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Pension vs Seniority

Old 12-20-2014, 04:37 AM
  #21  
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Originally Posted by pittflyer View Post
To make this thread all about ME, let me throw a wrench in this topic and say the same guy was at 16yrs (4yrs from retirement) however, flying currently in his active job and would be when he hit 20yrs (but that's in 2019). Do you leave the mil retirement money on the table, walk for the QOL and seniority # now at 16years or stay to the 20yr point to collect from Uncle Sam?

[All of this assumes you get on with a Major at this 16yr point, do the reserve gig so you don't waste the 16yrs you have, etc.]
As a young mil guy in late 90s when everyone was punching I saw spreadsheets (Darby?) that "proved" it made financial sense to get out with 19 years. Not including any guard/reserve. That didn't work out so good for those guys. Through no fault of their own--end of the day you assess what's out there and make best choice you can. Oddly enough, most of those folks made it back on AD and ended up with senority and a line number. Though I don't envy the stress they went through.

To me the question is do you want to stay active or not for another 4 years.

I'm one of those guys who never meant to stay in. I'm extremely thankful for the pension and tricare.

If you look at retirement numbers, they are pretty impressive from 18 on.

Good luck.
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Old 12-20-2014, 04:38 AM
  #22  
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Originally Posted by Jughead135 View Post
Double check your numbers. Remember, your numbers are percentage based off the "High 3" (if I understand your timeline correctly, that's the retirement system you're under), i.e., an average of your highest 36 months of pay. If you're an O-5 for less than 36 months, you won't be getting X% of that, it'll be a blend of your O-4 & O-5 pay (further complicated by annual CoL raises). I don't know if you included that in your calculations, but your $1,000 / mo (or $800 / mo in your numbers above) estimate seems potentially high....

As others have said, only you can decide--but, one more opinion to add to the pile, take the retirement NOW, get hired ASAP, and enjoy the benefits of seniority sooner, both financially & QoL....

Good luck!
Keep in mind that at most major airlines you will be putting the 415c limit into a retirement account within a few years of being hired. Even the second year you should be able to put 3ok plus into a tax deferred retirement account. That should ramp up to 52k fairly quickly. Once over 50 years old you can jump thar number to 57k.
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Old 12-20-2014, 08:16 AM
  #23  
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Originally Posted by pittflyer View Post
To make this thread all about ME, let me throw a wrench in this topic and say the same guy was at 16yrs (4yrs from retirement) however, flying currently in his active job and would be when he hit 20yrs (but that's in 2019). Do you leave the mil retirement money on the table, walk for the QOL and seniority # now at 16years or stay to the 20yr point to collect from Uncle Sam?

[All of this assumes you get on with a Major at this 16yr point, do the reserve gig so you don't waste the 16yrs you have, etc.]
I am walking away from the reserves at 15 years. Having to wait until age 60 to collect a check is the main reason.
For your situation create a spreadsheet with airline 401k starting in 2015 and have it grow at 16% contribution and at 6% growth. In another column calculate your mil pension starting in 4 years, include COLA and have it grow at 6%. Keep in mind the MIL money will not shrink as a 401k could and you get that money even if you have a medical issue. You could still get your 4 years in and be on the front side of the hiring boom. But also keep in mind the 4 years you miss at a major are 4 years less at the top of the pay scale.
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Old 12-20-2014, 11:06 AM
  #24  
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Originally Posted by viper548 View Post
I am walking away from the reserves at 15 years.
I know a lot of guys who did that in the 90's and regretted it after 9/11...guys old enough to be O-6's were coming back as O-3's so they'd have Tri-care and a few bucks a month after age 60 (the age 65 rule has since changed the dynamic a bit though). It worked out the airline crisis at the time coincided with a military build up.

Any way you can do light staff duty, drill free for points, correspondence courses just to keep it alive on the back burner?

I agree things look pretty rosy for the next 15-20 years, but you never know what can happen with this industry.
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Old 12-20-2014, 11:18 AM
  #25  
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Originally Posted by viper548 View Post
I am walking away from the reserves at 15 years. Having to wait until age 60 to collect a check is the main reason.
For your situation create a spreadsheet with airline 401k starting in 2015 and have it grow at 16% contribution and at 6% growth. In another column calculate your mil pension starting in 4 years, include COLA and have it grow at 6%. Keep in mind the MIL money will not shrink as a 401k could and you get that money even if you have a medical issue. You could still get your 4 years in and be on the front side of the hiring boom. But also keep in mind the 4 years you miss at a major are 4 years less at the top of the pay scale.
Don't do it.
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Old 12-20-2014, 11:41 AM
  #26  
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Originally Posted by Jughead135 View Post
Double check your numbers. Remember, your numbers are percentage based off the "High 3" (if I understand your timeline correctly, that's the retirement system you're under), i.e., an average of your highest 36 months of pay. If you're an O-5 for less than 36 months, you won't be getting X% of that, it'll be a blend of your O-4 & O-5 pay (further complicated by annual CoL raises). I don't know if you included that in your calculations, but your $1,000 / mo (or $800 / mo in your numbers above) estimate seems potentially high....
Staying in the extra four years was accounted for, 1 year to pin on and 3 years to retire as an O-5 (so 70% of O-5 pay). I can see that I would be giving up 4 years of high pay but that is if I am flying until my 60s. With upgrade an average of 10 years, that's age 58 to move to the left and get the big bucks. I love flying but also love the fam time. I did my 365 recently so deployments are out of the question. I plan on making enough to pay off the houses and build a college fund for the kids. Then live off the mil pension and rental incomes. I think one of the best quotes I've seen on APC was "The only thing better than getting paid to fly is getting paid not to fly!"
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Old 12-20-2014, 12:18 PM
  #27  
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Originally Posted by Sputnik View Post
As a young mil guy in late 90s when everyone was punching I saw spreadsheets (Darby?) that "proved" it made financial sense to get out with 19 years.
I seem to recall it began in the late 80's with a paper put out by some officers on staff at the Academy.
Then there were 1 or 2 papers written by officers in ACSC and War College that addressed it in the 90's

I'm sure that Kit did address it: after 20 years of saying "hiring will pick up soon", it finally happened. I guess he was right.
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Old 12-20-2014, 01:02 PM
  #28  
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I have never flown a trip with another pilot who said "yeah..quitting the reserves was the right thing to. Glad I got out...." I HAVE flown with a bunch who have said "yeah...I'd have been retired from that gig years ago..." or "...I am enjoying these checks that just started showing up..." Staff, points only, or something...but don't give it all up. Time goes by faster and faster the older you get...
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Old 12-21-2014, 03:16 AM
  #29  
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Hopefully we'll see more 15 year retirement options as the budget cuts continue. Before the pension itself starts to change... only a matter of time.
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Old 12-21-2014, 07:12 AM
  #30  
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Originally Posted by thrust View Post
Hopefully we'll see more 15 year retirement options as the budget cuts continue.
Has anyone ever seen early-retirement for reserves? I don't recall.

Originally Posted by thrust View Post
Before the pension itself starts to change... only a matter of time.
We'll be grandfathered. Also I suspect all the talk of eliminating the 20-year system was intended more as a distraction so folks wouldn't pay as much attention to reforms in other benefits (like commissaries and medical).

The 20-year pension is inextricably linked to our current career-progression system and military culture. You'd upset the whole apple-cart if you just axed it...there would be unintended consequences. Somebody somewhere has to realize that.
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