I’m starting a new comment here to answer Queue’s and Dan’s 24 January- February comments.

We’ve heard back from the DoD BRS office and we’re going to hear more outreach in the coming weeks. Hat tip to Airmen MilDollar of the MilitaryDollar site for chasing this down. They wrote most of this post and I’ve added some clarifications/links.

Just to reiterate what most people already know, the military is paid in arrears. The January mid-month pay deposit is technically an advance on the full pay deposited at the end of January. When that January LES is published, it’s predicting the end of the month. Those who contribute to their TSP accounts (which is less than half of the military) will also see on their January LES that money is being sent to the TSP. The TSP’s “January” contribution leaves your pay account at the end of January and ends up in the TSP in early February. It’s all reported correctly on tax forms at the end of the year.

For those of you wondering about the January government contributions (1% automatic and up to 4% matching) and why you did/did not receive them:
The BRS training and implementation documents all say something along the lines of “You will receive the Service Automatic (1%) Contribution, and Service Matching Contribution proportionate to your basic pay contributions, on the first pay period after opting in.”
https://militarypay.defense.gov/Portals/3/Documents/BlendedRetirementDocuments/Combined%20BRS%20Policy%20Document.pdf?ver=2018-01-02-105828-370
Since opt-in was first allowed in January, this would explain why many people didn’t receive January contributions – they should start receiving them in February (with DoD’s BRS matching TSP contributions going into the TSP in early March). However, the NDAA 2016 law actually says:
“The Secretary concerned shall make a contribution…for any pay period during the period that begins…on or after the date the member makes the election.”

The NDAA law means that anybody making their opt in election on January 1st (or Feb 1st, Mar 1st, etc) should receive government contributions for that month **because you made the election ON the day the pay period begins.** Anybody opting in later in the month has to wait until the following pay period.

Hopefully that explains why some people received the January contributions and others didn’t.

***********************************************************************

For those of you that think you should have received January contributions and didn’t:
If you match ALL of the following criteria and are interested in having your situation looked at, please contact me or Airmen MilDollar privately. We’ll ask the BRS office to dig deeper into your pay record and fix what’s broken. If you don’t meet ALL of the criteria, this does not apply to you.
1. You think you opted in between 0000 and 2359 EST on January 1st – AND –
2. You have confirmed you did NOT receive government contributions for January – AND –
3. You are willing to pass me your full name, branch of service, and (optional) approximately when you opted in (date and time, with the time zone if not already EST).

Personally, I’m already passing my daughter and son-in-law’s names to DoD’s BRS office.

Great point, Gerald– the goals have to be worth the hassle factors.

Thanks, OSV and Peter, those are great groups and programs!

Thanks for your question, Stephanie. This conversation goes a lot better when it’s started by the person who misses the military, although I appreciate that spouses are concerned– or even tired of being driven nuts by the problem.

The short answer is “No, you can’t return to active duty.” In this case it’s due to age, although all the services have experimented with waivers up through the late 30s. Some retirees have returned to active duty for short stints of 30-90 days for unusual skills like trauma surgeon or electrical utility grid operation in a battle zone. Other times it could be for a few months developing a special program or research project. Although the answer is usually “No”, if he has a unique skill then he can always ask the command or person who needs that skill and let that sponsor help with the waivers.

Another idea is serving the military in another capacity. Contact your local base’s Retired Activities Office, volunteer with a JROTC program at a high school, volunteer as a candidate guidance officer for students considering a service academy, or work with a veteran’s organization like MOAA.

Another idea is volunteer service. Look into disaster recovery with Team Rubicon, or helping with a local wounded warrior program, or volunteering with almost any other community non-profit organization. The key is to figure out what he really misses (leading a group? military camaraderie? mentoring and training?) and then find a way to do it without the military uniform.

A final suggestion is Ernie Zelinski’s Get-A-Life Tree. You can find the form at this link: http://bestretirementquotes.blogspot.com/2009/10/get-life-tree-great-retirement-planning.html (and Mr. Zelinski wrote an outstanding book about it, too). Use it to jumpstart your thoughts and find creative answers that are way better than doing what you’ve always done before. This can also be used by couples and families to come up with shared activities.

I’ve had a copy of the Get-A-Life Tree on my desk for nearly 14 years, but frankly I’ve been too busy to make the time to fill it out. I don’t want to get back in to the military, but I’ve found my own way to continue to pay it forward and mentor while I enjoy the camaraderie. When I’m not writing or talking with military & families, then I surf a lot, too!

Thanks, Peter, good advice!

Sorry about your back injury, Mike. Of course your first priority is to work with your doctor to try to reduce the effects of the damage and slow its progress.

You could ask your doctor whether your current condition is service-connected to the Marine laundry injury. If that incident is documented in your military medical records (or if a fellow recruit or staff can write a “buddy statement” on your behalf) then you may be able to file a claim with the Veterans Administration.

Talk with your doctor and then find a Veterans Service Officer with a vet’s group in your area like the American Legion, the Disabled American Veterans, MOAA, or your local VA office.

Thanks for asking the question, Bill!

The best answer is “Call your local recruiter.” The issue is that you’re considering this during a military drawdown, and you’d also need an age waiver. The recruiter might be able to suggest ANG duties or projects that you could join. That depends on what type of service & camaraderie you’re seeking, and what openings they have.

Thanks, Kevin, good point– I’ve clarified that in the post.

Sorry to hear about the divorce, Kim. If you or your spouse are in the service, then one of you should meet with a military lawyer to figure out your choices. If the military lawyers won’t see both of you, then one of you can get the JAG’s referral to a civilian divorce lawyer who’s familiar with military benefits.

In addition to financial and physical assets, the typical military divorce decides how to divide benefits like a pension, the Survivor Benefits Plan, life insurance, the GI Bill benefits, and child support. Your marriage didn’t meet the 10-year requirement of the federal law, but under state law the divorce court can make their own decisions. (Your children are also eligible for medical benefits as family members of the servicemember.) A lawyer who’s familiar with military benefits can make sure that the agreement accounts for military pay raises, promotions, disability ratings, and applicable medical benefits.

Don’t try this on your own. Get a lawyer who understands military benefits and has handled military divorces.

Good points, Gerald!

If you see new training materials on the blended retirement system, or a calculator to help make the choice, then I’d love to add the links to this post.

Thanks, Andrew!

A minor emphasis on one point– if you maintain a 40% savings rate for 20 years, you might reach financial independence without the pension.
https://the-military-guide.com/how-many-years-does-it-take-to-become-financially-independent-2/
https://the-military-guide.com/how-many-years-does-it-take-to-reach-financial-independence/
The advantage of the high savings rate is that you don’t have to count on gutting it out to 20 for the pension. If you’re no longer challenged and fulfilled by active duty, you can choose to leave for the Reserves at any time. It’s far better than grimly hanging on for 20 years (and sitting on a slightly larger pile of money) after risking your health and burning out.

I’m not sure where your numbers are coming from, and feel free to share them here or e-mail them to me. Frequently this difference arises when the taxable portfolio actually has a substantially different risk/return profile from the TSP. Your first check on your analysis would be to make sure that the taxable accounts are using benchmarks identical to the C, S, and I funds. Your second check would be that the fund performance is assessed over your remaining lifespan (or longer) or at least for the lifetime of the fund. Too many funds will cherrypick the dates for their performance claims.

The reason I suggest this is because a passive equity index fund with low expenses will almost always outperform the vast majority of actively-managed funds (and their higher expenses) over several decades. There are a handful of exceptions to this generalization (like Berkshire Hathaway), but then you have to be able to pick out those exceptions from over thousands of funds.

Here’s a link comparing the TSP’s funds to Vanguard & Fidelity funds:
https://www.bogleheads.org/wiki/Thrift_Savings_Plan

Our TSP portfolios were invested in the S and I funds. (Our contributions were made between 2002-2008, and today we’re in the process of converting them to Roth IRAs). For the last decade our taxable accounts have been >90% invested in equity ETFs at an average expense ratio of about 0.25%/year, at least 8x the TSP’s expense ratio. We paid much higher expenses than that (1%-2%) for over 20 years before that. Yet even at those high expenses we saved enough to reach financial independence– and despite two recessions over our 14 years of retirement, today that’s grown to “way more than enough”. My spouse and I may never touch our Roth IRAs (which will soon include all of our former TSP accounts). Life is definitely cushy.

While you’re younger and on active duty, especially with dual incomes and a high savings rate, I’m a big proponent of investing in a high-equity portfolio. It doesn’t have to be microcap telcom stocks– the TSP’s L2050 fund or any equivalent of the C, S, and I funds will do just fine.
https://the-military-guide.com/tailor-your-investments-to-your-military-pay-and-your-pension/

Admittedly as an O-2 it’s tough to max out the Roth TSP (the $18K limit is nearly 40% of your base pay) plus two Roth IRAs. However if you fail to make the most of the Roth TSP (and the Roth IRAs) every year then that opportunity is lost forever. When you promote to O-3 (and have a 35% pay raise) yet continue to live like an O-2, then you’ll be able to max out those contributions much more easily.

If your spouse’s income includes a 401(k) then you should try to contribute enough to least maximize the employer’s match. 401(k)s have higher expenses than the TSP, but the employer’s match will probably overcome even a higher expense ratio.

So the priority for your 40% savings rate is TSP, 401(k) to the match, Roth IRAs, the rest of the 401(k) to the limit, and then even more in taxable accounts. Your asset allocation can be high in equities in passive index funds with low expense ratios, but your asset allocation also has to help you sleep comfortably at night despite stock-market volatility.

Carl, as near as I can tell Type 2 diabetes is not on the Camp Lejeune list.

Here’s the current list of Camp Lejeune conditions that the VA is awarding compensation for:
http://www.publichealth.va.gov/exposures/camp-lejeune/

Here’s the proposed expanded list:
https://www.va.gov/opa/pressrel/pressrelease.cfm?id=2743

I know of veterans receiving VA compensation for Type 2 diabetes, but it’s for exposure to Agent Orange in Vietnam. Here’s more info on the dates and locations:
http://www.publichealth.va.gov/exposures/agentorange/benefits/registry-exam.asp

Carl, I’m afraid your years of service do not qualify for a military pension. In almost all cases you have to serve for at least 20 years (active duty or Reserve/Guard “good years”). Servicemembers can also be retired early from active duty by a temporary program (like TERA) or for medical/physical disability that occurred while on active duty.

If your health issues are caused by a service-connected condition then you may be eligible for compensation from the Veterans Administration. If a veteran is severely disabled or has minimal assets then they may qualify for additional VA financial support. (https://www.benefits.va.gov/pension/) However that’s a separate program from the Department of Defense.

Thanks, Bridget, you’re absolutely right!

Congress and DoD have to treat that as a revenue-neutral change, and there has been insufficient interest in cutting other programs to fund early retirement for those mobilized between 9/11 and 28 Jan 2008.

Thanks, Peter. Good points about behavioral finance.

Very good point, Vince, thanks for catching it.

I also didn’t specifically break out National Guard mobilizations for disaster recovery operations. And, of course, the 2015 NDAA correction to the 2008 NDAA that allows mobilizations/deployments after 30 Sep 2014 be counted across fiscal years…

These details are getting way too complicated. It’s probably time for me to write another separate wrapup post on early Reserve/Guard retirement.

Thanks, Hawkeye, sounds like you have a great plan!

My 5 AM internal alarm clock is definitely a personal problem…

You’re absolutely right, Vince, and I hope so too.

Based on what we’ve learned from our experience with REDUX, I’d say that we have an educational challenge on our hands…

Derrick, it’s generally permitted by law (if you meet the requirements) and you can always ask for waivers, but the military is in a drawdown and there may only be limited opportunities.

I’d recommend contacting a recruiter to see what’s available.

Mr. Haines, please e-mail me (NordsNords at Gmail) to tell me more about your questions and how I can help.

I like your plan, Jason!

We haven’t had any security issues– it’s a combination of house sitters, living in a cul-de-sac with nosy neighbors, and not having anything worth stealing. No problems in 15 years, although I do bring the longboards inside the house before we leave.

I’m ambivalent on the maintenance. We’d do well with a ground-floor townhouse or garden apartment (and access to a community garden) but I’m always concerned about noisy neighbors. When it comes to fixing a fridge or getting a tech to fix it for me, I think the former is a lot less time (with roughly equivalent hassle). A yard service while we’re gone would avoid a lot of catch-up work when we get back. I think I’m enough of a control freak that I’d prefer to own instead of rent, but we’ll see how I feel about my fierce independence in 20 years or so.

Your financial approach works very well for us. I don’t think I’ve updated our annual budget since our daughter launched from the nest five years ago– there’s no point when we’ve reached financial independence and our wealth keeps rising faster than we spend it. I no longer balance a checkbook (just review the statements) and I’ve almost stopped using Quicken.

————–

C’mon in, Rob, the water’s fine!

————–

Thanks, Vanguard! I think you’ll do great with Guam and the rest of the Pacific– let us know how it works out. It’d make a great “Lifestyles In Retirement” post…

Our lodging success is traveling during off-peak times in areas with extra rooms. July and Christmas would be tough. Most military lodging can barely handle a Reserve/Guard drill weekend, and they don’t make special accommodations for Space A travelers. (Except for flag or general officers…) We’re always willing to spend more money at a military lodge to upgrade from a standard room to a suite or VIP quarters, since it’s a short-term stay and not much of a price difference. Otherwise we’d end up catching a cab to the off-base hotels, getting a good night’s sleep, and revising our plan when we have a feel for the next passenger roll call.

We do a lot of last-minute calling ahead because we don’t know our destination (let alone our date/time) until we make the passenger manifest. (We get the phone numbers from the Take-A-Hop app and the AMC base info sheets at the passenger terminals). Many military lodges seem to release their reservations near midnight. Just before we left Rota, the Travis Air Force lodge said “Reserve weekend, sorry, wait list.” When we landed on the Travis runway at 11 PM, the lodge said “No rooms, sorry.” When the passenger van dropped us off there just after midnight (so that we could stay on their wait list and then call a cab to town lodging), the lodge staff suddenly had a suite for us. We were only in it for six hours(!) so it was a great convenience at a good price. If we’d spent Thanksgiving week at Travis then we would’ve reserved the next available day in the lodge and gone out to a town hotel.

I think the financial aspect is that you’re saving a lot on airfare (and commercial hassles) while spending some of the savings on lodging.

I don’t know if this is a new AMC policy, but we’re seeing passenger terminals close at 2200 and re-open at 0400 daily. (Including Hickam & Travis, but not yet Rota.) I think it discourages “campers”. Peoples’ sleeping bags are probably for the aircraft: C-17s and KC-135s are freakin’ cold! But when you can stretch out on the fuselage deck then a sleeping bag (and perhaps a yoga mat) are luxurious.

As for the adventure: Plan B can always be a commercial ticket for the next available flight. Plan C would be a different destination. Many airlines charge the same price for one-way or round-trip when it’s a last-minute purchase. We’re taking a hard look at this for our next trip because we need to be at a cruise port by a deadline date, so we may do part of it with commercial flights.

I wish we could eat green waste! It really annoys me to go grocery shopping for veggies while I’m discarding the grass clippings, bougainvillea stalks, and palm fronds…

Great question, Sarah!

The Reserve/Guard pension starts later in life, so its impact is smaller on the total retirement payout– whether it’s a 50% pay base or a 40% pay base.

The biggest advantage I can see is the continuation pay and the TSP match. The Reserve continuation pay is a lot smaller than the active duty amount, and as you point out it’d be a challenge to make the DoD match on the TSP with drill pay and AT.

However all of those funds would be in your TSP account instead of waiting until age 60 for DoD to pay them out as a pension. I suspect that an aggressive asset allocation (L2050 or the S and I funds) would grow the investment in your TSP account faster by age 60 than it would amount to as a pension payment starting at age 60.

You’re right– there are a lot of factors and it’s a highly individual situation that needs a calculator.

When you have a choice between a TSP and a civilian 401(k), I’d contribute to the TSP first for the maximum match, then the 401(k) for its maximum match, and then back to the TSP– for its lower expense ratio. And yes, it’s a challenge when you have both accounts. A good problem to have.

Thanks for your questions, RL, that’s a good plan after you’re out of uniform!

You can roll over your traditional TSP once you’re out of the military, although you should leave your funds in your TSP account as long as possible (for the low expense ratios). But once you’re ready to make the conversion, that’s the plan. The best “conversion window” for active-duty retirees is in small annual increments before you start Social Security or RMDs. Reserve/Guard retirees would convert before their military pension starts.

Either Vanguard or Fidelity is good (or even both). The former has rock-bottom expense ratios and the latter offers more services (for some higher fees). You’ll find policies and features to like (and dislike) at both firms.

Thanks, Ryan! I’ll keep everyone posted…

Great point, Jay!

If you have the discipline (and make the time) for regularly transferring funds to a high-interest account, then that’s the more profitable approach.

The intriguing feature of Digit (and their competitors) is that the transfer out of your checking account is automated for people who otherwise might never get around to it. Instead of having to make decisions every payday or every month, they only have to move their Digit funds a few times a year. This is especially useful for deployments where the servicemember is out of touch by being underwater (submariners) or away from personal bandwidth (infantry, special forces).

Thanks, Ty, that’s interesting info on the glut of housing at military bases.

Thanks, Bruce.

I agree that federal law is being mis-applied to those who are eligible to retire, yet do not want to retire because of the huge financial penalty for reverting to an enlisted pension.

I also hope the Army reviews their personnel numbers and does the right thing for those affected by this decision.

Thanks, Peter– great advice!

Excellent points, Deserat– thanks!

