Do they really think anyone with 15+ years are going to get out for $100K when all they have to do is stick it out for another few years to get retirement? It almost seems silly to even offer!

 

It will be closer to $300k or more... Separating at 15+ seems crazy, but if a guy has nothing but remotes and staff duty left, it’s a little more understandable. Some guys are scared of being stuck in a non-flying job to finish their career and then trying to apply to airlines with zero flying time in the last 36 months.

 

Here's another way to think about it, by the numbers - I hope none of these thoughts make anyone mad, but I base it on being a third-generation AF Officer who's seen my father and grandfather retire as LtCols. Both had successful non-flying post-AF careers, but also learned some key lessons along the way.

Most productive people don't retire before 65, anyway and $100K put away at 12% for 30 years is $3million+. In reality I think Tarheel's right about this year's VSP being more like $300K. If you die, your wife and kids keep it all. If you die one day after retiring at 20, your wife and kids get $0. Retirement's great if you live to 85 and want to play golf for the rest of your life and live in a small condo in Florida.

Take the VSP at 15 years, you get to start your second career sooner, potentially reaching a higher salary sooner and topping out higher. Starting in a new arena at 30 or 35 is a lot easier than starting at 40 or 45. Plus there are other factors, like some employers offering less once they find out you're getting military retirement (yes, it happens). And believe it or not, some jobs are not open to a "retired Major or LtCol", since many employers assume the "peter principle" and only hire retired Cols or Generals into their top jobs - perhaps better to separate as a Major and keep them guessing at your potential.

You could also look at it like pre-paid retirement: take a few hundred K now, finish your 20 in the AFRES, and get 1/2 the retirement check while you pay back the VSP later, with $3mil in mutual funds and Roth IRAs.

This is why VSP actually takes some of our most talented "risk-takers" out of the Air Force.

On the other hand, I hope that all my peers think it's silly until after my separation's been safely approved.

Is my logic screwy?

 

The VSP for a 12yr person for FY07 was around 130k..and about 100k after taxes..nowhere near 300k. For a 6yr and 3 month Captain it was around 70k before taxes, around 52ish after.

 

True, but the Defense Authorizations Act actually allows the AF to pay up to 4 times involuntary separation pay rate - this ends up over $300K for a Major (pre tax). They stuck with 2x ISP for FY07, but it costs less to encourage someone with less than 12 years to leave - I base this on what the AF did in the early 90s, they offered a higher rate to the higher yeargroups, based on the whole "closer to retirement" issue. Anyway, a guy can hope... as we all sit here in suspense, totally speculating with no real idea at all.
One thing's for sure, in less than 5 years, the AF will be screaming that they don't have enough people, enought pilots, etc.

 

Agree, I'm not a pilot though, everyone is running and screaming from my career field. (space and missiles) I'm just hoping they eventually pay my YR group something, if they don't this year they probably will next year as they will eventually have to RIF my YR group. So far at least they ahve been nice and offering more money to leave on your own early, ie: only VSP for RIF ligible.

 

Think of twice passed over Major's who are weary of even making it to retirement....those are the guys they're probably targeting with VSP money (but I hope not)

 

I'm just curious, what do your Father and Grandfather recommend (assuming, uh, they're there to ask)? Whenever I meet older folks, retired military or not, they all think I'd be insane to even consider leaving at the 15 year point (I'm not going to). They understand the value of a regular paycheck not to mention health insurance, crappy as it is. I've meet very few retired military who after retiring, went to one job and kept it, especially the ones who went airlines. All had periods of unemployment. While a large cash payout is nice, it's not the same thing--if it were even close the AF would never offer it.

Regarding dying the day after you separate, if you do SBP your family will get more than $0, not a whole lot more, but something.

There is no broad right answer to VSP vs staying till retirement, it's a very personal decision based on what you want, what your family wants, etc. However...if you reduce it to strictly financial terms, I have to disagree with your assesment. Just as I think it would be insane for someone who hates the AF to stay 20 just to get the retirement, I think it would be pretty nuts for someone who likes it to get out just for the VSP. If you're inclined to stay anyway, then the "retirement" is something nice. If you're inclined the bolt then the VSP is just gravy.

 

Gang,

Since I'm close to retiring I have looked into the bennies a little. The Survivor Benefit Plan (SBP) that was mentioned will cost me over $200 per month to guarantee 55% of my retirement pay to my spouse. If my spouse and I both croak in a car wreck or something, then my kids would get it and would get Social Security Insurance benefits. That would stop at age 18 for SSI, 22 years if in college (SBP only).

I priced out term life insurance based on the amount of retired income I could expect to see based upon my family's average age when the grim reaper comes-a-knockin. I should see about $3M before taxes, therefore I priced out a $3M policy. About $250 per month locked in for 20 years. That's alot better than the SBP, and the wife and kids would get that as a lump sum. I'll be going this route.

Regarding health insurance...I defy you to find anyone who pays as little as a military retiree for health insurance. I realize it used to be free, but $460 per year plus minor co-pay costs and free prescription drugs at MTFs is untouchable. This is still a great benefit.

Just my 2cents

Trojan

 

My dad has been thankful that he had AF retirement after several periods between jobs. It's a great safety net. I agree that striving for AF retirement is a personal issue. If you love the AF, stay in as long as you can and enjoy the benefits.

I'm ready to get out with or without VSP (why do you think I'm trolling the Airline Pilot forums?), but I'll wait a few more days to see what happens.

I think that SBP is a horrible plan, but I'm sure there are a few whose spouses are glad they signed up.