOWEVER, look at what was passed (then retracted) just this past year, a reduction in COLA for working age retirees, originally with NO grandfathering. I just will not add it into the NW calculation because if things like Tricare rates, SBP rates, lower or no indexing to inflation occur and we are basing our FIRE NW off of a number that includes X (which involves promises over decades) and it really turns out to be Y and we don't have money to make up that difference...well then we are screwed. Better safe then sorry in my book.
But, since you're on the MMM website and in all likelihood not a huge spender, this pension could presumably pay for all, more than, or just a bit less than your FIRE expenses...right? So if this pension can cover that, how is it anything but a HUGE investment in TIPS/T-Bills?
SBP is a choice and a monthly expense, not something that effects the value of the annuity (pension). If you're worried about this going up, that goes on the expense side of the equation.
Also, Tricare rate raises? I hope you're kidding, the raises have been a joke. It pisses me off so much that they won't defray some of the costs onto comparatively rich retirees (often with another job/income) more than a couple of dollars. This is exactly why I don't give money to any of the active duty or veterans' lobbying groups. Furthemore, like SBP, this goes on the expense side of the ledger, not income.
Finally, even if you think it will lose to inflation, you can treat it as $1m in a high-yield savings account...Or something along those lines. Again, it is an annuity backed by the full faith and credit of the US government. If you don't buy that then neither your home nor your stocks/bonds should be part of your NW.
If the pension is there, yup, the estimates say it could pay for all of our expenses when he retires. Simply because Tricare rates haven't raised significantly in the past, doesn't mean they won't, in the future.
Yes SBP is an expense, one that could go up in the future, so it is an "unknown" variable over the course of 40 years (if we opt for it, we may not), just like taxes are. I think we will see a tax hike sometime in the future of our lives, which could also lessen the pension and stock value.
We will not ever count the pension in our NW calculations, based on past history of various cities and states, and watching the supposed promises the state gave my parents in regards to their pension wither away, I don't have faith that people, now, and in the future, won't vote to alter that "promise"...kind of like how they changed it from Free Medical for Life, to Champus, to Tricare, to increased copays and retiree cost sharing. I still find the medical a ridiculous value, and it's one of the main reasons he stays in, but I don't for a minute believe that the promises in place today will remain the same 20-30-40 years from now, heck they may change in the next year when the Commission report comes out. They may not...but that's not a sure thing. We don't believe in leaving the fate of our future up to the whims of other people.
There is also no guarantee (though with his specialty it is HIGHLY unlikely) that he will be able to make it to the 20 year mark with the massive layoffs that are occurring in the military. We know a number of people that were planning on retiring and having their pension in 5 or 6 years, and didn't save a lot, and now they are out of jobs, with very little in the way of savings...starting over from the ground floor instead of enjoying luxury in retirement.
Plan for the worst, hope for the best. I'd rather have our estimated 1.5 mil in the investment accounts plus a paid off house when he retires. If the pension is there gangbusters! We will live the grand life, and travel a lot in retirement while being able to give back more to the community then we had originally planned for.