Stephen, you’d have to spreadsheet the math to decide whether finishing 20 for an enlisted active-duty pension is better than going to the Reserves for an officer’s pension. Some of the math depends on your age at retirement and when you’d start a Reserve pension.

Regardless of rank or the size of the pension, I think the most significant factors in a military pension are the cost-of-living adjustment and the cheap Tricare premiums. Without crunching all of the numbers, it’s probably better to take an active-duty pension sooner at a lower rank.

Of course the key is whether you’re able to stay on active duty to finish 20 years.

The above paragraphs assume that you’re still enjoying your time in uniform. If you’re miserable on active duty then it’s probably better to transfer to the Reserves, enjoy the improvement in quality of life, and know that your pension will pick up at age 60. The cliché “It’s only money” certainly applies here.

Stephen,

Not quite. See this post: https://the-military-guide.com/mixed-plate-military-sanctuary-disability-and-civilian-pensions/

Here’s a summary: the services discourage sanctuary because they have to pay big bucks for it. When a Reservist reaches sanctuary (and is retained on active duty for an active-duty retirement) then that pension funding is not supported by DoD. Each service has to pay sanctuary active-duty retirements out of their own personnel funds until the servicemember reaches age 60 (the Reserve pension start date) and the funding obligation reverts to DoD.

If a servicemember has over 5840 points (over 16 years of points) then they’re still allowed to keep drilling and doing AT and even multiple ADTs of up to 29 days each. That’s considered training, not active duty, and that’s all approved by the local Reserve Center and the gaining command. However BUPERS N9 (and CNO N13) screen orders when the servicemember is ordered to active duty (30 days or more) via ADT, ADSW, or even mobilization. That’s considered operational active duty, and that’s only approved by OPNAV.

Servicemembers are also required to track their point counts and ensure that they don’t exceed sanctuary without OPNAV approval. If they “somehow” reach sanctuary without that approval then they could be involuntarily released from active duty and sent back to Reserve status. See paragraph 6 of OPNAVINST 1001.27 (https://doni.documentservices.dla.mil/Directives/01000%20Military%20Personnel%20Support/01-01%20General%20Military%20Personnel%20Records/1001.27.pdf)

I have seen a Reservist mobilized by a PACOM flag officer even though the servicemember was very close to sanctuary (17.9 years of points). The next morning BUPERS overrode the flag officer and canceled the orders, then told PACOM to submit a sanctuary request. (It was disapproved.) The Reservist was allowed to continue to do drills and ATs, and one 29-day ADT per fiscal year. They eventually retired with over 7400 points (over 20 years of points, and 25 good years) but for a Reserve pension.

Thanks, Bill, I’m glad that’s working– and that you don’t have to do the paperwork!

Thanks, Ryan, I sure hope so too. That “pending review” comment on slide #61 makes me hope that at least someone is looking at ways to work around the legal issues.

Thanks, Deserat!

This drawdown is a smaller percentage of the total force than the 1990s “peace dividend”, but it’s still every bit as painful.

Thanks, Lee, and I think you’re right about Solar City not wanting the panels back. The hardest part of your contract is not moving every seven years like most Americans.
Our neighbors have both Volts and Leafs. My spouse and I go back & forth over which one we like the best– and which one can handle the biggest load of longboards…

Thanks for your comment, Mary!

Each situation is different, and the details make it complicated. It’s worth asking your medical provider why this wasn’t brought to your attention four months ago. If you’re not happy with their explanation then your next step would be discussing it with a lawyer at your base legal office.

Great, Mel, now I’m hungry again!

Sanctuary was practically unheard of during the Cold War, although it’s been more common during the last 12+ years of war. I still get that question a couple of times a month, but I think sanctuary will disappear during the next few years of the drawdown.

Thanks for the update on pension plans. The reader who left that comment never responded, and apparently nobody else has been able to find a better inflation-adjusted annuity. There are still plenty of paths to financial independence, but that particular route may not be heavily traveled.

I’m very impressed with JO Rules. My daughter came across it on SailorBob.com (a forum for Navy officers) and that submariner has written a whole new division officer’s guide!

Thanks for the great questions, Tom! The answers are “sort of”.

This post doesn’t cover all the details of every situation. Every time I write about the TSP (or IRAs) the caveats and exceptions and footnotes would triple the length of the text and make it read like the tax code.

As you know, servicemembers make their contributions to the Roth TSP (or the conventional TSP) through payroll deduction– either from active-duty pay or from drill pay. The difference is that the Roth TSP contributions are after-tax dollars (servicemembers pay taxes separately on their contributions) while the conventional TSP contributions are pre-tax. And, of course, contributions from a combat zone are completely tax-free (but that’s a caveat for another post).

The “over 50 catchup” provision allows an extra $5500 contributions, but admittedly that doesn’t apply to very many active-duty servicemembers. However I see a lot of Reserve/National Guard readers in their 50s, and the TSP is a much lower expense ratio than a civilian 401(k). Reserve/Guard servicemembers could do very well by contributing their drill pay & active-duty pay to the TSP. After their civilian employer’s 401(k) match (if any), that $5500 catch-up goes further in the TSP.

Retired servicemembers can make contributions to the TSP if they’re back on duty and receiving earned income from a military salary (a very few elect to do this on occasion). Retired servicemembers can also roll over their conventional IRAs to the TSP. Now they can even roll over their Roth 401(k)s and other after-tax tax-deferred retirement accounts to the Roth TSP. See this chart:
https://www.tsp.gov/whatsnew/roth/compareRoth.shtml
A military pension is not earned income, so that couldn’t go into any retirement savings plan. A military retiree in federal civil service could certainly contribute their civil-service pay to their civil-service Roth TSP account. But I’m not sure that any military retirees could contribute directly to their military Roth TSP from civilian earned income. They’d have to use the rollover tactic.

The Roth TSP withdrawal rules are similar to TSP withdrawals. Take a look at this link:
https://the-military-guide.com/is-the-roth-thrift-savings-plan-right-for-you/

I’m not familiar with TSP or Roth TSP withdrawal provisions for kid’s college expenses, but I know that you could withdraw Roth IRA contributions at any time for any reason. Beyond the basic advice in this post, you’d want to chat with your financial adviser (or one of USAA’s CFPs). Aside from the tax code rules, I think any financial adviser would hesitate to recommend cannibalizing retirement assets to pay for a kid’s college degree.

Let me know if these answers clear up your questions or just muddy the waters even further. I could turn this into several more posts on the topic…

Thanks, Mike!

The good news is that progress is quick when you’re motivated by the third step…

Thanks, Spencer!

I’ve done my share of rate chasing, and I think I’m batting about .500. As I simplify my finances, I’m finding out that customer service is a lot more important to me than having to ride herd on a less-competent company. The challenge is avoiding the need for customer service in the first plsce.

Maybe us DIY finance people are not USAA’s key customers. I think they cater to “trust” & “one-stop shopping”, and members are willing to pay a little more for the peace of mind.

Good points, everyone, I’m going to have to take more notes on our next trip…

I logged in to find 68 coupons (way down from last week’s 115):
24 “general” (including condiments, supplements, & skin care)
2 produce
3 beverage
1 dairy
3 frozen
11 grocery
6 meat/seafood
1 packaged meat
4 snack
5 health/beauty
4 baby
1 cereal
1 international
1 home
1 baking

I’ve “clipped” coupons for a buck off toilet paper and 50 cents off packages of frozen fish. We’ll still save 2-3% this time, although not every time.

Mike, it’s mostly convenience/processed foods and brand names. No fresh foods, although Dole canned pineapple made the list and I’ve bought bagged salads before. I noticed this time that there are no cleaning products but hair care is popular (and pricey). The cereal brands do not seem to be on board yet.

I agree that it’s still cheaper to shop the generics and healthier to buy local fresh/raw. Coupons almost never inspire an impulse purchase, either– we only use them for items already on our list. However we’ve been using more of the rewards card coupons than the printed ones, and compared to paper it takes me a fraction of the time to manage the website.

Good point about the military bases, Rob, and this card would also be useless for retirees far from a base. Our local grocery stores (even with loss leaders and their own rewards cards) can’t beat the commissary or Costco. Local stores are less than two miles from our house but it’s literally over a year between our trips there. Even just shopping loss leaders would take more time/gas than going straight to the commissary.

Spencer, I’m going to have to check whether our commissary even has coupons on the shelf by the product anymore. They used to but I’ve stopped looking. I don’t know how much a manufacturer spends processing paper, but the rewards cards have to be a significant savings for the stores and the corporations. And if people have the card number on their grocery list or in their smartphone, they don’t even need to remember to bring along the card.

Thanks for the comments, everyone!

@Anjali, I’m OK with being a public figure and it was a big help to see the problem on FIA’s website, but I was not at all happy with the snail-mail and telephone bureaucracy. They still seem to need signatures on paper and formal notification before they can act.

@Jason, thanks for Clark Howard’s link; I hope that the fraud alert takes care of this. I’ll look at my free credit report in another four months and revisit the decision. I froze my Dad’s credit when he went into his care facility, and that process seems to work well. But my spouse and I are contemplating yet another mortgage refinance in a few months, so a credit freeze would get in the way of our short-term plans.

@Gubmints, I’ve started putting our utility bills on a dedicated separate card too.

@Janette and everyone who mentioned USAA, I’ve always had good credit-card service from them. The difference between Amex’s 2% rebate and USAA’s 1.5% rebate seems a lot less significant when you add back the hassle factor of dealing with FIA’s fraud process.

Thanks, Jason!

I’m a big fan of TA, especially at commands who support giving their people the evenings/weekends free to take the classes. My training commands benefited from many MBA surveys, studies, & projects. Especially when the XO was working on his own MBA.

I think a name-brand MBA program can help a marginal student grow into their skillset, especially by spending time with the mentors and top performers. Ironically the high-powered performers who can get into any of the top programs would succeed even if they attended a program at a community college. It’s the application that counts, not the source.

I’d love to see the data on whether veterans have a higher demographic representation among startup entrepreneurs and small-business owners. That military experience shines through pretty brightly.

Mike, Al, thanks for your comments!

Another reader said:
1. Staying another year? If the assignment officer is sending you to Kabul– no way.
2. Cash flow is king. Restructure debt to get required monthly payments lower. Flexibility is the key to Air Power you know.
3. I had a guy in my office today saying that with his military retirement check he could be a civilian guard for $12 an hour and be just fine.

I’m with you guys. It’s good to stay on active duty if it’s still fulfilling, but it’s tempting to choose the “comfort” of the uniform instead of the unknown of the transition. Unfortunately I think too many servicemembers leave their finances until it’s too late, and they feel they don’t have choices.

Thanks to Gunny at CitizenBlogger1984 for providing a link to news of the pending Marine Corps early retirement announcement:
Marines to offer early retirement, with benefits

@Robbo, at least it saves the percentage fees that come with cash advances. Sounds like a wire transfer on paper, and doesn’t take much more time. By the time I was done talking with all the credit unions & banks, this would’ve seemed like the way to go.
@ejw93, that’s the sort of transaction I hope everyone’s doing in a few years.
She’s looking at three different cars in the next couple days. I can’t wait to see how this works out!

Thanks for the trackback, PFBlogWatchDog, and feel free to leave a comment with a different perspective anytime. There are many paths to early retirement…

Thanks, Deserat!

Thanks, good question! The 1990s military drawdown was more about the end of the Cold War, not the politics. Remember the “peace dividend”?

Your question about “retired benefits” leads right into the post scheduled for 5 AM HST Wed 14 Dec. And while there will be a slash & burn, I don’t think it’ll impact today’s active-duty personnel as badly as it did in the 1970s. I think the Reserves & National Guard will feel pain in their training, equipment, & travel budgets but not in the expenses for current personnel.

I’ll put some thoughts together for a “drawdown predictions” post.

Thanks!

I used to get teased about my car or about commuting by bicycle until I pointed out that they reflected my values, not my assets.

We tell our daughter that we hope she finds an avocation that she loves, but that financial independence gives her the choice to do what she loves…

Jan,

Thanks for letting me know– I don’t have an iPad and you’re the first to call attention to my blissful ignorance.

This blog’s theme, WordPress’ Twenty Ten, has an iPad utility that lets me set some of the display features. It says “Onswipe displays a beautiful app-like experience to visitors browsing with an iPad.” It lets me select the “Cover Display”, “Cover Logo”, and the “Launch Screen Image”. I don’t have anything chosen for those and I’m not sure you should care about them, but now you know they’re options.

The final option is “Display Font”, and there seem to dozens of them. If you have an iPad font that works well for you on other blogs or sites then I’ll set it up here.

Here’s the support page for these settings: http://en.support.wordpress.com/onswipe-theme-for-ipad/

By March I suspect you’ll really be ready to visit here! Let me know if you have questions or if you’re looking for suggestions. A relatively new way to explore Oahu is 3DHawaii.com…

Thanks!

We’ll get guardianship & conservatorship, although the courts make it a bit complex to have conservatorship from a different state. I might be able to do the court hearing by phone or by Skype, but I’m supposed to sign an extradition waiver with Dad’s state…

Before you start “the talk” with your grandfather, it can be a tremendous help to hit it off with a geriatric care manager in his neighborhood. We ended up using three of them (in my town, Dad’s town, and my brother’s city) and I couldn’t have done it without them. They’ve seen it all, and they’re thrilled to get a request for help before it’s a crisis. They’re able to walk through ideas for your talk with your grandfather, and they’ll be standing by if he wants help.

Thanks, I enjoy Paycheck Chronicles too!

Note the update at the end of the thread with links to a spreadsheet where you can enter your own assumptions and calculate the results.

I think these guides are playing to the lowest common denominator of beginning investors. But it’s easy for military investors to overlook the inflation protection of a pension with a COLA…

Thanks! We’ll see how she does during sophomore year. “So far so good”…

Guilty. Seems so simple, doesn’t it?

Thanks, Scott. I’m just working through the John Hancock bureaucracy to make the claim on my father’s long-term care policy. It’s not a very enjoyable process but it seems to be going OK so far.

Thanks, Scott, good to know.

I’m calling John Hancock this week to start my Dad’s claim.

Thanks!

I think the AF is unique among the services in letting their retired members return as drilling Reservists, but I don’t know each of the services’ Reserves or Guard as well as I know Navy.

Navy Reserve would also prefer that their members not “homestead”, and eventually it can count against them at promotion boards. However in the Reserves there’s at least a choice, while we all know what would happen if we tried to homestead on active duty…

Thanks, I’m glad those pingbacks are working.

Thanks also to Deserat/Bridget for her draft on this subject. That chapter of the book comes from someone who really knows how to balance the Reserve and civilian aspects of life & work, and the chapter practically wrote itself.

Thanks!

Most servicemembers (and even most veterans) have no feel for the expense of civilian health insurance. I think military healthcare will get more expensive, but I think it’ll still be a lot cheaper than the civilian equivalent.

Thanks, Janet!

You’ll have to keep us posted on how things work out. You’re turning into one of the retirement mentors now…

Janette,

I’m looking forward to when I’ve been retired 14 years!

We own a home and a rental property. We’re DIY & HGTV home-improvement enthusiasts, so in 1989 we were able to scrape together the down payment on a “quaint fixer-upper”. In 2000, after looking at dozens of homes, we were also able to scoop up another “handyman’s special” bargain during the pit of Hawaii’s decade-long real-estate recession. The sweat equity has been a substantial investment.

Today’s prices are eye-popping, and we’ve improved our homes to the point where they’d be out of our reach if we had to buy them again. (I envy anyone who could live on the North Shore, especially during winter surf!) When I retired in 2002 we were carrying an 8% mortgage on our home but a couple months ago we were able to refinance down to 3.625%. That’s helped our financial situation quite a bit.

Rental property cash-on-cash returns are particularly pathetic here and it ties up a lot of equity– 3-4% APY is common but it was a good hedge during the 2008-09 recession. Our rental is between Schofield and Hickam/Pearl Harbor so military tenants have been great.

Although Hawaii’s real-estate prices aren’t for the faint of heart, there are bargains. Condo & townhome prices have been especially soft for the last couple years and they offer good ways to build equity over the next decade. I’ll have to work up a post on retiring in Hawaii, but feel free to comment or e-mail me with questions. Thanks!

Same here, and I think most ERs struggle with it. I try to turn the conversation back to them.

When new acquaintances see the way I dress and learn about my surfer-bum lifestyle, though, I think they’re afraid I’m going to ask to borrow their money. So they’re happy to talk about something else…

I’ve really enjoyed your blog over the years. I think you deal with the personal & emotional issues that most financially-oriented bloggers never get around to. (Those issues also seem to keep a lot of military veterans in the workforce even if they don’t have to be there.) It’s even more impressive with your background of accounting & venture capital, where very few seem to ever feel compelled to retire!

Thanks! So far so good…

Thanks! We have one in college on a Navy ROTC scholarship, so these subjects are getting a lot of discussion & practical application.

Well, you can also tap the Roth for first-time home purchases and education expenses! But you’re probably done with those categories.

I need to finish estimating my 2010 income so that I can squeeze in a little bit more of a Roth IRA conversion. It seems easier to write blog posts than to chase down all the details of the income and deduction numbers.

The biggest advantage of a Roth is NOT having to take distributions. A conventional IRA may grow so large by the time you turn age 70 that the required minimum distribution could be a huge tax hit. Instead that would be one of the first things you’d tap (definitely after age 59.5 and perhaps even earlier with 72(t)) to smooth out the tax bill over the years.

After eight years of early retirement I’m beginning to wonder if frugal habits will ever change, although I still enjoy the challenge. Our spending habits have started to change, especially if the alternative jeopardizes safety or a bigger expense. For example I’ve reluctantly concluded that car tires on Oahu are pretty much worn out after six years, no matter how few miles we’ve put on them.

