BobZ

And at 65 its medicare wth tricare as supplement

TED74

2,500/mo for 40 years is $1.2M total, which will of course be adjusted for inflation. That works out to $60,000 per year worked prior to collecting. Sounds like a lot of money to me. If they transfer their GI benefits to their child, the taxpayer could be on the hook for another $80k of education benefit (tuition/books/fees plus E-5 spending money for 4 school years)...or if they got education benefits themselves up front there was a large expenditure to begin with (e.g., ANG benefit for part time service).

Now, E8 isn't out of reach at 20 years, and neither is O2-E if they commission along the way... so after 20 years it could be more than $2.5k/mo.

Looking at an officer from the beginning, that individual might go to college for free or heavily subsidized (service academy/ROTC), retire at age 42 as an O-4 or O-5, and over 40 years after retirement pull down well over $2M. That could be a $110,000 cash benefit per year of actual service and of course doesn't include medical benefits. Naturally, O-6s with those years of service or a few more (many of whom join us at the airlines) blow those numbers out of the water.

Add in certain favorable tax treatments of military pay, disability pay, TSP contributions while assigned to a combat zone (whether actually fighting or not), etc... and you've got a rather expensive retirement (dare I say entitlement?!) program that the vast majority of Americans support whole heartedly.

waldo135

Nice pivot. I addressed a comment about significant cash flow, not cost to taxpayer over 40 years. Check your math. $1.2 divided by 40 is $30k. Not a lot to live on most places in the US if you are 38 with kids.

TED74

I definitely pivoted; sorry if that bugged you. Cash flow was the wrong term...cash would have been the right term.

Check my verbiage...$60k per year worked. That's inverting what most retirement plans pay, which is to say a benefit term that is closer to or less than the term worked.

Agreed, $30k is not a lot to live on... in fact it's not enough. But it's easily food and rent in many parts of the country.

My hunch is that there are few (other) government systems that offer that kind of return on investment. Naturally, there are outliers.

I discussed cost to taxpayers because that's what bankrupts municipalities, not a metric of what is or isn't a livable level of income.

gloopy

That's the thing about the mil 20 and out system though. It only works because its based on base pay with 3 years in grade and the VAST majority never get any of it.

Yes its fashionable to say police fire emt teachers etc should all make a million dollars a year and all of that. But ridiculous pump and dump nonsense where you can scam the system for multiples of what one "was promised" simply because the department hoards the OT for those in the FAE window so they can punch out making 2.5 times for life what an active "servant" made while on the job and expecting the taxpayers to work til they die to pay for it is a problem that eventually society isn't going to tolerate as these state and local entities with the abusive gravy train systems go deeper into the red.

And we're not just talking about police and fire in many cases but all "government servants" including those who were never exposed to any level of danger greater than a paper cut. And sometimes the tax payers on the hook for the scamming are those in identical lines of work but who work for "lesser" departments within the larger entity (i.e. a county equivalent of a state level position etc.)

I know its super populist to act like this is a labor vs the evil corporate robber baron issue and the worker is just clawing back some of the wealth stolen by the proletariat and all that. But radically unbalanced and unsustainable systems that are abused just because they can be with the expectation that the wealth property and labor of the entire taxpayer base is on the hook for unlimited confiscation to cover it so most have to work til they die for a few to pump and dump 20 and out is something that if it isn't fixed will likely just end abruptly without a tear shed, loophole based "promises" notwithstanding.

crewdawg

What gloopy said! One of the big things that has bankrupt municipalities (and I believe killed airline pensions) is whole idea of using FAE as a construct for pension payments. A squadron mate was a cop in a former life and was part of busting their own firefighters for fraud. They had a scheme setup that rotated from person to person, whereby someone would call in sick, which would allow someone else to come in on overtime. This severely bloated their paychecks and their pensions...and it was bankrupting the city.

That's why I'll never understand why individual FAE is used as the upper limit for airline pensions. Seems like it would have made more sense for us that we used a set max. If you work a "normal schedule" (make it a window...say 68-72 hours or whatever) you get X pay rate times X hours. If you choose to work more, great you get some extra pay now, but your pension remains the same. If you choose to drop trips and work less, then your pension will reflect it. This seems like it would be a much more sustainable model for everyone.

BobZ

Ponzis are never perpetrated to be sustainable.

They are set up to benefit the principle....and in the short term payoff the leading edge of 'investors'.

At the end of the day...it always ends badly.

SabreDriver

It's well under $2300/mo for an E-7 @20 before taxes and SBP etc... Probably sees about $15-1600/month in spendable money. E-6 sees about $12-1500. You cannot really live on that in CONUS... There are plenty of places you can, overseas, if that fits your lifestyle.

It's still a pretty good deal, it gives them a huge advantage going forward in life, especially considering the Medical coverage aspect. I also consider it modest compensation for taking the risks associated with service, and forgoing control of the most healthy and productive years of your life.

Statistically, only about 17% of service members stay long enough to collect a retirement, most bail out.

badflaps

I feel over paid now, with my $2334. from the PBGC.