Originally Posted by
flensr
18k (max contribution should keep increasing but we can assume 18k...) per year for 20 years at 7% will get you somewhere around $800,000 at military retirement. Assume that money sits untouched for the next 20 years until "real" retirement, and it'll be over 2.8 million bucks. Thats at just 7% and assumes zero retirement investing between military and "real" retirement. Continue the 18k investment for a full 40 years and even at just 7% it'll be over 3.5 mil.
Others have already pointed a major flaw in your calculations - the ability to save $1500/mo as an O1-O3, but let's run with the $1500/mo earning 7%. That comes out to ~$761K after 20 years; you opted to aggressively round it up to $800K.
An O1 under 2 grosses $3034.80/month. I suppose if he lives on ramen and has a bicycle for transportation, he could bank $1500/mo but it would be a miserable existence.
Still, you're talking tomorrow's dollars and are ignoring the effect of 20 years' worth of inflation.
Instead of using $18K/yr, how about someone use the 2017 match of 5% plus 5% individual contribution. Then compare that to a 20% reduction in retirement pay. I haven't worked the numbers but I'm sure they're out there somewhere.