Good comment about the spreadsheet– I need to put up a post about “lifetime consumption-smoothing” retirement calculators like ORP and ESPlanner. Those of you who want to explore on your own can check the retirement links in the sidebar.

Thanks! The next three posts are on Reserve/NG healthcare, pension comparisons, and handling those multiple streams…

WordPress flagged a comment from a German poster whose website translates to “daily cash winners”… smells like spam to me. (Please contact me if I’m mistaken.) However their comment is still worthy of response: “I don’t usually reply to posts but I will in this case. My God, i thought you were going to chip in with some decisive insght [sic] at the end there, not leave it with ‘we leave it to you to decide’.”

Sorry you didn’t get the easy sound-bite answer you’re seeking. Early retirement is a highly individual decision all by itself, even without spouse/family considerations. Many veterans miss the opportunity to make the transition, let alone pursue the education or the self-confidence to handle the issues that arise.

I can’t tell you the best way to live your life, but I can tell you that it can best be achieved through financial independence.

I can also suggest that you read the book when it’s published next year! There’s plenty more material in it than I’ve put in the blog, and the book is packed with the personal stories of over 60 veterans. In the meantime you can join the discussion at Early-Retirement.org and see what hundreds of others are doing with their ER lives.

Jerome,

I’m sorry, I can’t ever recall ever seeing anyone ever taped to anything on any submarine. Why, you’d have to station a safety monitor to make sure that they could be freed in the event of an emergency, or you’d have to carefully design the taping method to ensure that they could free themselves.

It sure was a different Navy back then… and I’m glad taping is no longer a part of it.

And we division officers miss the heck out of that other stuff too. NOT.

Outstanding, Tom, and enjoy the ride!

Exactly, Jerry. Fortunately a high savings rate overcomes a lot of “brilliant investor” distractions.

Fantastic, David, and that’s great progress!

You bet, Angela. You can e-mail questions anytime to NordsNords at Gmail.

Thanks, Jes!

Scott, that phone number goes to the VA’s National Cemetery Administration team:
https://www.cem.va.gov/cem/burial_benefits/need.asp

Good question, Scott.

You’d have to read the fine print in your commitment contract. Being in the IRR is normally satisfactory for longevity. If your E-7 commitment requires you to obtain points for a good year, though, then currently it’s nearly impossible to do that in the IRR.

In addition, if you’re out of a drill billet for even one day, you’ll lose your eligibility for Tricare Reserve Select health insurance. Be very careful about depending only on the VA for your health insurance (without Tricare) for injuries or medical issues which are not service-related. Going to the IRR may not be the most financially beneficial move if you have to obtain other health insurance after losing TRS.

The best way to estimate the amount of a future Reserve pension is to assume that it’s being paid today, and in today’s dollars. (You’ll also assume that your longevity in your retirement rank continues to accumulate through 2023, which means that you may be eligible for the maximum longevity pay at that retirement rank.) By estimating your pension in today’s dollars, you can easily compare your pension to your current expenses without having to make a bunch of further assumptions about inflation.

While your deployments may mean that you’re eligible to start your pension at age 59.5, remember that Tricare health insurance will not kick in until age 60. You’ll still need to cover the six months with Tricare Retired Reserve insurance, or some other plan.

I’ve never heard that response from USAA before, RJ!

It’s a bad idea to mislead an insurance company (let alone anyone else). You could call them back if you decide to use the loan for commissioning expenses like a security deposit on an apartment, possible deposits with utility companies, more uniforms, and travel expenses at your next command.

When the money’s deposited in your USAA account, then the only way USAA could tell where you spend it is if you transfer it directly from a USAA account to that payee. Otherwise I don’t think they’d be able to track it.

Stepping back from that question, here’s two bigger questions:
1. Are you sure you want to borrow money…
2. … and are you sure you want to pay off your student loans early?

I would not rush to pay off a student loan if it was at a very low interest rate (<3%), or if it was eligible for programs like Public Service Loan Forgiveness or the various income-based repayment programs like IBR, ICR, PAYE, or REPAYE.

I’d also hesitate to borrow money if those payments were higher than your current student loan payments. (By “higher” I mean “more dollars” when the loan is paid back in a shorter length of time.) You’d save interest expenses with a loan at a lower interest rate, but if the shorter amortization means a higher payment then you’d be under financial pressure to keep up the payments.

You could achieve the same interest savings with your own additional higher payments. If you have unexpected financial issues then you’d still have the flexibility to send in the minimum required payment while you deal with the other financial issues... and then you could resume your self-imposed faster/higher payment schedule.

When you’re just starting your military career (and a new pay record and new allowances and a new command) then I’d be very cautious about putting yourself under the financial pressure of taking out a career-starter loan. It might make sense to wait for a few months after commissioning (until your pay & allowances are running) before you set yourself up for a payback.

Good question, Leo! When he’s a full-time student then you can claim him for your VA disability compensation eligibility up through age 23. Here’s the requirement from the VA’s website at:
https://benefits.va.gov/compensation/add-dependents.asp
Children (including biological children, step children, and adopted children) who are unmarried and either:
– Under the age of 18
– Between the ages of 18-23 and attending school full-time, or
– Who were seriously disabled before the age of 18

I strongly recommend using eBenefits to update your claim info. Here’s an in-depth video on adding your son through eBenefits, including supplying information about the school and his program:
https://m.youtube.com/watch?v=Vsn-LB9Nrec

You could also submit a stack of paper forms or use a local Veteran Service Officer, but eBenefits is generally worth the occasional hassle & frustration.

Thanks for sharing that story, Deserat, and you make a great point about doing our duty. We step up.

I strongly agree with grief counseling. It’s a long process and the impact is different for everyone.

Thanks, Peter!

Thanks, Janette, I’m glad it’s helping!

We plan to use POD/TOD beneficiary designations for most of our assets, which is pretty straightforward when we’re dead. In case of our extended disability (coma or dementia) we plan to use a combination of a revocable living trust (real estate), durable powers of attorney (Fidelity accounts), and joint accounts (NFCU checking). All three options have their advantages and drawbacks, and we’ll discuss those.

The best estate-planning advice is to consult a lawyer for the free hour and then pay an hourly fee for additional advice before drawing up the paperwork for your situation.

It doesn’t look like it, Amber, but you’d want to verify that with your state Veterans Affairs office or your foster agency. The state may offer additional benefits that the federal VA does not.

The VA’s website says:
“You can add a dependent if: You have or adopt a child.”
Foster children aren’t mentioned on this page.
https://www.va.gov/disability/add-remove-dependent/

You could also consult a VSO in your community from a local chapter of the American Legion, the Disabled American Veterans, the VFW, or even MOAA.
https://www.va.gov/disability/get-help-filing-claim/

I’m sorry to read about your husband, Helen.

I don’t know of a good way to solve this problem. It’s possible that you’re considered to have opted into the Reserve Component Survivor Benefit Plan (by default) simply because you never explicitly opted out. However you’ll absolutely want to consult a lawyer about your rights.

I realize you’ve learned a lot about the SBP in the last year. One of the best resources I’ve found is Kate Horrell’s SBP roundup post:
https://www.katehorrell.com/survivor-benefit-plan/
You may need to refer your JAG (or civilian lawyer) to these details.

You might also want to talk with a different VA representative. You can use your state Veterans Affairs representative (especially since you’re already talking with your senator). You could also contact a Veteran Service Officer with a local chapter of the American Legion, the Disabled American Veterans, the VFW, or even MOAA. The VSO’s services are free:
https://www.benefits.va.gov/vso/
https://www.ebenefits.va.gov/ebenefits/vso-search

Thanks for the tip, Peter!

Thanks, Peter!

No worries, Greg, TERA is a reduced pension yet with the same treatment as a regular military pension.

Depending on your civil-service seniority, it can make financial sense to waive a military pension in favor of buying your military service credit deposit. (A shipmate is a senior civil servant who retired from the military as an E-6 and opted to waive his military pension for a higher FERS pension.) However you’re entitled (by federal law) to collect your military active-duty pension and your civil-service pension as long as you do not buy your military service credit deposit.

Eddie Wills has more advice on this at GubMints.com. Here’s a post on the details of the military service credit deposit:
http://gubmints.com/2013/03/26/gubmints-comprehensive-military-service-credit-deposit-guide/
and here’s a post on using the deposit when you’re retired from active duty:
http://gubmints.com/2013/04/15/military-service-credit-deposit-retired-from-active-duty/

You’re welcome, Spencer! Ask me questions any time.

Wow, One Sick Vet, I’m sorry about your other parent.

I wonder whether they’d accept an hour or two of “free” consultation with a lawyer, paid for by you? It looks like you’d be paying for it anyway.

My “death log” was very helpful in a new way– I was just contacted by ANB Bank’s troubleshooter who’s going to research what they did and what they should do. Their understanding of who I spoke to and what they said was very basic and incomplete. I was able to bring up my log file and read dates/summaries of my side of the story.

Thanks for reaching out, Virginia!

If your friend is already receiving his military pension, then the most reliable way to change the withholding would be on the Defense Finance and Accounting Service MyPay website. (https://mypay.dfas.mil/) A less-reliable way would be to fill out a new W-4 and mail it in to DFAS.

If your friend’s not yet receiving a pension then he’s not getting any money from DoD and has no military income for DFAS to withhold. He might be receiving VA disability compensation, and that flows through the DFAS MyPay website, but VA compensation is not taxable. I’m not sure whether he’d have a MyPay link to change withholding. Any changes to tax withholding would have to come from somewhere else (a civilian employer’s income?) or he’d have to pay estimated taxes.

He can always pay estimated taxes on his own, and for that I greatly prefer the Electronic Federal TaxPayer Service (https://www.eftps.gov/eftps/ ).

Thank you, NCBill, that’s good advice!

You have to trust the co-trustee even more than a successor trustee, but when a grantor/co-trustee is disabled then having you as another co-trustee certainly cuts down on the gatekeepers and the bureaucracy.

Among all the issues with my father’s lack of financial planning and estate planning, his residence and vehicle were the least of our problems. Dad had sold his home long ago and lived in a series of 2BR apartments before having to move into a care facility. When he moved to the care facility, he agreed to sell his SUV to my brother (for $1). That helped a tremendous amount when Dad needed transportation for a medical appointment or just wanted to go for a drive and a Sunday brunch.

We’re taking a similar estate-planning approach in our family, and I’ll write about that in a future post.

No worries, One Sick Vet, we all get to judge our own value of our spending!

I wrote this post for analyzing financial independence without a military pension. The numbers, ratios, and graphs are our actual spending (from our years of Quicken and Personal Capital data) and include the principal & interest payments on our home’s mortgage.

The post also assumes that we only have our investment portfolio to support that spending– no home equity, no rental income, no pensions.

This was the scenario we faced in 1999 when my spreadsheet showed that we had the investments to support the 4% SWR, yet we did not have my pension.

Today’s reality is that we’re spending my pension checks *and* withdrawing from our investments. Life is good.

When I was crunching the spreadsheet numbers, I also noticed the interesting drop in our non-discretionary spending.

That’s a very good question, Heatherann. I don’t know the answer, let alone whether DFAS is doing it right. If you’ve just reached that 30-year mark, then the adjustment to your pension might happen on the next deposit (a month in arrears).

I’d file a request with DFAS to make sure they haven’t overlooked it.

The legal references are Title 10 U.S. Code, with different sections for each of the services:
Army: 10 U.S.C. § 7344
Navy/Marines: 10 U.S.C. § 8334
Air Force: 10 U.S.C. § 9344

The Financial Management Regulation (DoD 7000.14-R), Volume 7B Chapter 9, describes the procedure which DFAS follows:
https://comptroller.defense.gov/Portals/45/documents/fmr/current/07b/07b_09.pdf
It goes into great detail on the computation, but it doesn’t mandate that you request it.

I’d contact DFAS through this link:
https://www.dfas.mil/dfas/retiredmilitary/about/aboutus/customer-service.html
or submit a ticket through their online customer service site:
https://corpweb1.dfas.mil/askDFAS/custMain.action?mid=12

Thanks, LT! Yep, the numbers are showing that the 4% Safe Withdrawal Rate is working the way it’s supposed to work, and that the numbers are following the “high success rate” probability.

If there was going to be a failure of this portfolio, it would’ve happened during the first decade. Instead it’s growing faster than inflation, and at the long-term rates. Now that the SWR has dropped below 3%, it’s indefinitely sustainable.

Thanks, Peter. I agree that emotions (behavioral financial economics) can derail the logic & math of our financial plans.

The good news is that a high savings rate can go a long way toward overcoming those money attitudes too.

Good question, Shane, you made me think!

For personal-finance fiction, I highly recommend MK Williams’ “Enemies Of Peace”.
https://www.amazon.com/Enemies-Peace-M-K-Williams-ebook/dp/B0763DVGZY/
We enjoy nerding out together about writing, and I need to make the time to read the rest of her books.

Otherwise there’s minimal value and maximum escapism in my fiction reading. I’ve been a science-fiction reader since the 1960s, and today it continues with trashy military science fiction and action-adventure novels. Those authors currently include John Scalzi, Jim Butcher, Richard Fox, Stephen Konkoly, D.J. Molles, Kacey Ezell, Larry Correia, and John Ringo. I still use the library but Amazon makes it all too easy to follow my favorite authors and to click the Kindle buy button for immediate gratification.

Jesse, the simplest method would be logging in to your eBenefits account and adding your family members.

Since you may be eligible for back pay, you might want to visit your local Veteran Service Officer and figure out how far back the VA will go. They can also add your family members, and they may want to see marriage certificates & birth certificates.

Thanks, Avanbuiten!

Morris, I’m a little confused by the term “discharged”.

If you’ve served at least 20 good years in the Air National Guard and have your Notice Of Eligibility for retirement, then a Medical Evaluation Board would consider you for transfer to the Temporary Disability Retired List or a medical (disability) retirement.

In any case your retirement rank would be subject to federal law Title 10 U.S. Code section 1372, which generally entitles you to the highest rank in which you satisfactorily served. I’m not aware of any minimum time-in-grade requirement for the E-8 rank.
https://www.law.cornell.edu/uscode/text/10/1372

Your E-8 pension would be calculated using the pay tables in effect during the year when you reach the age to start your pension (generally age 60) and at the longevity for your E-8 rank as though you’d been on active duty the entire time you were “retired awaiting pay”.

In case I’ve misunderstood any state rules about your state’s Air National Guard billet, you should seek the advice of a JAG who’s familiar with your unit.

Thanks, Deserat, you and I went through many of the same experiences during those years!

It’s a tough conversation, One Sick Vet, and I appreciate you stepping up to get it going!

And yeah, I’m keenly aware of the parallels between good financial decisions and good lifestyle decisions. I’m also finally thankful for all of that military experience at motivation, planning, and persistence…

Good question, Mitch. You’d want to check the results of your Medical Evaluation Board and your retirement (discharge?) orders.

If you served a total of at least 20 good years in the Guard (made up of active duty, drilling, and AGR) then you would have received a Notice Of Eligibility for a pension. The MEB would have awarded you the higher value of their disability rating (as low as 30% to the federal law’s maximum of 75%) or of your pension amount. Again you’d have seen these findings in your MEB package and your retirement orders.

The MEB disability percentage and your pension are completely separate sections of federal law from your VA disability rating. If you were eligible for a National Guard pension (or if you were awarded a disability pension by the MEB) then it starts at age 60 and in addition to your VA disability compensation. You’ll get the military pension and you’ll continue to get the VA disability compensation.

If you served in a combat zone (like Iraq) after 28 January 2008 then you’d be eligible to start your pension three months earlier for every 90 days (of the fiscal year) in the combat zone.

The best way to verify this information is to review your MEB package (and your retirement orders) with a JAG or with your unit’s personnel center.

Alberto, my first recommendation is getting healthy. Regardless of how you do with the VA, you should consult with your doctor to do as much as you can to stabilize your back and hopefully heal more.

Separately, talk with a Veteran Service Officer about the possibility of other records of your visit to the corpsman. (There may be something in a Marine archive.) If there was never an official record of your visit to the corpsman then you might also try “buddy letter” statements from fellow recruits or drill instructors who could have witnessed your injury.

VSO services are free. You can find a Veteran Service Officer from your local chapter of the Disabled American Veterans, the American Legion, the VFW, your local VA clinic, or even MOAA. They’ll go through your medical & service records to help you find as much info as possible for your claim.

Great question, AF Guy. The default is indeed “retired awaiting pay” but you’re smart to make sure it’s not inadvertently set to “separated” or “discharged”.

Each service has a different retirement procedure. You’ll want to talk with your unit’s chain of command or confirm “retired awaiting pay” with the local Reserve center or your service’s Reserve personnel HQ.

You’re welcome, Chad, I enjoyed reading it! You (and the other BiggerPockets authors) have shown a lot of people how to reach their financial freedom.

And yeah… come on over to Hawaii someday, and you’ll paddle out to see what we’re all so happy about.

Great question, Ben!

When you start your pension at age 60, you have to get a new ID card from your local RAPIDs facility. Your ID card changes to the blue retiree version and the issuer updates the DEERS database.

In addition to your pension, DFAS updates your Survivor Benefit Plan status (if you opted for SBP). The transition to your retiree ID also turns on your eligibility for Tricare (Prime or Select health insurance) and the Veterans Administration (in case your military pension is offset by any VA disability compensation). You’re eligible to fly military Space A worldwide (not just the U.S. and some territories). And finally, it continues to give you base access because many military base security guards will now confiscate an expired ID.

