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.

Interesting numbers. Under the traditional pension you'd get half of O5 $8754 at 20 years of $4377 per month. In order to get that same amount from an investment returning 7% you'd have to have $750k principle to start. Pretty darn close to your $800k. Some differences. Traditional pension has no risk so it's like a t-bond paying 7% on $750k. The individual can't screw that up and the market doesn't affect it. If the return on investment is only, say, 3% though, the 401k pays less, while the traditional keeps paying the same, now like having $1.7m in principle. Only 55% of traditional can pass to spouse, and that's after paying premiums for 30 years. 401k is all inheritable. Traditional has annual inflation adjustment, protecting its value over time but it's immediately taxable while 401k has tax advantages until withdrawal. I guess the biggest difference is that the $800k 401k was paid for by the individual to start with. The traditional pension is a benefit for serving. If someone with a traditional pension had the discipline to sock an average of $18k per year away during 20 years of service, then retire with the pension they'd be very well off. That might be hard to do through the first few years of lower pay scales.

You're not going to contribute $18K/year to the TSP until well into your career. Maybe $5-10K, but even that's a stretch.

True statement. O-3 AD pay I was making just shy of 6k/month take home pay. It would take another 25% bite of that to max the TSP every year.

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.

All your assumptions sound so easy and good, except you left out one, life.

And as an airline pilot you also forgot to mention the cost of the divorce or two you earned while chasing the F/A or your "girlfriend" in Asia (or any other foreign port you may visit).

"When I was younger, I spent my money on good whiskey, fast cars, and fast women. The rest, I spent foolishly."

Are the contributions out of pre tax or post tax earnings?

Pretax unless you're in a combat zone.

TSP has both regular and Roth options.