Potential Significant Changes to Military TSP (House Defense Bill)

[ExtremeWX]

Some good info on military TSP and retirement.
Stay informed!

I think the TSP stuff starts around page 167.
http://docs.house.gov/meetings/AS/AS02/20150423/103283/BILLS-114HR1735ih-U1.pdf

Happy reading!
Bryan

 

[nnuut]

5% matching, good for our Military guys.

 

[rothnroll]

5% matching, good for our Military guys.

Not really. Those that are in have to change retirement types to get the match. It would not effect me as an active duty officer, just those who come in after October 2017.

 

[nnuut]

A step in the right direction. I was CSRS and didn't get the 5% match wish I had.

 

[James48843]

Yes, Nuuut- BUT with CSRS you got enough of a higher retirement check that you got about what the 5% matching could have brought- or at least that is what it's turned out close to.

The Military folks I know all rejected that idea when it was first floated in the early 1990s- saying they didn't want a reduced 20-year pension in exchange for a measley 5% matching for TSP. Of course, we have a another generation of military folks since it was last fought so strongly back then. I don't know if those in the military today are really thinking in terms of a 20-year retirement loss in exchange for the matching money.


We'll see how Congress works it out in the end.

(Waiting to begin collecting my 20-year military pension at age 60 from service with the Guard Still got another six years to go before that starts.).

 

[nnuut]

Yes, Nuuut- BUT with CSRS you got enough of a higher retirement check that you got about what the 5% matching could have brought- or at least that is what it's turned out close to.

The Military folks I know all rejected that idea when it was first floated in the early 1990s- saying they didn't want a reduced 20-year pension in exchange for a measley 5% matching for TSP. Of course, we have a another generation of military folks since it was last fought so strongly back then. I don't know if those in the military today are really thinking in terms of a 20-year retirement loss in exchange for the matching money.


We'll see how Congress works it out in the end.

(Waiting to begin collecting my 20-year military pension at age 60 from service with the Guard Still got another six years to go before that starts.).

I didn't know they were cutting their retirement in exchange for the 5% match. I thought I would get that crap from one of you Libs. What about my Social Security being cut by 60%, guess we deserved that too?

 

[Boghie]

Positives for full TSP membership over a pension:

• TSP assets are transferable. An individual who serves his/her country for four years - or any duration less than required to meet pension vesting - will be able to transfer retirement assets earned to his/her new employer.
  
• TSP assets cannot be jiggered and 'optimized' by politicians thirty years in the future. Anyone out there really confident that politicians in 2040 will honor promises of politicians in 2015. See Nnuut's comment above.
  
• And, James, the TSP 5% match along with the ability to invest in something other than the 'G Fund' - which is where military pensions are 'invested' - will result in a much better retirement for those who select the new option while youngish. At an 8% return (5% real) I will clear more than $6K a month (inflation adjusted). My pension and Social Security is significantly less. I did not invest in TSP in any meaningful way till I was 32.
  
• Finally, any retirement that pays out more than the assets earned is in trouble. We can afford to do so if we get our deficit down, but things will change if the gubmint has a harder time borrowing to cover daily costs. We is broke bro. Broke. And, much broker now than we were in 2008. What expenses will be trimmed first - over-promised retirement benefits to a few people, over-promised benefits to lots of people, or closing down Federal entities such as the 'National Raisin Reserve'. Remember the 'Gubmint Shutdown'. Cut to the bone lots of the gubmint. I less the fondly remember the furloughs - but at least entities such as the 'National Raisin Reserve' survived!!! Cut to the bone (no Washington Monument Game playing here - nothing to see here, move along)...