The amount of your pension depends on which retirement option you chose in 2006. 99.99% of Reserve/Guard servicemembers opt for “retired awaiting pay”. By federal law for that option, your pension is calculated from the pay tables and longevity for your rank as though you’d been on active duty all the way up to the start of your pension. You’d get all the pay and longevity increases since 2006.

The reason that “retired awaiting pay” includes all the pay and longevity increases is because gray-area retirees are also subject to recall to active duty for a total mobilization. That last occurred during WWII.

Because of that very small risk, a few Reserve/Guard retirees opt for “separation” or “discharge” when they file for retirement. That prevents being mobilized before their pension starts at age 60, but it also freezes their pension at the pay tables and longevity which were in effect when they made that choice.

You probably chose “retired awaiting pay” and you’ll get the increases.

By the way, your new blue retiree ID should expire on the day before you turn age 65. That’s to make sure you sign up for Medicare by age 65, which you’ll have to do in order to get a new retiree ID with eligibility for Tricare For Life insurance. That’s supplemental Medicare insurance which covers the Medicare copay.

You’re welcome, Avee, I’m glad it’s helping!

Kerry, I think we’re mixing numbers here. The SWR was set at 2% because Grunhead wanted to be extra (perhaps excessively) conservative.

In a separate calculation, he reduced his spending from 0.4 to 0.2. That should boost the savings rate from 60% to 80% because it all adds up to 100%. Whatever is not spent is now being saved.

Each service does it differently, Whitney, and I’m not sure of their specific processes.

Talk with your chain of command, and that’ll also help you get an estimate of when you’d be able to stop showing up for drill weekends.

Thanks for the feedback from the other side of the fence, Dan, and I hear you on optempo.

You’re welcome, Life2.0, and I’m glad it’s helping!

Congratulations to both of you on your retirement!!

Bill, the first thing you should do is talk with your doctor and your physical therapist to get as healthy as you can.

From reading those posts, you already know that you have to show a service connection in your military medical record (and service record) to document the injuries leading to your disability. You also have to show that you need continuing treatment, because if you don’t continue to seek treatment then the VA decides that you’re “cured”.

If you haven’t already done so, please talk with a Veteran Service Officer. They’ll guide you through the process and keep you updated on the VA’s status of your claim.

Sorry to read about this, Rhode. You’d definitely want to have a new C&P doctor if you had any choice in the matter.

I think your VSO is giving you good advice. I’m not aware of any way to correct a C&P exam before it’s reviewed by the VA’s rater, although this exam might have so many problems that the VA asks for another one. The VA already has a copy of your records, and hopefully the rater will note the exam’s errors.

Either way you’ll hear from the VA, and if they don’t give you the appropriate rating then you’ll obtain your claim file and put in an appeal. (That’s the process which the VSO knows very well.) The updated rating will be delayed, but the appeal means that it’ll be paid back to the original date of your new VA disability claim.

Hector, I’d start by visiting a Veteran Service Officer for a review of what’s been done and what needs to be done. You could start with a copy of your VA claim file (if you have your C-file) and your DD-214 discharge paper, and later add your service & medical records.

You can find a VSO at a local VA clinic or local chapters of the American Legion, the DAV, the VFW, or even MOAA. You might also be able to get help from your state’s veterans benefits agency– state benefits as well as the VA’s federal benefits.

The “Related Content” links up in that post have more information about submitting a claim and updating it.

You’re right, Phil, when you “retire awaiting pay” with at least the minimum time in W-5 rank then your pension will be based on the W-5 pay tables.

The formula will use the average of the highest 36 months in the future W-5 pay tables in effect when you’re ages 59, 58, and 57, and at the longevity in your W-5 rank as if you’ve been on active duty up to age 60.

You’ll also be eligible to receive your pension three months earlier for every 90 days (in a fiscal year for most cases) which you’re mobilized to a combat zone (or a national emergency for some cases) after 28 January 2008.

Thanks for your support, Brandon, and I’m glad the info is helping!

All that’s correct, David, but keep in mind that active-duty and Reserve retirements start on the first of the month. (Disability retirement dates are set by a different process.) In addition, the pay base of a High Three pension is the average of the highest 36 months of pay, and a military pay raise during the last year of service does not have a significant effect on that average. Finally, the amount of pay & allowances earned during the final year is a far greater effect on the size of the pension than the COLA in the following year.

In other words, the COLA is one of the least significant issues in the timing of a military retirement. However the system is confusing, and this post helps military families predict their pension income for the years after retirement.

I don’t have an answer for that question, Tiffany. The VA only issues a paper check for situations when direct deposit is not available, and these days a paper check is relatively rare.

It could take several months once the disability rating is calculated and the award letter is issued.

The best way to answer your question is to check the status of your claim in eBenefits. (Make sure eBenefits has your banking deposit information as well as the info for your family members.) If eBenefits doesn’t have the estimate of when your retroactive payment should be deposited then I’d check with a Veteran Service Officer in your area.

Thanks, Dan, and I appreciate your help in spreading the word!

You’re welcome! I’m glad it’s helping.

You make a good point, Brian! The answer is “only a handful, unless they do more orders”.

Even an E-9>38 earning $8242/month in 2019, and reaching 78 points (48 drills, 15 days of AT, 15 participation points, not considering any limits on annual points) would only have base-pay earnings of $21,429.20. They might have specialty pays or bonus pay as well.

However the TSP contribution limits ($19,000 in 2019) are set by federal law for 401(k)s and not by DoD. A Reservist who wanted to hit those contribution limits from their drill pay would have to do some extra orders or mobilize.

Keep in mind that those contribution limits are tracked by Social Security Number, so a Reservist with a civilian career would have that $19K limit apply to the total of their contributions to their civilian 401(k) as well as their TSP. That’s in a footnote to the contributions table on the TSP website:
https://www.tsp.gov/PlanParticipation/EligibilityAndContributions/contributionLimits.html

You’re absolutely right, Kate, and the BRS office has specifically avoided talking about these financial planning and estate planning topics.

As I say in the post, BossyDude, $3000/month is “a relatively large pension”. Now that you’ve seen three different ways to put a value on a military pension, you can use numbers which you feel are more reasonable.

I’m not sure where you’re getting your base pay from, but you’d want to use the >20 column at a minimum.
https://www.dfas.mil/dam/jcr:ccc8e348-187d-4bff-9e39-b113ad7fa67d/MilPayTable2018_4.pdf

I agree that it seems high, Michael. We’re waiting on a more detailed breakdown but (at a minimum) it includes both eligible active-duty and eligible Reserve/Guard servicemembers.

The BRS office might also have been speaking for the Coast Guard, NOAA, and the USPHS as well as all the people who’ve joined the uniformed services in 2018.

Good questions, Harry.

DFAS calculates a pension using the DoD Financial Management Regulation (DoD 7000.14-R) volume 7B chapter 3.
https://comptroller.defense.gov/Portals/45/documents/fmr/current/07b/07b_03.pdf
You’d follow along in paragraphs 030201, 030203, 030205, and 030208, and 030209. Maybe you’re also covered under 030204.

First, you’d want to make sure that you’re indeed eligible for Final Pay (a Date of Initial Entry on Military Service on or before 8 September 1980). 33 years implies that you joined in 1984 (High Three) but you may have joined earlier and had some interrupted service. More importantly, you want to make sure that DFAS also has that information in your record, or else they’ll default to High Three.

Next, verify that you and DFAS are using the same point count (3837 points?). If they’re using a different number then you’d have to correct that with your drill records and your DD-214s.

Third, what year did you start your retirement? For the vast majority of Reserve & Guard retirees eligible for Final Pay, it’s your 60th birthday year. If your Reserve pension starts at age 60 and your 60th birthday was in 2017, then you base your pension on the 2017 pay tables. If your 60th birthday is in 2018 then you start with the 2018 pay tables. (A few Reserve/Guard members deployed for at least 90 days in a fiscal year to a combat zone or for a national emergency, and they’d start their pension at least three months sooner. More info on that is at:
https://themilitarywallet.com/national-guard-and-reserve-early-retirement-age/ ) You’re also right that you start with the years of longevity as though you’d been on active duty all the way up to the start of your pension. At the E-7 paygrade, that tops out at E-7>26.

Finally, the Final Pay formula is
(Points / 360) x 2.5% x base pay = $/month
According to the rules in the FMR, the first division is carried to three places and rounded to two. The formula’s resulting dollar figure is rounded down.

If you started your pension (60th birthday) in 2017 then your deposit would be
(3837 / 360) x .025 x $5167.50 = 10.66 x .025 x $5167.50 = $1377/month.

If you started your pension in 2018 then your deposit would be
(3837 / 360) x .025 x $5291.40 = 10.66 x .025 x $5291.40 = $1410/month.

Let me know if I’ve made any incorrect assumptions.

Good question, Jonathan. You should be covered under federal law by going over 30 years of combined Guard service and “retired awaiting pay” status.

The “10 years of commissioned service” rule is in federal law. The Army version is here:
https://www.law.cornell.edu/uscode/text/10/3911

Also by federal law (Title 10 U.S. Code section 1407(e)), DFAS will use the highest enlisted rank to determine the high-three pay at the time you file for retired awaiting pay:
https://www.law.cornell.edu/uscode/text/10/1407

However after a combination of 30 years of active duty and retired time, retirees are eligible to be advanced on the retired list to the highest grade they served on active duty.
https://www.law.cornell.edu/uscode/text/10/3964
I realize you’re Guard, not active duty, but stick with this for a few more paragraphs.

When a Reservist “retires awaiting pay” (not just “discharged” or “separated”) then they’re hypothetically available for recall. (This last happened during the country’s total mobilization of WWII.) As an incentive for this status, their pension is calculated from the pay tables in effect when they start the pension (usually at age 60) and… at the longevity in their retirement rank as though they’ve been on active duty the entire time.
https://the-military-guide.com/reserve-retirement-calculator/

You retired awaiting pay in 2011 with 21 good years as an E-5>20.

At age 60 you’ll start your Reserve pension. You might start the pension sooner if you deployed at least 90 days in a fiscal year to a combat zone or a national emergency, per the NDAA 2008 legislation and its 2015 amendment. Military blogger Ryan Guina covers that topic with this post:
https://themilitarywallet.com/national-guard-and-reserve-early-retirement-age/

Nine years after retiring awaiting pay, you’ll reach E-5>30 longevity. However by that federal law section 3964 you’ve also reached eligibility to be advanced to the highest rank you satisfactorily held. That means you’re an O-2>30.

Please let me know if you have more questions!

I think you’re doing everything right, Jeremy, but you’re always welcome to e-mail me at NordsNords@Gmail.com.

It’s possible that the TSP computers have ignored the combat zone deployment because you didn’t exceed the $18,500 elective deferral limit during the deployment. One way to test that would be to try to contribute to your Roth TSP (and get up to $18,500 in just the Roth TSP). That seems to be possible from the contribution example obtained from the FRTIB and the spreadsheet that I built from it, although that spreadsheet example exceeds the traditional TSP’s EDL during the deployment.

Another option would be to have your finance office request that the TSP restore your ability to contribute to the Roth TSP. I’m not sure whether that’d take effect in time for more than the December TSP contribution. That contribution would be deducted from your pay at the end of December and sent to your TSP account during the first week of January.

My contact at the TSP has been reading this post (and a Facebook group discussion of the same topic). She’s committed to improving the public availability of the training materials about the contribution limits. I’ve also sent an update of the entire discussion to the DoD BRS office. They’re focused on the BRS program, but the TSP policy affects both BRS and High Three contributors.

I get that question a lot, Hank. I guess I should highlight the irony that the very first comment on a post titled “It’s Not About The Money” is… about the money.

Speaking of DoD’s calculator: several of us bloggers (members of the DoD BRS Roundtable) extensively beta-tested it before release. It doesn’t include the effect of your own personal TSP contributions (a hotly-debated topic at the BRS office). It doesn’t account for financial planning (income taxes) or estate planning (SBP and passing on the TSP account). You’ll have to correct for those omissions in your own spreadsheet.

Of course that spreadsheet should also include other omissions from the DoD calculator: career flexibility and quality of life.

If we’re going to discuss (once again) the numbers, then we have to do probabilities & statistics as well as compounding math. Let me point out the flaw in your logic: you’re unlikely to reach military retirement. Only 15% of the people who join the military make it to 20 (1 out of 6).

In other words, you’re proposing to make a High Three bet which pays off only 1 time out of 6. Even worse, 5 out of 6 times you receive nothing… not just the dollar difference between the High Three and BRS but literally zero pension.

Meanwhile with BRS you know that 6 out of 6 times you’ll leave the military with DoD’s agency/matching contributions in your TSP.

Let’s go back to High Three cliff-vesting at 20. If you happen to be the 1 out of 6 who survives the career events beyond your control (medical issues, training accidents, operational mishaps, combat, downsizing, lack of promotions, family crises, quality-of-life burnout) then the question is whether the additional payoff is worth the risk.

Another blogger has done multiple runs of the BRS calculator without accounting for Continuation Pay.
https://militarydollar.com/2017/05/15/brs-part-3-comparing-systems/
Let’s say that the biggest difference between High Three and BRS at retirement is $440K, the case of the O-4 at 11.5 years. (It’s reasonably close to your $500K figure.) Maybe the O-4 takes the CP bonus ($21K) and also compounds it for another 26 years at 7% (like the rest of their TSP) for another $122K. Now the High Three calculation of that post yields roughly $320K more at age 59 over the BRS.

That retiree is likely to live another 20 years, which yields roughly $16K/year out of locking themselves into a bet which only has a 1 out of 6 payoff. Five out of six times it’s zero, and the sixth time it’s a lottery win of $16K/year. The expected payoff is $2667/year.

But this is not a poker game where you can play 40 hands a night. This is a military career that you can only do once, and the High Three poker table requires you to gut it out to 20 years. With the BRS you could quit after any hand and walk away with some house money.

Let’s go back to the DoD calculator. The BRS office did not add financial planning or estate planning to the BRS calculator. Your High Three pension has a few issues:
– It’s taxed every year, while the Roth TSP pays lower taxes and the traditional TSP can be gradually converted to a Roth IRA at a lower income-tax bracket– and that income-tax bracket is largely under your control.
– The pension dies when you do, unlike the TSP account which can be passed on to your heirs.
– The High Three SBP premiums are 20% higher, while with BRS (and an inherited TSP) you might not even want SBP.
https://the-military-guide.com/tricky-details-military-blended-retirement-system/

Finally, if we’re going to assume that you’re the 1 out of 6 who earns a High Three pension, I think it’s fair to assume that many servicemembers would be lucky enough to score a Continuation Pay bonus contract multiple of more than 2.5 months of base pay. That’s also a four-year commitment, which is a lot easier than gutting it out to 20.

Back to the point of the post’s title: are you really willing to bet your career on a pension which forces you to cliff-vest at 20 for a speculatively higher amount of money? Or would you rather take the sure bet of career flexibility, quality of life, and more money in your TSP?

Dan, you’ve asked a very pertinent BRS question, and I just received the TSP’s response.

If you’re still in the combat zone at the end of 2018, then you can contribute to the Roth TSP just short of $18,500 (as specified on the TSP’s 2018 contribution limits page) and to the traditional TSP for the rest of 2018’s $55K annual additions limit. (That would be another $36,500.) Note that you’ll have to leave room in the traditional TSP for the DoD’s BRS agency/matching contributions, so your personal contributions will be short of that $55K total. Put your own numbers in the spreadsheet which is linked to this post.

In 2019 you’ll still have to keep your Roth TSP below the 2019 limit of $19K. You can stuff as much as you’re allowed into your traditional TSP– up to the 2019 AAL of $56K, which still includes DoD BRS agency/matching contributions. As soon as you return home, however, the TSP interprets the 401(k) law to mean that your traditional TSP account limit also reverts to the elective deferral limit ($19K for 2019). That means anything above $19K in your traditional TSP when you come home would lock you out of the traditional TSP for the rest of 2019.

The 2019 solution is to leave room in your Roth TSP for 5% base pay contributions for all 12 months of 2019. Then contribute to the traditional TSP until you’re home. If you’ve contributed >$19K to the traditional TSP by the time you return home, then you’ll be locked out of more contributions to your traditional TSP.

However you’ll still have room in your Roth TSP for the rest of the year’s 5% base-pay contributions, which will enable the DoD BRS matching contributions to be added to your traditional TSP.

In short, follow the example spreadsheet (with your own numbers) which is linked to this post– note that all 12 months of the BRS 5% base-pay contributions are all in the Roth TSP.

Thanks for your question, Bee– that was an epic research project with the TSP. I’ve quoted their response above and edited the post to clarify what limits apply to which situations.

Great question, Ann. The VA will assign an effective date to your claim, which is typically the first day that you’re no longer on active duty. If you file your claim after leaving active duty then the effective date is generally the date you submitted the claim.

The payments start when the VA has processed the rater’s decision and has your banking info for an electronic payment. (If applicable, they’ll also need your family information.) Ideally you entered your banking info (and your family info) into your eBenefits account when you submitted your claim. If that info is correctly processed from your eBenefits account then your payments should start a month or two after you receive your decision letter.

The amount of the claim will be paid (in arrears) all the way back to the effective date of the claim.

Christian, if you already have 19 good years (not just 19 years of service but 19 actual good years) then federal law protects you from being separated:
https://www.law.cornell.edu/uscode/text/10/1176

If you’re going to a Medical Evaluation Board then the most likely results are either a disability pension or continuation to a National Guard pension. (Assuming that you can complete 20 good years to receive a Notice Of Eligiblity for your pension.) It’s possible that you’d reach 20 good years before the MEB process was finished.

Again, posting the details of your situation to PEBForum.com can help you figure out what’s more likely.

Danielle, if you already have a Notice Of Eligibility for retirement with at least 20 good years, then the most likely option is that you’ll be offered a disability retirement.

That’ll give you the option of retiring under whichever National Guard pension calculation gives you the most money– your point count or the MEB’s disability rating.

In both cases when you retire awaiting pay then you’ll continue to receive your VA disability income until you reach age 60. (You might start your pension a few months earlier if you deployed to a combat zone or were mobilized for national emergencies after 28 January 2008.) At age 60 you’ll start your pension.

If you have more questions about the MEB then I strongly recommend posting the details to PEBForum.com. It’s founded by a JAG and includes hundreds of members who’ve been through MEBs and PEBs. They know all of the timelines and processes and can help you figure out the details of your pay & benefits options, not just the decisions.

Jim, I’d suggest talking with your Reserve unit’s personnel staff or with ARPC. Each service can have its own policies (exceeding the minimums of federal law) for satisfactory time in grade to retire at that rank. Two years may be the Air Force’s rule, not the federal law.

A High Three pension system is just the average of your highest 36 months of pay for determining your pay base (which is different from base pay) in the pension calculation. For Reservists, it’s calculated at the rank from which you retired, using the pay tables that are in effect when you turn age 60 (or whenever you receive your pension, if earlier), and at the longevity as if you’d been on active duty the entire time up to age 60. If you want a pension at the MSGT rank then you’d have to comply with the Air Force’s rules to “retire awaiting pay” as a MSGT.

As far as I can tell, time in the IRR counts toward time in grade. We don’t know whether that requires you to earn enough points for a good year, and we’re having a difficult time finding a reference which confirms that. If you can find a way in the IRR to earn your 35 points and get a good year then that absolutely counts for time in grade.

Sorry to read about this, Shar. The VA has not made (yet) any presumptive connections to the eruption or the cleanup.

The only other suggestion I have is to work with a Veteran Service Officer (from the VA, or the American Legion, or the DAV, or MOAA) to attempt to establish some sort of service connection (Pinatubo or otherwise) from your military records.

Douglas, you’ve asked a question that we haven’t been able to answer yet.

If you transfer in “retired awaiting pay” status to the Retired Reserve then you will not be eligible to promote and you won’t earn time in grade.

If you go to the IRR then you’re still eligible to promote. (That’s unlikely compared to the promotion opportunities in the Selected Reserve, but you’re eligible even in the IRR.) The “problem” with going to the IRR is that it’s very hard to get a good year– especially now that points have mostly been shut off for correspondence courses.

If you don’t get a good year then I don’t know whether that still counts as satisfactory performance in the O-5 rank. I’ve asked some Reserve and FTS officers to look into it, and those answers may have to come from BUPERS.

Again, the biggest value of a Reserve pension is the Tricare healthcare and the annual cost-of-living adjustment. Before you decide to go to the IRR, do the math for the pension as an O-5 versus an O-4. If it’s not a big difference to you then go to the IRR or the Retired Reserve (whichever you prefer). If the O-5 pension is a priority then I’d recommend staying Selected Reserve until you meet the time-in-grade requirements.

If we find out a different answer from BUPERS then I’ll update this post.

I’m not sure, Dee. Every state has different insurance laws and what applies to me in Hawaii might be different in your state.

The servicemember would be covered by military healthcare, but family members might face the same issues of Tricare paying after insurance. UM/UIM coverage might also lead to a settlement which could fund lifetime care for family members who were permanently disabled by the accident.

I’d suggest following the same process that I did in the post: call your Tricare rep and your insurance company with the questions. You could also talk to an insurance broker (not just a sales agent for one company). The calls will also give you a feeling for the quality of the insurance company’s service, which might factor into your decision of whether the cheapest premium is really the best choice.

The “good” news is that UM/UIM insurance is relatively inexpensive, and you may decide to carry it just to offer this additional layer of protection against long-term injury.

Doris, I’m not sure what question you’re asking. The site comes up fine and asks for a login:
https://my.commissaries.com/customer/account/login/

It looks like they’ve set up a new login system that lets them collect e-mail addresses instead of logging in with the card number: “Patrons with a Rewards Card already registered are required to set up a customer account and re-register their card through the new customer portal.”

EDIT:
Here’s more info: https://www.military.com/spousebuzz/2018/10/02/commissary-launches-first-part-website-upgrade.html

Thanks for your feedback, Jim. I’m not sure what the median military pension may be, yet I know several readers who are living on $1800/month.

I don’t think we have to worry about misleading the civlians. Most of this site’s readers are military, and I’ve written before that people should not join the military to get rich.

As you’re probably keenly aware, the COLA is based on the same one used by Social Security. I hope the calculation can be made more relevant, but it’s the best measure we currently have.

For other readers of this comment, the 2018 pay tables show that an E-7>24 earns $4940.40/month base pay. The High Three pension for 25.5 years of active duty works out to about $3000/month.

Here’s an update from Jason. Jared, you’re absolutely right. I’ve added minor edits in [brackets].

“I hit 7305 at the of May and qualified for active duty retirement. I asked for a 1095 waiver and got that, so that I could stay another year since I am waiting for a specific job. RPAs are extremely critically manned (24/7 combat ops with no end in sight). I do not foresee MPA orders running out anytime soon. One of the guys I worked with who just retired received a second 1095 waiver (I guess it’s a 1460 waiver) and was able to fly five years with no break as a TR on MPA.
I think there isn’t a notification. [Of eligibility for an active-duty retirement.] At least I can’t find one. I was just told that when I go to MyPers and apply for a retirement, I select active duty and the personnelists gonk it out. The only way I think I can check is on PCARs. I can see that I have over 7305, and all of my points are listed as 1 (active duty) since I have always been on MPA. I’ll figure it our soon. I’m going to apply for retirement next June so I should be able to do it when I get back from leave since I’m now a year out.
We have a ton of people in our unit doing exactly what I’m doing. A bunch of TRs are riding full time MPA orders for 1095 days to get active duty retirements. From my perspective it’s better than AGR. I have all the benefits of a TR (i.e. I can say no), I fly the line, and I earn an active duty retirement. The only downside is you never know what the budget will be or when it will be passed. It hasn’t been an issue other than a bit of pain. I’ve had to be VOCO’d [given verbal orders] twice because the budget wasn’t done on time. But it has always come through.”

Got it, thanks– see the above comment.
Jared, can you link to that AFI sanctuary waiver paperwork or send me a copy (NordsNords at Gmail)?

Waiving sanctuary means giving up the active-duty pension, but if it’s a program like AGR then it might qualify for an active-duty pension.

You’re right, Keith, Reserve & Guard servicemembers have a lot of edge cases in a very complicated pension system.

First, make sure you get at least 35 points before December 2020. That should earn you the 15 participation points for a good year, but of course it’d be even better if you earned 50 points on your own before December 2020. As usual, you’ll have to meet all of the unit’s other requirements to be awarded that 20th good year.

Second, make sure now that your official service records are accurate. By December 2020 you’ll ideally have everything in your official Army National Guard database and updated, waiting only on your 20th good year and your Notice Of Eligibility letter. Guard units are notorious for not having the earlier Army service dates in their database.

Third, you have more than 10 years of commissioned service so you’re eligible for an O-3 pension. (That’s in federal law.) In addition your pension is calculated from the High Three average of the pay tables in the year that you reach age 60 (2020 in your case) and at the longevity as though you’d been on active duty the entire time. This is more than 37 years since February 1983, which is the >34 and >36 columns in the O-3 pay tables (for 2018, 2019, and 2020).

Finally, I’d apply for a continuation on drill status until April 2021 in order to reach 20 good years. Your Guard unit will either approve the waiver or coordinate with the Army’s National Guard Bureau to make sure you have your 20 good years logged by December 2020.

It’s worth your time to have a JAG review your service records and your waiver plan to make sure that I’m not missing any details.

Please let us know how this works out.

As you know by now, Joseph, the Navy didn’t have the Army’s records on file and DFAS went only by the Navy’s service record.

What should be reflected on your LES right now is your Pay Entry Base Date (and Date of Initial Entry on Military Service) of July 1992. When your PEBD or DIEMS is set to that date then you’ll be paid for your current rank— and with over 26 years of longevity.

The Navy should indeed add in your six months and 26 days. Once your Army records are included in your Navy record, then BUPERS should forward the information over to DFAS.

In addition, you may have been paid at the wrong longevity rates for the last 17 years. When you joined the Navy in 2001, BUPERS and DFAS should have adjusted your PEBD and DIEMS to July 1992 and immediately started paying you at the >8 years rate. In July 2002 you would have gone >10 years. I don’t know whether there’s a statute of limitations on that. You could ask a PSD supervisor about it, but you may need to consult a JAG to find the rules and the legal references. I think the JAG could be more helpful than DFAS.

You may already know that if you have at least three good years from your Reserve service then you’re now eligible for a Reserve pension at age 60. You could hypothetically resign from active duty now, file for “retired awaiting pay” from the Reserves, and receive a pension at age 60. You can read more about that at this post:
https://the-military-guide.com/reserve-military-retirement-for-active-duty-veterans-with-previous-reserve-or-national-guard-service/

If you deployed to a combat zone after 28 January 2008 then you may be eligible to receive a Reserve pension three months earlier for every 90 days in a fiscal year.
https://themilitarywallet.com/national-guard-and-reserve-early-retirement-age/
Regardless of when the Reserve pension starts, Tricare would still only start at age 60. You’d have to find other health insurance (like Tricare Retired Reserve) to cover the gap to age 60.

But before you make a retirement decision, I’d talk to a supervisor at PSD about adjusting your PEBD/DIEMS and correcting your back pay. If they can’t show you the references to explain what they should do (as described above) then your next step would be a visit to the JAG. It’s painful to fix these problems now (while you’re on active duty) but it’s even harder doing the BCNR when you’re a retiree.

Outstanding, Mike, thank you!

Great question, Marcus, and it’s a confusing topic.

I sent this post’s deployment timeline to the DoD’s Blended Retirement System office, and they coordinated the response with the TSP staff. Note that the quotes and the spreadsheet numbers come directly from the TSP, and they said that info is used as training material for their employees. Feel free to quote the TSP’s response in this post to the TSP reps.

First you’d want to check that your unit indeed meets the DoD and IRS requirements for a combat zone in 2019 and is not simply in transit from the zone. (This is especially important for Navy deployments.) Then you can test the TSP’s software by treating your 2019 contributions as eligible for the annual additions limit. Of course your tax-exempt pay ends as soon as you leave the combat zone but you’ll still have your remaining base pay, special pay, and any other bonus pay for your TSP contributions.

The best way to test this in 2019 would be to contribute more than $18,500 to the traditional TSP. When that works then you could decide where you want to put your remaining 2019 AAL contributions, but you’d have to stay short of the $18,500 limit in your Roth TSP. Keep in mind that the DoD BRS agency & matching contributions are also part of the AAL’s $55K total, so you’ll want to edit the post’s spreadsheet for your 2019 plan to make sure it all works out.

Of course if the TSP shuts off your traditional TSP contributions when you reach $18,500 then please let me know. I’ll query the DoD BRS office and the TSP’s legal staff.

Thanks, John, I appreciate the help spreading the word!

T, your description of Title 10 U.S. Code section 12646 of the federal law is accurate, and it’s a completely different topic.

You’re absolutely right that any servicemember with 18 years (or 18 good years for Reserve/Guard members) can continue in their active-duty, Reserve, or National Guard status until 20. Failure of selection for promotion when you already have 18 years essentially guarantees continuation to 20.
https://www.law.cornell.edu/uscode/text/10/12646

This post debunks the myth that 18 years of active-duty points entitles a Reserve/Guard servicemember to an active-duty pension. The post’s title emphasizes that sanctuary (based on Title 10 U.S. Code section 12686 of federal law) can only be declared if the Reserve/Guard servicemember is on active-duty orders at the time. They can’t try to declare sanctuary simply because they have 18 years of active-duty points.

Thanks for asking the question, Travis, you’re absolutely right to check that you have it covered.

Fortunately a Roth TSP is one of the easiest cases of the early-withdrawal bunch. It’s a category of the Roth 401(k), also known as a “designated Roth account”.

Once you’ve hung up your uniform (separated or retired) then you simply roll your Roth TSP over to a Roth IRA. After five tax years have passed then you can tap the amount of the Roth TSP rollover (but not the new gains in the Roth IRA!) tax-free and penalty-free.

If you want to dig into the tax code with a financial advisor then I’d recommend this outstanding detailed post from CFP Michael Kitces. Read the section titled “5-Year Rule For Designated Roth Accounts Under A 401(k) Or Other Employer Retirement Plan” at:
https://www.kitces.com/blog/understanding-the-two-5-year-rules-for-roth-ira-contributions-and-conversions/

If you’re one of many servicemembers who have combat zone tax-exempt pay in their Roth TSP, then check with your Roth IRA custodian to see how they’ll handle the tax-free portion. Many of them will not track the basis of that portion of the contributions in a Roth IRA, and a few of them won’t even accept tax-free contributions.

Great question, Godwin! When the TSP’s higher contribution limits kick in, there’s still a limit on Roth TSP contributions. Here’s the information from the table on the TSP website:
https://www.tsp.gov/PlanParticipation/EligibilityAndContributions/contributionLimits.html
“If you are a member of the uniformed services, you should know that Roth contributions are subject to the elective deferral limit ($18,500 for 2018) even if they are contributed from tax-exempt pay. If you want to contribute tax-exempt pay toward the annual additions limit, you will have to elect traditional contributions for any amount over the elective deferral limit.”

As long as you’re below $18,500 in the Roth TSP, you can continue to contribute to the traditional TSP until the end of the calendar year and up to the total annual additions limit ($55,000 in 2018). If you’ve exceeded $18,500 in the Roth TSP, however, then the TSP’s system computers lock you out of further contributions.

Beyond the annual additions limit, you’re also eligible for catch-up contributions:
“The maximum amount of catch-up contributions that can be contributed in a given year by participants age 50 and older. It is separate from the elective deferral and annual addition limit imposed on regular employee contributions.”

Janet, this post is intended for members of the military’s Reserve and National Guard who are also federal civil-service employees. They can earn a pension in both the military and the federal civil service.

If your spouse simply left the military and has no intention of joining the Reserve or National Guard (or returning to active duty with another service), then he can’t qualify for a military pension. However if he joins the federal civil service (and possibly some state civil services) then he could use his military time to buy his military service credit deposit from the civil-service retirement system.

Once he’s joined the federal civil service then he can learn more about the military service credit deposit from former civil-service employee (and submarine veteran) Eddie Wills:
http://gubmints.com/2013/03/26/gubmints-comprehensive-military-service-credit-deposit-guide/

Thanks, MK, I hope to see everyone there!

Of course they could also make the thousand-mile trek from Florida to Little Rock for the 7-10 September CampFI South, but I’ll write a separate post about that.

You’re welcome, Keegan, I’m trying to give people permission to think about their exit strategy!

I’ll e-mail you my contact info, and if you’re inport Pearl Harbor we can just get together for a cup of coffee near you.

If you’re looking into the Health Services Collegiate Program then I’d also recommend the website Vet2MD.ORG.

Tim, it’s hard to tell whether your appeal is still working through the system or whether it’s stuck in a backlog.

You could discuss it with a local Veteran Service Officer from your VA clinic, the American Legion, the Disabled American Veterans, the VFW, or even MOAA. They have the resources to look up your appeal and figure out the next step.

You could also post your questions to PEBForum.com. It was founded by a JAG and has hundreds of vets whose disability claims have also gone through the appeals process. They might have more suggestions on how to track it down and speed it up.

Here are two things to keep in mind between our different situations, Rob:
1. Insurance laws vary by state, and your state may allow USAA to charge a premium for a teen driver– even an occasional one.
2. In our household we had three drivers for two cars, and our daughter did not own her own vehicle. USAA chose to consider her an occasional driver, and it’s probably because Hawaii state law allowed this.

I’d encourage everyone– especially active-duty military– to check their state’s laws and USAA’s premiums whenever they’re in a new state.

Good question, Henry, I’m sorry to say that you could have started your Reserve pension over a year ago. The good news is that you can have it paid retroactively to your 60th birthday.

The first step is applying for your pension through your military service:
http://www.moaa.org/Content/Benefits-and-Discounts/Pay-and-Benefits/Military-Pay-Issues/Guard/Reserve-Retirement-Benefits.aspx
You’ll need your Notice Of Eligibility for your pension, your point count, and your approved retirement request.

You can apply through the service’s websites (or by a phone call). If you’re near a Reserve Center or a military base then you could stop by their personnel center to start the process.

Once you have your retirement package from your service you can apply to the Defense Finance and Accounting Service to start the deposits. In your case they should also pay you for the months you’ve already missed back to your 60th birthday.
https://www.dfas.mil/retiredmilitary/apply/how-to-apply.html

You can calculate your retirement pay using the information in this post and your point count. (DFAS will also do this calculation for you.) You’re a Final Pay retiree because your Date of Initial Entry into Military Service was before 8 September 1980. Your pension will be based on the 2017 pay table (the year you turned age 60) at the longevity of your rank as though you’d been on active duty all the way up to 2017. (It’ll probably be a column like “>30”.) Because your pension system is “Final Pay”, you do not have to worry about High Three.

By the way you’re also eligible to apply for Tricare health insurance, either Tricare Select or Tricare Prime:
https://tricare.mil/

Thanks, WSPP, VA benefit appeals are a frequent problem. I hope you’re also able to tap into the healthcare that you need to cope with your symptoms.

First, I’d recommend talking with a Veteran Service Officer from the Disable American Veterans, the American Legion, VFW, or even MOAA. They might uncover additional information in your medical, dental, or service records– or spot errors in the VA’s claim file.