 

[rothnroll]

Positives for full TSP membership over a pension:

• TSP assets are transferable. An individual who serves his/her country for four years - or any duration less than required to meet pension vesting - will be able to transfer retirement assets earned to his/her new employer.
• TSP assets cannot be jiggered and 'optimized' by politicians thirty years in the future. Anyone out there really confident that politicians in 2040 will honor promises of politicians in 2015. See Nnuut's comment above.
• And, James, the TSP 5% match along with the ability to invest in something other than the 'G Fund' - which is where military pensions are 'invested' - will result in a much better retirement for those who select the new option while youngish. At an 8% return (5% real) I will clear more than $6K a month (inflation adjusted). My pension and Social Security is significantly less. I did not invest in TSP in any meaningful way till I was 32.
• Finally, any retirement that pays out more than the assets earned is in trouble. We can afford to do so if we get our deficit down, but things will change if the gubmint has a harder time borrowing to cover daily costs. We is broke bro. Broke. And, much broker now than we were in 2008. What expenses will be trimmed first - over-promised retirement benefits to a few people, over-promised benefits to lots of people, or closing down Federal entities such as the 'National Raisin Reserve'. Remember the 'Gubmint Shutdown'. Cut to the bone lots of the gubmint. I less the fondly remember the furloughs - but at least entities such as the 'National Raisin Reserve' survived!!! Cut to the bone (no Washington Monument Game playing here - nothing to see here, move along)...

So we borowed the money to pay for those wars. We injured and crippled many people in the process that will be a drain on the VA for the next 50 years.
We need to find a way to pay for that. Let's make the population of people who sacrificed their lives to pay for it. That way, the general public never feels the sting of this Iraq/Afghan thing!
It's like making you pay for the war you fought!
Also, i hear peple say all the time... "I don't know if Social Security will be there when I retire"
I never hear people say "I don't know if welfare and food stamps will be there in 10 years"
The Goverment has plenty of money, they just waste it in the wrong areas.

 

[Boghie]

So we borowed the money to pay for those wars. We injured and crippled many people in the process that will be a drain on the VA for the next 50 years.
We need to find a way to pay for that. Let's make the population of people who sacrificed their lives to pay for it. That way, the general public never feels the sting of this Iraq/Afghan thing!
It's like making you pay for the war you fought!
Also, i hear peple say all the time... "I don't know if Social Security will be there when I retire"
I never hear people say "I don't know if welfare and food stamps will be there in 10 years"
The Goverment has plenty of money, they just waste it in the wrong areas.

RothNRoll,

The Gubmint does not have plenty of money. All we have done is borrow money for daily expenses for fifty years. One day either the bond buyers will stop financing our debt or the taxpayers will stop paying their taxes. This is bad juju.

My main point is that TSP assets are not directly within the grasping hands of the Federal Government. No group of politicians can directly grab at those assets. They can increase taxes (see Clinton and Social Security), but they cannot jigger benefits. Those assets are actually in your 'Lock Box'. I trust assets in my hands more than promises made by current politicians that must be honored by future politicians.

And, let me make this clear, I don't know if welfare and food stamps will be there in 10 years. And, yes, spending borrowed money on the Raisin Committee (and other mission critical offices) is a complete waste. And, finally, why is a discussion on retirement planning an opening to talk about taking care of our war injured? Do we have to take assets from the VA before we take assets from the Raisin Committee?

 

[domingo3]

The Military folks I know all rejected that idea when it was first floated in the early 1990s- saying they didn't want a reduced 20-year pension in exchange for a measley 5% matching for TSP. Of course, we have a another generation of military folks since it was last fought so strongly back then. I don't know if those in the military today are really thinking in terms of a 20-year retirement loss in exchange for the matching money.


We'll see how Congress works it out in the end.

I personally think it's a good move. The people who fought the hardest before, and likely will fight the hardest again are officers who are staying in for 20+ years and like the fat retirement check. In my opinion, the all-or-nothing thing is unfair and unsustainable. Those who enlist for a few years or 19 years get nothing. With the TSP match, they'd have something to save or roll over. As for sustainability, life expectancy has gone up dramatically. Paying out a pension to someone starting as early as 38 years old throughout their lifetime is incredibly expensive. I like they they are taking small steps with this rather than a more radical reform. Nobody currently in service will be affected unless they opt into the new system. New recruits would still get 40% immediately upon retirement as opposed to 50%. I believe that more steps will need to be taken in the future.