Next, I’d post more details about your claim at the PEBForum.com. It was founded by a JAG and it’s filled with hundreds of military vets who have had VA problems similar to yours. They’ll be able to tell you more ways to approach the solution.

Casey, as Penny says, your service will almost certainly approve your retirement request at your enlisted rank. Be aware that your pension will be calculated at your last enlisted rank before commissioning.

The processing time varies by service. You’d have to check that with your personnel branch.

When the sum of your years of active duty and your years of retirement reach 30 years, you’ll be automatically advanced to the officer rank which you held at retirement, and your pension will be recalculated (going forward) at the pay of your commissioned rank. For example, that federal law for the Air Force is:
https://www.law.cornell.edu/uscode/text/10/8964

Good question, Laura, and you might have a misunderstanding of the sanctuary program.

You’re only able to declare sanctuary when you’ve already been mobilized on active duty and authorized to continue those orders past 18 years of active-duty days. At that point you stay on active duty at the same command and retire (on an active-duty pension) as soon as you reach 20 years.
https://the-military-guide.com/sanctuary-in-the-reserves-only-on-active-duty/

While you’re at your mobilization duty station getting to 20 years, you can apply to be augmented to your military service for an additional tour. That would make you a part of your service’s personnel (not a Reservist or National Guard member) and you’d be eligible for worldwide assignment. You’d fill out a duty preference worksheet and see what your assignment officer could do for you.

However continuing beyond 20 would depend on your service wanting to move you from sanctuary to integrate you with the rest of your service’s active-duty personnel headcount. You’d count against their end strength, and they’d have to need your skills somewhere else after your sanctuary duty. I’ve only seen that happen once.

This is way outside my circle of competence, ThatMom.

If you’re not getting any help from the VA then I’d suggest contacting a Veteran Service Officer from a local chapter of your Disabled American Veterans, or the American Legion, or the VFW, or even MOAA. Their VSO services are free and they’re typically used in filing VA disability claims, but they might be able to help with the Navy Reserve pension as well. They’ll want to review all of the Navy records & paperwork you have for your father, even if it’s only the letter. If you’re not near one of those chapters then you could also contact your state Veteran Services office to meet with one of their staff.

As a long-shot possibility, you could contact Navy BUPERS about his 20-year Notification Of Eligibility letter to see whether you’re able to obtain a set of retirement orders and process the application for the pension:
http://www.public.navy.mil/bupers-npc/career/reservepersonnelmgmt/ReserveRetirements/Pages/default.aspx

If your father is within the low-income limits then he might also be entitled to a VA “Aid and Attendance” pension. (The VA calls it a pension, but it’s actually a stipend.) That’s completely separate from the Navy and DFAS.

Thanks for asking, Rina!

The rough-draft schedule is here:
https://milblogging.com//agenda/
and that’ll update over the next few months.

The only weekend events are on Sunday 23 September– nothing on Saturday. Sunday includes golf in the morning, workshops in the afternoon, and the kickoff dinner that evening. There’s plenty of time for networking and talk story.

I no longer golf but I’ll be at the resort all weekend (and the following week) and I’ll be happy to get together to answer questions!

Mike, your understanding is not quite correct. Since you have less than three years’ time in grade as an O-5, then you’ll have “Major” on your retirement certificate– and your pension will be based on the O-4 row of the pay tables in effect in 2034 (when you turn age 60).

However if you have at least two years as an O-5 when you retire at that 21 years, then you can apply for a waiver from your service to retire with the rank (and the pay tables) of an O-5.

The applicable sections of law are in Title 10 U.S. Code section 1370 paragraphs (3)(A) and (5)(A).
https://www.law.cornell.edu/uscode/text/10/1370

Let me recap:
1. If you apply to “retire awaiting pay” with three years in rank as an O-5, your retirement rank is O-5.

2. If you apply to “retire awaiting pay” with at least two years in rank as an O-5, and a waiver from your service to retire at that rank, then your retirement rank is O-5.

3. If you apply to “retire awaiting pay” with less than two years in rank as an O-5, then your retirement rank is O-4.

Once you’re retired awaiting pay (gray area) then your rank longevity accrues as though you’re on active duty until the day your pension starts, and at the pay tables in effect when your pension starts. At the O-4 and O-5 ranks, for the vast majority of Reserve retirees, this is the maximum pay for those ranks.

In your case, 16 years later in 2034, that would be as an O-4>36. If you had at least two years as an O-5 and were granted the waiver from your service to retire as an O-5, then your column in the pay tables would be O-5>36. In the 2018 pay tables, O-4 pay tops out at >18 and O-5 pay tops out at >22, but Congress and DoD could change the pay tables again (like they did in 2007) to reflect more pay raises beyond those years of service.

When your pension starts (usually at age 60, perhaps a little younger from deployments qualifying for an earlier pension) then DFAS looks back at all your pay tables in effect over the years that you were in uniform and in gray area. They take the highest 36 months of pay and calculate your High Three pay base by averaging those months.

If you retired as an O-4, then in 2034 DFAS would note that you received O-5 pay in 2016-1018. If that O-5 pay in 2016-18 was higher than the pay for an O-4>36 in 2034 then they’d include the O-5 numbers in the high three calculation.

If you retired as an O-5 then in 2034 DFAS would just pick out the highest 36 months of O-5 pay in the pay tables up through 2034. Hopefully military pay continues to rise every year (or at least stay flat) and highest O-5 pay would have occurred during the 36 months of 2031-2034.

Bottom line for O-5s and above: If you’re not going serve for three years in grade, then get the waiver for two years or retire at the lower rank.

Thanks, MERJ!

Eddie and I are both submarine vets, so our shared background offers a balanced perspective on this perpetual debate.

I don’t know whether we’ll change anyone’s minds, but we’ll definitely make sure that prospective homeowners understand their risks.

Great question, Scott.

If you’re already “retired awaiting pay” (gray area) and your commissioning date gave you nine years & two months at the date you started gray area, then you’ll stay an Army Reserve CPT.

When you retire awaiting pay, your longevity continues to accrue as though you were on active duty during the gray area years. Eight months after you retired, you would have reached 10 years of service as an O-3.

Your longevity will continue to accrue until the day you start receiving your pension (probably at age 60, maybe a little earlier for combat deployments after 28 January 2008). When your pension starts then it’ll be from the future pay tables in effect during the year that your pension begins. If you were enlisted for more than four years of active duty (or had more than 1460 points in the enlisted ranks) then you’d use the O-3E pay tables.
https://www.dfas.mil/dam/jcr:ccc8e348-187d-4bff-9e39-b113ad7fa67d/MilPayTable2018_4.pdf

Here’s another little-known feature of the federal law: even if you’d retired from active duty under those conditions starting in 2011, you would have been approved for a waiver to retire with only eight years of commissioned service. That authority expires in September 2018.
https://www.law.cornell.edu/uscode/text/10/3911

Here’s a third little-known federal law: even if you had been disapproved for that waiver, when your total years of military service (active duty, Reserve, and retired awaiting pay) reached 30 years then you would have been advanced to the highest rank held during your time in uniform: Army Reserve captain.
https://www.law.cornell.edu/uscode/text/10/3964

By the time you start your pension you’ll probably meet all three of those situations.

If you want help calculating your actual pension (estimated in today’s dollars) then feel free to let me know more details. You’ll need your point count and your rank at retirement (O-3 or O-3E). You’ll also need to know the dates of any combat deployments after 28 January 2008 (or possibly some national emergencies). Finally, you’ll need to know whether you’re Final Pay (Date of Initial Entry into Military Service before 8 September 1980) or High Three (DIEMS after 7 Sep 80). You can comment here, or use the “Contact me” form on the blog, or e-mail NordsNords at Gmail.

Here’s the post to calculate your pension:
https://the-military-guide.com/reserve-retirement-calculator/

And here’s the post with more details about any combat deployments after 28 January 2008:
https://themilitarywallet.com/national-guard-and-reserve-early-retirement-age/

Thanks for listening, Joe, I enjoyed guesting on Brandon’s podcast!

Congratulations on your commission, and let me know if you have any questions on the posts.

Elizabeth, you’d qualify for a Reserve pension as soon as you had 20 good years (the five good years in the drilling Reserve plus 15 years of active duty). You’d qualify for an active-duty pension if you stayed to 20 years of active duty, or a total of 25 years in uniform.
https://the-military-guide.com/reserve-military-retirement-for-active-duty-veterans-with-previous-reserve-or-national-guard-service/

I’d be good with that too, Troy– I’m still waiting on K-1s before I can finish prepping my return.

Sounds good to me, Peter, and not just around tax time!

Joy, I don’t have the legal knowledge to offer a recommendation on this.

Perhaps your lawyer could talk with a military JAG, or maybe you could have your ex-spouse provide copies of his electronic Retiree Account Statements.

Emy, you’ve asked a good question, but I’m the wrong guy for the active-duty answers. I don’t know enough about the military’s 1970s pension or compensation systems. In general I’d suspect that he is not eligible for any pension benefits.

However he’s certainly eligible to request that the Veterans Administration evaluate his health for a disability rating. If he has any disabilities which have been caused by his military service then he can have the medical exams which could lead to a disability rating and some financial compensation or other benefits. If his income is very low then he may also be eligible for other VA financial assistance.
https://the-military-guide.com/file-veterans-disability-claim-not-just/

You should contact a Veteran Service Officer near you. They’re usually found with a local chapter of the DAV, the American Legion, the VFW, or even MOAA. Their services to you are free, and they know how your spouse’s time in uniform can be compensated with the VA disability rating rules.

I’d also research your state veteran’s benefits.
https://www.military.com/benefits/veteran-state-benefits/state-veterans-benefits-directory.html
It’s not just license plates and discounts at Home Depot but possibly lower property taxes and other state support.

Philip, you’ll need a couple more details when you do your calculation.

As the post says, when you retire awaiting pay then your longevity in your rank will continue to accumulate (just as though you were on active duty) until your pension starts at age 60. E-7 pay tops out in the >26 years column of the pay tables, so if you’re an E-7 retiree then you’ll probably earn the maximum pay in that retirement rank.

You’ll have to calculate your own High Three average of the future pay tables that will be in effect when you reach age 60. If you want to do the calculation in today’s dollars then just take roughly 96% of the latest pay tables for the maximum pay in your retirement rank. (That 96% assumes two years of 2% raises.) If you’re already close to age 60 (or starting your pension early) then you might be able to calculate your High Three average from the current pay tables and assume a 2% pay raise for next year.

Your deployment dates cross over a fiscal year. Your pension will start three months earlier for every 90 days during a fiscal year that you spent deployed to support combat operations in accordance with the 2008 NDAA requirements. You already know that you have 90 days before 30 September 2010, and you probably have another three 90-day periods before the end of the deployment. You’ll also have to check that your orders comply with the deployment requirement to support combat operations. If your orders were written correctly then you’ll be eligible to start your pension at age 59.

You can look at the example calculations I’ve done for David J. and Sophia below and follow the format with your numbers.

Keep in mind that although your pension could start at age 59, Tricare will still only start at age 60. You’ll have to cover your own health insurance all the way to your 60th birthday.

I agree, Peter, flipping is a tough way to make money.

Franchising probably works a lot better for most people… and that’s pretty challenging too.

DB, the criteria is “active duty”. Drill points don’t count because they’re for training, and neither does ADT. However the AFI 36-2131 goes into considerable detail in sections 2.1 and 2.2:
http://dopma-ropma.rand.org/pdf/AFI36-2131.pdf
That’s dated in 2011, and you may have a more current version on an Air Force website.

Once you get past 16 (or 16.5) years of active-duty points, the personnel tracking systems should kick in to notify your chain of command about the procedures to be followed for voluntary orders and for waiving your rights to sanctuary. The only sanctuary declarations I’ve heard of in the last four years have resulted from long-term database errors.

Great questions, Matt, and here’s some more thoughts.

The first benefit of the BRS is the one that everyone overlooks: the possibility that you won’t make it to 20 for reasons beyond your control. It doesn’t matter how good you are. The military could go through another large downsizing. Your specialty could be declared overstaffed or even obsolete. You might already have the skills & performance of an E-8, but a decade from now there might only be one or two E-8 openings per year. (Not even the assignment officers can project a decade of career promotion rates– let alone the rest of us.) You could suffer a career-ending injury or a medical crisis.

Statistically, those enlisted who make it to 10 years have only a 50% chance of staying to retirement.

The BRS offers flexibility (and more money in your TSP) than taking the risk of making it to 20 (or getting nothing). It’s cheap insurance against the risks that you can’t control.

Next, the BRS matching contribution, invested aggressively in your TSP, can grow faster than the amount of High Three pension you’re giving up. Run the BRS calculator with various long-term return assumptions from the TSP’s C, S, and I funds to see how long it takes for the BRS matching contributions to exceed the difference between the pensions. DoD actuaries have made the BRS a revenue-neutral decision, and the longer you live then the more the odds shift in your favor.

Third, the Continuation Pay bonus is a retention contract. All of the services are currently using 2.5x monthly base pay, but in October 2018 those multiples will start to rise as the community managers use them for mid-career retention incentives. You have to sign up for CP before you reach 12 years of service, and it still carries a four-year obligation, but you could wait for two more Octobers before you make a retention decision. If you’re going to stick around to 20 anyway (if you can!) then you might as well invest the CP bonus in your TSP. That will also compound faster than the part of your legacy High Three pension which you’d give up for BRS. Run the BRS calculator with an assumption that you receive 2.5x for CP and see how much more quickly the BRS return exceeds the legacy High Three pension.

To be excruciatingly correct, when you opt in to BRS you’re losing 20% off the legacy High Three pension because the pension multiplier drops from 2.5%/year to 2.0% per year. At 20 years of service your BRS pension drops the same 20%, but it’s 10 percentage points (from 50% to 40%) of the 36-month average of your base pay. When you add in the BRS matching contributions of 5% of your base pay (not a 36-month average but just your base pay at various ranks from now until 20) then it’s not a straight 5% equivalent of your pension. Better yet, the BRS matching contributions are compounding in your TSP instead of waiting for you to cliff vest at 20 years.

Both types of military pensions will be adjusted for inflation for the rest of your life (and for your Survivor Benefit Plan, too) but the TSP can be invested in funds which will grow faster than inflation.

Better still, your TSP funds can be passed on to your heirs no matter how short your life might turn out to be. Your survivors will have their own assets, and you could decide that you don’t need to buy as much of the SBP.

Finally, your military pension will be taxed each and every year at the federal level (and possibly at the state & local levels). When your BRS matching contributions are invested in your traditional TSP, they’re only subject to income tax once (at withdrawal). If you’ve converted your traditional TSP to a Roth IRA (after the military) then the funds were taxed once (in the conversion) and never taxed again.

Thanks, Crew Dog, those are great points. And I hate paying full retail on sales fees & commissions, yet the FSBO alternatives are trading money for time & stress.

I hear that, Sallie. The Reserve/Guard retirement system is so complicated that this has been the blog’s highest-ranked post every month for over five years.

The good news is that you didn’t really have a “choice” on Final Pay or High Three. Final Pay is only for those who joined the military before 8 September 1980 (with a Date of Initial Entry into Military Service before then), so you’re most likely on the High Three pension calculation.

As Dave mentions, Combat-Related Special Compensation is different from Concurrent Retirement and Disability Pay. DFAS will choose the higher amount for you when your pension starts.
https://www.dfas.mil/retiredmilitary/disability/comparison.html
Until your pension starts, you’ll continue to receive your VA disability compensation.

Since you’re retired awaiting pay, you’re also eligible to purchase Tricare Reserve Retired health insurance until your Tricare starts at age 60. TRR is not subsidized like Tricare Reserve Select so the TRR premiums are higher. You might do better with employer health insurance or from the ACA health exchange, although you can continue to seek treatment from the VA for conditions that are related to your disability rating.

Even if you’re eligible to start your pension earlier than age 60 (due to combat deployments or national emergencies of at least 90 days in a fiscal year), Tricare starts at age 60.

Thanks for the update, Greg– do you happen to have a link to that reference for others to use? Would that be in the Financial Management Regulation or somewhere else?

I still get the question every few months.

It’s a tough decision, Troy.

When you reach 18 years of service, federal law guarantees that you’ll be allowed to continue on active duty until 20. If you leave active duty for the Reserves or National Guard you’ll still be able to serve up to at least 20 good years, but you may also have a six-year commitment to the unit. (Talk with your Reserve recruiter to verify this.) You’ll also want to know that you have a Reserve/Guard unit near you, and that you can get a drill billet.

If you have more than 16 years of active duty when you transfer to the Reserves or National Guard, then your service’s sanctuary policies will limit the active duty which you can take.
https://the-military-guide.com/sanctuary-in-the-reserves-only-on-active-duty/

You’ll also want to reassess your financial situation. If you’re near financial independence then you have a lot more flexibility. (Your savings/investments only have to cover the gap between leaving active duty and starting your Reserve/Guard pension at age 60.) If you’re still pursuing FI then you’ll have to consider the employment prospects for you and your spouse. A Reserve/Guard career offers more of what you enjoy about the military and less of the not-so-good parts, but you’ll still have to focus on work-life balance.

If you still feel challenged & fulfilled by active duty, then maybe your goal is finding a billet in a location where your family can thrive– while knowing that you’d move back to your current area in a few years. That’s not an easy decision either, and you’ll have to have lots of long discussions with your family.

Thanks, Jan, I appreciate your retirement moving experience!

I appreciate your comment, Rebecca, and I’ve reached out to USAA’s Communications team.

Another option is contacting the Member Relations team through the USAA app/website and a supervisor.

Sophia,

I’m happy to help with those numbers, although I depend on the manual calculation instead of those point charts.

I’m going to assume that you did not deploy to a combat zone after 28 January 2008 for at least 90 days during a fiscal year. If you had, that would entitle you to start your pension three months earlier for each of those 90-day segments. If that might be an issue, though, you can read more about it at this post from my friend (and ANG officer) Ryan Guina:
https://themilitarywallet.com/national-guard-and-reserve-early-retirement-age/

You could wait to start your Reserve pension on 1 January 2019, but it works against you with High Three. It can work with the Final Pay pension system (it’s usually less than a 10-year payback), which is applicable to those who started active duty before 8 September 1980. However High Three averages the final 36 months of pay tables before you start your pension. If you delay the start of that pension while the older base-pay numbers are dropping out of the 36-month average, you could be missing thousands of dollars a month in pension deposits which would take decades to make up.
https://militarypay.defense.gov/Pay/Retirement/reserve/

When you start your Reserve pension in November 2018, the 36 month average uses 11 months from the 2018 pay tables, 12 months from the 2017 tables, 12 months from the 2016 tables, and December 2015. You probably retired awaiting pay with at least three years time in grade as an O-6 (or a waiver down to two years), so your pension is calculated from that rank.

If your Date of Initial Entry into Military Service is 17 March 1985 then (for pay longevity purposes) your DIEMS date puts you as an O-6>30 in March 2015. I happen to know that the pay tables top out for O-6 at 30 years (it’s the same pay for O-6>32) so it’s a little easier to look up the numbers.
https://www.dfas.mil/militarymembers/payentitlements/military-pay-charts.html

Here’s the numbers I’m using:
2018 O-6>32: $11,599.80
2017 O-6>30 and O-6>32: $11,328.00 for both
2016 O-6>30 : $11,094.90
December 2015 O-6>30: $10,952.40

The November 2018 High Three average is:
[(11 x $11,599.80) + (12 x $11,328.00) + (12 x $11,094.90) + $10,952.40] / 36 = $11,322.91

4833 points / 360 x 2.5% x $11,322.91 = $3800/month.
(The Financial Management Regulation requires DFAS to truncate the result to the lower dollar.)
https://www.dfas.mil/retiredmilitary/plan/estimate.html

If you start your pension in January 2019 and there’s a 2.0% pay raise (which seems like a reasonable compromise on the 2.6% proposal), then your High Three average would drop December 2015 and January 2016 while adding December 2018 and January 2019’s 2% pay raise.

The January 2019 High Three average would be:
[($11,599.80 x 1.02) + (12 x $11,599.80) + (12 x $11,328.00) + (11 x $11,094.90) ] / 36 = $11,361.36
and your new pension amount would be $3813/month. However you lost the entire month of December ($3800) and some days in November. Making up >$3800 at a higher pension of $13/month would take over 24 years. (It’d be an additional $126.67/day or 9.75 months per day for whatever you lost from your November birth date). Maybe you’d win that bet (it’d motivate me!) but I’m not sure it’s worth the payoff.

Regardless of when you decide to start your pension, you can sign up for Tricare Prime or Tricare Select on your 60th birthday.

Chief, the amount of the DoD BRS TSP contribution for each month is determined by the amount of base pay which is contributed by the servicemember that month. It’s 5% of a month’s base pay for active duty because they’re on duty all month long and they contributed (at least) 5% of their base pay. For a Reserve/Guard servicemember, it’s 5% of the amount of base pay earned during that time period, assuming the Reserve/Guard member contributes at least 5% of the amount of base pay they earned.

If the only military duty performed by a Reservist that month is the weekend drill, and they contribute at least 5% of that drill weekend’s base pay to the BRS, then the DoD BRS match would be 5% of the base pay earned during the drill weekend– not 5% of an entire month of base pay.

As you said, it’s set by the base pay for both Reserve/Guard and active-duty servicemembers. The active-duty members worked all month. The Reserve/Guard members worked for a drill weekend.

If the Reserve/Guard members were on active-duty orders of at least 30 days (and contributed at least 5% of their base pay to the TSP) then their DoD BRS TSP contribution would also be 5% of a month of base pay– the same amount of money the DoD BRS contributed that month to an active-duty servicemember’s TSP account.

However you can still contribute up to $18,500 of your Reserve pay to your TSP every year, and the DoD BRS match is not included in that $18,500 elective deferral limit.

DFAS’ MyPay software will allow up to 92% of all pay (specialty & bonus as well as base pay) to be contributed to the traditional TSP. (7.45% is reserved to pay FICA.) The various DFAS pay systems will allow about 60%-65% of all pay to be contributed to the Roth TSP. (Again the rest of the money is supposed to be set aside for tax withholding and FICA.) If I remember correctly, MyPay is set at 60% and Marine Online is set at 65%.

When you do a drill weekend (four drills) as an E-7>12, that’s $558.24.
https://www.dfas.mil/dam/jcr:4a30221a-c554-4f01-b9f4-9e22378aa0ef/MilPayTable2018_2.pdf
If you contribute at least 5% of that to your TSP then the DoD BRS contribution will be 5% of $558.24 or $27.91. Over a year of 10 drill weekends that adds up to $279.10. If you do two weeks of AT (14 days of pay or 14 drills) then the BRS contribution is $139.56 x 14 x 5% = $97.69. The entire year’s DoD BRS contribution is $376.79. Over eight years that would be roughly $3200 (from DoD) because you’d continue to accrue seniority and receive annual pay raises.

Meanwhile those 10 drill weekends and 14 days of AT earned 54 drills or 54 x $139.56 = $7536.24. You could contribute 92% of that to the traditional TSP ($6933.34) or 60% to the Roth TSP ($4521.74). Over eight years your contributions would add up and the entire account would compound in the TSP’s investment funds.

For a Reserve/Guard member to contribute $18,500 to their traditional TSP account, they’d have to gross at least $18,500 / 92% = $20,108.70. For an E-7>12 earning $139.56 base pay per drill that’d be 144 drills– 10 drill weekends and 104 days of active-duty orders, or 12 drill weekends and 96 days of active duty.

You can check your TSP balance in your TSP account (both traditional and Roth TSP). You can check your percentage contribution settings in MyPay (MOL for Marines, Direct Access for USCG and NOAA). Each month’s LES will also have fields reflecting the DoD BRS 1% agency automatic contribution, the DoD BRS 4% agency match.

The TSP only accepts contributions from federal government pay (federal civil service and military). You can’t contribute civilian corporate pay directly to the TSP, although your employer might have a civilian 401(k) plan. (The TSP is based on the same Section 401(k) of the tax code.) You could also contribute self-employment income to similar retirement accounts like a Solo 401(k). The DoD training materials don’t include this information because it’s outside of the scope of the BRS and the TSP programs.

However the TSP website mentions that you can roll a 401(k) account into the TSP (https://www.tsp.gov/PDF/formspubs/high14d.pdf). You can even roll a traditional IRA into the traditional TSP.

As for the quality of the explanations on the government websites, I can forward your (anonymous) feedback to the DoD BRS office for them to clarify the Reserve/Guard portions of the curriculum.

Good points, Peter!

I still get a lot of unhappy e-mails from Norfolk-area homeowners who are long-distance landlords.

Thanks, Rich, and I appreciate the Grant Cardone advice!

It’s a tough decision, Michael, but when one spouse retires from active duty (and you’re financially independent) then the other spouse has more choices.

The Reserve difference is just like any other community: the availability of billets and the promotion opportunity. Assuming she’s still feeling challenged & fulfilled (and especially if active duty has the higher probability of promotion & retention) then she’d stay with active duty. If she’s ready to go Reserve/Guard now, then some billets are more scarce at the senior ranks or might even require competitive selection. Not being in a pay billet can make it difficult to get enough points to meet the requirements for a good year, and correspondence courses are no longer an option for earning points. It might make more sense to get into a Reserve billet now so that she’s more competitive for other Reserve billets later.

If she goes to the Reserves at 14 years then there’s the possibility of being mobilized for a deployment during the next six years. If she goes to the Reserves at 17 years that would be less likely (but still possible).

You’d have to talk with other Reservists in her community (and with a Reserve recruiter) to parse the billets at each year (and at each prospective rank).

I don’t think that the discussion is selfish– it just reflects that she has more options. Challenge and fulfillment are the entering arguments. There’s certainly no mathematical reason to raise your net worth from “enough” to “way more than enough”, but the extra margin of financial security (and behavioral financial psychology) might help her sleep better at night. How does she want to balance career, family, and quality of life? How will she feel 20 years from now when she looks back on her decision?

For those readers with very long memories, there is no longer any requirement to finish a 20-year Reserve career with 6-8 years in a Reserve unit.
https://www.law.cornell.edu/uscode/text/10/12731

Patterson James, you might be referring to these clauses in the FERS Handbook:
“On account of a service-connected disability incurred in combat with an enemy of the United States; or

On account of a service-connected disability caused by an instrumentality of war and incurred in the line of duty during a period of war…”

This is a good time to consult with your OPM rep and talk to a JAG. These sections of the Handbook may be referring to a disability retirement (Chapter 61 of Title 10 U.S. Code) which is different from an active-duty retirement and also different from receiving compensation for a VA disability rating.

In other words I’m not sure about the civil service interpretation of the word “disability” in the FERS handbook, and I strongly recommend checking with a lawyer.

Good points, Peter, and I think the Reserves and active-duty counterparts are much better integrated since 9/11.

I hear you on the senior ranks in the Navy Volunteer Training Unit for all the wrong reasons. Many many senior enlisted and senior officer Reserve/National Guard servicemembers think that they have to continue drilling for the longevity raises. As you know, federal law guarantees that Reserves/Guard who “retire awaiting pay” will have their longevity continue to accrue (just as if they were on active duty) up to the start of their pension.

Once those O-5s/O-6s reach time in grade (three years by law, two years with a waiver) they can apply to retire awaiting pay and they don’t have to drill for the longevity.

Sean, that’s a very good question and the answer is outside my circle of competence. You need to consult with a JAG (or a civilian lawyer) who understands OPM regulations. You could also e-mail Eddie at GubMints.com (http://gubmints.com/contact/) to see if he’s heard the question before.

Of course you can receive two federal pensions. You’ve earned both of them. The question is whether you can continue to receive the benefit of the military service credit deposit in your federal pension without having to waive a portion of your military pension.

I see three possibilities:
1. OPM regulations give you the credit for the first 10.5 years (because you were entitled to it at the time) and you elect not to take the credit for the latter 9.5 years (because you’d have to waive your military pension). You’d still apply for your additional FERS credit for annual leave:
http://gubmints.com/2013/04/15/military-service-credit-deposit-retired-from-active-duty/
You’d retire to both pensions. It might be perfectly legal under OPM regs, although it’s certainly rare. The question is whether OPM actually has any regs to address this situation.

2. OPM regulations determine that you’re no longer eligible to benefit from your military service credit deposit for the first 10.5 years and they return your money. You’d still apply for whatever FERS credit you can get for annual leave (the same post linked in #1).
You’d retire to both pensions, although your FERS pension is smaller because you were no longer able to use the military service credit deposit.

3. OPM regulations determine that you’re now going to have to waive a portion of your military pension in order to keep the military service credit deposit from the first 10.5 years. You’d have to negotiate a solution, because I think that an active-duty pension now is worth more than buying a larger FERS pension later.
You’d retire to both pensions, although your military pension is smaller because you had to waive a portion of it.

You might possibly find some way to apply for a waiver to enable #1.

Again, please consult Eddie and a lawyer who understands OPM FERS regulations with military service.

Thanks, FIndependentOne!

Mike made a good point about those who have been involuntarily separated.

Glad to help. Please let us know how it goes.

Thanks, Peter.

“You will know when it’s time to go.”

Thanks, Military Dollar!

The Reserve/Guard pension system is probably one of the world’s most complicated. I regularly have to quote the federal law and the CFPs from the military-association websites.

Gwendolyn, I’m very confused by the facts you’ve stated.

If you have an ID card stating that you’re a retired Army Reserve veteran then yes, you’re presumably awaiting a pension.

If you have 14 years of active duty and four good years in the Reserve then you’d have a total of 18 good years. When your Form 249 point count shows 19 good years, though, it means that you have a total of 19 good years.

A typical Reserve/National Guard retirement is based on reaching at least 20 good years, regardless of the the point count or the mix of active/Reserve years. However if you’ve indeed been medically retired then you have a disability retirement, which is a different section of federal law. It’s also based on your Reserve medical disability rating and does not require 20 good years.

Here’s a couple of options:
– Check your retirement letters from the Army Reserve and Army HRC and let me know more details. The first question is whether you’re “retired awaiting pay”, or whether you’ve been given a disability retirement. (It’s also possible that the Army Reserve has given you a “separation” or “discharge” type of retirement, but those are very rare.) You could comment here or e-mail NordsNords at Gmail.
– Post your questions at the PEBForum.com. It’s founded by a JAG and has hundreds of disabled veterans who’ve been through the medical evaluation board process. They can walk you through all of the issues of both your medical disability retirement and your VA disability compensation.

Thanks, Queue, I hope your accounts are updated (or “backdated”) on Monday 5 February!

Thank you, Vikyat. I hope it keeps spreading.

As others have mentioned, Austin, I think we’re using different words for the same concepts. It looks like DFAS and the TSP are giving early-opt-in BRS members their January DoD match, and another week will produce more evidence.

First, military pay (and pensions) are in arrears. We have to stick around for an entire month before we get the full pay (mid-month pay is just an advance) and an LES. People who opted in to BRS in early January are getting the match at the end of January, and it’s showing up in their LES. DFAS will probably deposit the DoD match to TSPs around 2 February, and we’ll be able to check that on TSP account activity. The 2018 end-of-year match (deposited on 2 January 2019) will probably show up in 2018 summaries and tax forms.

Second, I think the different services are showing the DFAS transactions at different times. There shouldn’t be a cutoff between an Air Force servicemember who signed up at 6 AM EST 1 Jan and an Army officer who signed up six hours later, despite the lack of LES evidence. Most of the services process their payrolls during the second half of the month (~20th) so I’d opt in as soon as possible.

Thanks for the question, NLDekker, but the whole point of the sentence (in the intro to the post) is that most of the Reserve calculators aren’t accurate. (Even when they’re available. *) This post goes into all the details necessary to determine an accurate estimate, and (more importantly) to understand how the rules affect your pension.

[* I think you’re referring to the DoD calculators at https://militarypay.defense.gov/Calculators/ . We at The-Military-Guide are never going to try to fix that problem. You might find a service-specific calculator behind a CAC login, at a Reserve center, or at a Guard armory– but of course a lot of Reserve/Guard servicemembers don’t have CACs and might not have convenient base access. Yet everyone can do a manual calculation.]

Good retirement calculators are hard to create. (I share your frustration. I’ve been using them for over 30 years.) Accurate Reserve/Guard retirement calculators are even more difficult because of the incredibly varied and highly individual career parameters. That’s why this post shows you how to make sure that your estimate is accurate.

This has been the blog’s most popular post nearly every day for almost six years, and it’s because the manual method works better than any existing calculator.

If you want help verifying your numbers then feel free to comment here, use the “Contact me” form, or e-mail NordsNords at Gmail.

Gwen, I’ve just sent you an additional e-mail from NordsNords at Gmail. You might have to look for it in some other folder.

That’s certainly an issue, Gwen. I can believe that PERS-9 has made a horrible mistake, but it’s very unlikely that they missed the officer going over 16 years in their tracking system.

Let me check some numbers with you.

First, sanctuary has to be declared while the servicemember is still on their active-duty orders. They’ve met that requirement.

Next, the 18-year threshold is based on active-duty days and not drills. In other words, it’s not just 18 years of points but rather 18 years of active-duty points. The sanctuary point count subtracts out drills and other points which did not qualify as active duty.

Finally they’d need to check their active-duty orders and make sure that they have not signed a waiver of their sanctuary rights. This frequently happens with voluntary mobilizations but the significance is not always appreciated by the servicemembers.

Unless those requirements are met, then the Reserve officer is not in sanctuary. They’re someone who has over 18 years of points (>6480 = 18 x 360), but not enough active-duty points for sanctuary. There are a handful of those servicemembers in the Reserves and National Guard, and many of them have well over 7500 points. I’ve met most of them through the blog, many via e-mail after reading this post.

When the updated (corrected) point count is submitted to the Reserve personnel branch, if the officer is over 18 years of active-duty points then all sorts of alarms will go off. If your review indicates that they may have reached sanctuary then the officer should immediately fill out their sanctuary declaration and send it to BUPERS.

If the updated point count has over 16 years of active duty then they’ll be tracked in the PERS-9 system. Further active-duty orders will be restricted to make sure they either demobilize short of 18 years or have signed a waiver of sanctuary.

Once someone declares sanctuary, they’re moved from the Reserves or Guard to their active-duty service. They’re given a new set of orders to take them to 20 years (for their active-duty pension) but no further. They could be eligible for worldwide assignment but they’re usually left at the command where they declared sanctuary (due to their short time remaining on active duty). On the other hand they’re certainly able to deploy with their active-duty command (or on temporary duty).

The active-duty officer could request a conversion to FTS (or any other community for which they’re qualified) but selection is up to the other community. The decision is probably based on their potential for long-term service in the new community, and that’s unlikely if they’re retiring at 20.

Thanks, Peter, that’s a great long-term perspective!

Smitty, I’m not sure what “a Guard/Reserve junkie” means. Please let me know if that’s a specific term or program, or whether it’s your description of someone who continues drilling (and doing active duty) even after they’re eligible to retire awaiting pay for a Reserve/Guard pension.

If a Guard/Reserve member has enough days of active duty to reach 18 years of active-duty service for an active-duty pension, then they meet one of the requirements for sanctuary. However to receive an active-duty pension they have to be actually on active duty at the time they reach 18 years, and they have to continue to serve until 20 years of active duty. The program is also heavily monitored by the services to make sure that they know who’s approaching that 18-year tripwire.
https://the-military-guide.com/sanctuary-in-the-reserves-only-on-active-duty/

The short answer to your question is “Generally not.”

That’s an interesting question, Michele, because Tricare’s website doesn’t show an expiration date like “3 January” or “the first month after dropping out”. However the young adult loses their Tricare eligibility the minute that they stop being a full-time college student. (https://tricare.mil/LifeEvents/College/Graduating) For your question that would presumably be when they formally withdraw from the college. It could also be the first date that they stop paying their fees or don’t show up for attendance.

A young adult (dependent child) is dropped from the DEERS database on their 21st birthday– unless the sponsor provides a “letter of attendance” from the college to verify enrollment (“full-time in an accredited college in pursuit of an Associate’s Degree or higher”, https://tricare.mil/Plans/Eligibility/Children). This DEERS drop happens even if the young adult is a full-time student taking 22 credit hours on a ROTC scholarship. Let’s not get into how I know this.

The next tripwire would be college graduation or their 23rd birthday (whichever happens first), when they age out of Tricare for college students and have to purchase their own health insurance. (https://tricare.mil/Plans/Eligibility/Children)

If a young adult drops out of college between those two birthdays, they’ll still have to have an updated address in DEERS (https://tricare.mil/LifeEvents/College/HealthCarePlans). Tricare will only have a reason to formally verify their attendance if they seek medical care. And, of course, if they claim medical benefits when they’re not eligible for that insurance policy then it’s considered fraud. Tricare would probably pay the claim but then check attendance letters and mailing addresses and start asking questions.

The answer to your question: when your young adult reaches age 21, they have to be a full-time college student to retain their Tricare eligibility. If they decide that they’re no longer a college student or if the college drops them (whichever happens first), then they’re no longer eligible for Tricare health insurance.

Good question, Phil, and a very frequent one.

This post explains all of the ways to tap IRAs and TSPs before age 59.5. All of those methods are penalty-free, and most of them are free of taxes.
https://the-military-guide.com/early-withdrawals-from-your-tsp-and-ira-after-the-military/

A number of readers have retired on their military pensions, although they prefer financial independence to caviar & champagne. FI is based on saving up at least 25x your projected net expenses, which is the tripwire for the 4% Safe Withdrawal Rate. That can be reached within 20 years (even without a pension) by a high savings rate of at least 40% and an asset allocation high in equities. If a servicemember is among the 1 out of 6 who make to a pension then their FI portfolio survival is amply protected by an inflation-fighting lifetime annuity and cheap healthcare.

Warner, the “oft-cited less than 20%” number comes from the Defense Manpower Data Center and has also been backed up by RAND studies. I’ve pulled those details from the DoD BRS office and from the RAND database. A number of us military personal-finance bloggers have asked for a breakdown by rank, service, & specialties, and we may have to put in Freedom Of Information Act to get it. In the meantime there’s the thrill of wandering around the RAND archives for hours searching for the same info.

One of those RAND numbers is an estimate that officers have a much higher retirement probability of nearly 49%. That number is spread across all the services, and I suspect it’s lower for infantry than aviation. If you have data showing that Army officer exit points are extremely bimodal then I’d appreciate a link to whatever is publicly available.

Whether the retirement odds are the roll of a die or a coin flip, there are still risks of not reaching 20 years due to factors outside of our control. I’ve personally experienced it, my spouse personally experienced it in her active-duty career, and I’ve seen similar stories from many readers. This is why so many servicemembers (and their families) requested the BRS.

You describe the risks in terms of houses and college educations. Others see the risks in terms of life energy, health, and family harmony. All of those perspectives are rooted in behavioral financial psychology (not so much in math or logic), and that complicates apples-to-apples comparisons.

I’ve moderated a comment which could be interpreted as an ad hominem response. You’re also welcome to send over a guest post presenting your side of the debate. I’m at NordsNords at Gmail.

Thanks for pointing that out, Randy! You’re right, and it just makes the retirement date even more complicated (in a good way). Ryan’s linked post at TheMilitaryWallet explains all the changes since 2008.

Thank you, Julie. I completely understand the “living in the present” part.

Peter, I think you’re also describing the financial counseling available at military bases and the lifetime employment for personal-finance bloggers.

Another way to look at the question would be where civilian corporate employees get their professional advice and financial counseling. I doubt that most companies do more than offering a video about their 401(k) benefits. Maybe DoD’s financial-responsibility counseling to its military servicemembers, as rudimentary and flawed as it may be, is better than most corporate programs.

As SITM says, absolutely. You’re still contributing $18,500/year but DoD is kicking in another $2000 of free money that does not count against this lower limit.

When you’re in a situation for the annual addition limit (combat zone or direct support), then the math gets more complicated. However several active-duty military personal-finance bloggers are already doing this during their deployments, and I know several more readers who are working through it. When you approach a deployment, contact us to go through the details and make it work for you.

Thank you very much, Eva!

Financial independence has completely changed the culture during the last couple generations. That’s a very good thing.

Thanks, Mel, I appreciate your thoughts.

If there’s anything good about my father’s finances, it’s that we had over six years to organize them after he entered the care facility.

You know that we have a “Death Folder” in our family too.

That’s partially correct, Phil. If you wanted to maximize the 2017 TSP contribution of $18,000 then you’d need to figure out the percentage of $1500/month in base pay. (Because $1500/month x 12 months = $18K.) In 2018, with a TSP contribution limit of $18,500, it’d need to be $1541.67/month.

The good news is that $1541.67/month is far more than 5%/month for everyone. (Even for an admiral or general it’s still nearly 10%.) Every servicemember putting in at least 5% of their base pay will still maximize their BRS match from DoD without going over the contribution limit. (The matching contributions do not count toward the $18,500 annual limit.) However a servicemember putting a re-enlistment bonus, an annual incentive bonus, or a Continuation Pay amount in their TSP would have to make sure that they leave enough room for a full year of contributions in order to earn a full year of DoD matching contributions.

And yes, that contribution percentage needs to be checked every year to make sure that the servicemember is going to reach the limit. The good news is that if the member goes over the limit then the TSP will accept part of the contribution (up to the limit) and then kick back the rest to DFAS. We’ve verified this several times through personal experience with other milbloggers in various services.

The reason that the TSP contributions have been changed to percentages (instead of fixed dollars) is to allow enough remaining income to pay federal & state income taxes. Traditional TSP contributions are limited to 92% (the other 7.45% goes to FICA) and Roth TSP contributions are limited to about 60%-65% (varies by service) to allow for regular income taxes (because Roth TSP contributions are made before taxes).

Another reason that the TSP contributions are in percentages is to make it easier for servicemembers to “set and forget”. Even if they get a pay raise, a longevity raise, or a promotion then they’ll still contribute the same percentage (yet a higher dollar amount) to the TSP. Sadly, many TSP account owners have never changed their contribution percentages from the day they signed up.

I understand the access problem of being at a FOB. (During my submarine sea duty I would be locked out of communicating for up to 90 days at a time.) On the FOB, however, this is a situation requiring the command to send message traffic or an e-mail to a finance office to have them take care of the servicemember. It’s not a problem with the TSP or the SDP– it’s a problem with the leadership.

Thanks, SITM, exactly.

As for the rest of your comments, Peter, I don’t think that future servicemembers’ financial behavior can get much worse than that of todays’ servicemembers. At least those new young adults will *have* a TSP account and some actual contributions. Today’s hope of cliff-vesting at 20 is not a plan.

You’re welcome, Matt!

First, you should read Rich’s blog posts about his real estate. Next you should read all of Bigger Pockets’ free material (and maybe buy a book or two). I know the founders well and they have one of the nation’s largest networks of real estate investors.

It’s not just the time and the work (and the hassle). How well will your roommates take care of your place? How about total strangers after you move on to the next duty station? It’s also the risk. Will you be adequately compensated for the money you invest, and could you have achieved a higher return somewhere else? Or could you at least achieve the same return with less risk?

At this point in your career, you don’t have a lot of time. However you have a relatively high income and you can easily contribute more to the Roth Thrift Savings Plan. Pay off your consumer debts. Try to save at least 15% in the Roth TSP (in the L2050 fund or more aggressively in the C, S, & I funds). Continue to maximize your Roth IRA contributions. Get 99% of the market’s return (with diversification) and about 1% of the effort. Live with roommates and save your excess housing allowance (in a money market or CDs) for the first down payment on your first property.

Now spend your time getting qualified. O-1s don’t have a lot of time (or qualifications) and you’ll earn far more from practicing your craft than from managing real estate on the side. Choose your investing asset allocation by deciding how much you’ll invest in passively-managed index funds and how much you’ll invest in real estate. Learn more about real estate while you’re getting qualified, but don’t jump in until you finish your military training.

By the time you’re qualified you’ll be much better at picking out distressed & discounted rental properties and analyzing their cash flow. That’s the real “head start”.

Any time you find a big fat return from an asset, invert the question and find the asset’s hidden risks. Make sure the price you pay accounts for the risk you’re taking on.

Thanks, MM!

Great question, Donald.

The C&P doctor works from a VA website that’s supposed to contain the relevant documents. However there’s no guarantee that the VA’s doctor website has everything, and a 781a could be absent from the documentation displayed for the doctor.

You should take copies of the 781a, the supporting statements, and your Disability Benefits Questionnaires to the C&P exam and offer to give the doctor their own copy. Ideally the doctor would review them all and factor them into their report. The doctor’s report back to the VA might even include the copies you gave them.

The doctor’s report goes to the VA’s rater, who actually determines the disability rating for that issue. The rater would ideally have your entire claims file, including the 781a and attached statements. There’s no way for you to contact the rater (or provide additional copies) so you have to initially trust that they have everything they need to do their job. Once you receive your VA disability rating you can request a copy of your full claims file (everything the VA used to determine your rating) and check that the documents were in the file.

Congratulations on putting the money to good use, Clayton, but there are two issues with your logic:
1. It’s totally unreasonable to ask someone at 15 years of service to make assumptions about staying for another 5-15 years, let alone getting promoted to the top of their rank structure. Good work, and I know you worked hard for it, but I doubt anyone (least of all you) saw that coming at 15.

2. When you compare the cost of those years of a percentage point of COLAs that you gave up in exchange for $30K, your home is a very expensive purchase. You’re going to be paying that “interest rate” for the rest of your life.

It’s a very good thing that REDUX will end with 2017.

I’m sorry to read about the problem, Billy.

The best approach is for the VSO to keep asking the VA to confirm receipt of the documents. (If you and your VSO aren’t getting along then I’d suggest trying a new VSO.) In addition, when you go to your C&P exams, take along copies of whatever records you have for the doctor. They can include those records in their report to the VA.

I’ve read that if the VA receives an inquiry from a member of Congress, then the VA ceases working on the claim until the Congressional inquiry receives a satisfactory response. That may or may not be correct, but I’d try to work through the VSO and the C&P doctor before using a Congressional inquiry.

Thanks for your comment, Steve, that’s an interesting change. Do you happen to have a reference for being required to pay 360 months of RCSBP premiums if you had the coverage during retired awaiting pay and wanted to withdraw in the 25-36 month window after starting your pension?

Dave, you’ve asked a very logical question, but there’s a different rulebook.

The military High Three pension averages the highest 36 months of the base pay scale, not the average of the amount of the pay you’ve earned. It just goes straight by the pay tables in effect for your type of pension, not by your total earnings. But you can see how this question rises from the military’s plagiarizing of the civilian high-three pension system.

When you “retire awaiting pay” from the Reserves and National Guard, that base pay scale also includes the pay tables for the years up until your pension starts *and* at the longevity for your rank at the age your pension starts. In other words the Reserve/Guard pension starts at the pay tables in effect at the future date, just as if you’d been on active duty the entire time you were waiting for that first pension deposit. If you turn age 60 in 2026 (or three months earlier for the right mobilizations of at least 90 days), then your High Three pension will look at the highest pay scales during the years of 2023 – 2026 as well as all of the pay scales back until the year you joined the military. It’ll also be at the longevity for your rank, which (if you joined at age 18 and by the time you turn age 60) could be 42 years. For the vast majority of Reserve/Guard retirements, the pay scale is at the maximum longevity pay of that rank.

If you go on a year of active duty then you’ll rack up 365 points (another 2.53% for your pension) and you’ll also have a year of additional pay, savings/investments, and active-duty benefits. But the only numbers that count for your High Three Reserve/Guard pension are the numbers on the pay tables.

Thanks, MrInTheWheat, at this point I’m barely attracting any attention on the issue.

I’d love to know a better way to show people how compound interest works for them!

Thanks, Peter, those are all good points.

Consolidation, convenience, trust– and understanding that servicemembers (& families) might be calling from anywhere in the world at any time of day.

Good questions, Tom!

“Retired awaiting pay” is the status chosen by almost all retiring Reserve/Guard servicemembers. It means that they’re retired from Reserve/Guard duties (and waiting for the pension to start) yet have agreed to remain eligible for a total mobilization (which last occurred in WWII). In exchange for retired awaiting pay (instead of resigning or discharge) they’ll continue to accrue longevity in the pay tables as if they were on active duty, and their pension will be based on the pay tables in effect when they start drawing it.

You’ll be in retired awaiting pay status, and then a few months before turning 58 years old you should receive the paperwork to start your pension deposits.

The penalties for early withdrawal of 401(k) accounts (like the TSP) still apply. However there are several ways to tap your retirement accounts (penalty-free and possibly even tax-free) before age 59.5. This post has more details:
https://the-military-guide.com/early-withdrawals-from-your-tsp-and-ira-after-the-military/

Thanks, Mark, and I agree with your ceremony perspective about honoring (and thanking!) family & friends.

The author of this post is a personal acquaintance, and I know that they preferred not to have their command devote a week (or more) to the planning & execution of a retirement ceremony. In their rank & billet at the time, it would’ve tied up quite a group of people and presented a significant backlog of visitors at the base gate.

Personally, my family & friends didn’t care for the planning & logistics. (My spouse was also active-duty military.) During my attendance at submariner retirement ceremonies I’d seen too many steely-eyed killers of the deep break down at the podium, and I wasn’t going to risk that in my case. Instead, the people with whom I worked the most closely devoted our time to a Friday-afternoon BBQ farewell ceremony, where I had the chance to say thank you personally and in front of our peers. It was way more relaxing, fulfilling, (and fun!) than a formal ceremony.

15 years later, many commands still seem afraid to let a servicemember retire without formal recognition. Maybe it’s because the command “knows better” that the retiree will appreciate the closure, or the command is making a major effort to recognize their contribution. (A few commands want to make sure that there’s no complaints later about not getting a ceremony.) Yet a significant minority of servicemembers tell me that they don’t need the formal recognition, and their families & friends have already been honored & thanked without the command’s traditional ceremony. I hope more servicemembers get their choice, guided by the wisdom and experience of comments like yours.

Thanks for the update, Charles. We’d heard about the appeals but I missed that final announcement.

In case BUPERS changes that link, here’s an excerpt of the text from the FAQ:
1. How did the policy for Midshipman cruise credit for retirement pay change?

In 2009, after a legal review by both Navy Personnel Command and Defense Finance and Accounting Services (DFAS), it was determined that Title 10 U.S.C. § 2107(g) actually prohibits the awarding of any credit for NROTC midshipman time, including summer training cruises for those officers who entered the NROTC Program after the enactment of the 1964 Reserve Officers Training Corps Vitalization Act (ROTCVA).

3. How will I know if I am personally affected?

All personnel affected by this change will receive individual letters from Navy Personnel Command notifying them that their official record has been modified to indicate the correct retirement credit and/or points, as applicable. In addition, DFAS will notify each individual by separate letter of how much their retirement pay will be affected.

4. How much credit is being taken away from my retired pay calculation?

The amount of time deducted from your total active duty creditable service or retirement point credit will be equal to the time you served on active duty for training during midshipman cruise periods. The average time credited was approximately 30 days each summer.

7. What do I need to do to not have to pay the money back? I owe less than $10,000.00.

The Secretary of the Navy has requested, on your behalf, a waiver of indebtedness if less than $10,000.00.

You’re welcome, Fred!

Your math agrees with another post:
https://the-military-guide.com/present-value-estimate-of-a-military-pension/

Thank you!

Thanks, Peter, I’m open-minded about the commune but I’m not sure whether my spouse is interested…

I haven’t stopped writing but most of my output was going toward book manuscripts and reader questions.

Those three key points are straightforward in principle & logic, yet the emotions are a tad more difficult.

BRS is strongly focused on giving more assets to the 85% who don’t make it to a military retirement. Among those who beat the 1-out-of-6 odds and retire, I suspect it’s revenue-neutral for most. It’s more profitable for those who aggressively invest their matching DoD contributions, and it’s almost certainly more profitable for those who have a large continuation pay multiple in their specialty..

Thanks Darren!

I think you’re right about having spouses on board. That’s not a financial problem– it’s a communication problem or even a marital problem.

Your spouse could be showing you exactly where the line needs to be drawn between frugality and deprivation. Frugality is challenging & fulfilling while deprivation is not sustainable. You might have been FIREd sooner but you probably would’ve been unhappy. Especially, as you’ve noted, if your spouse is unhappy.

No need to fear the next recession when you’re improving on the 4% SWR with the techniques of a two-year cash stash and variable spending. (4% SWR computer models are still struggling with that simulation code, but it’s working just fine for the humans.) And I like your idea of being FI from having to work, not necessarily from wanting to work. That makes a great 140-character meme!

Penelope, you can request the waiver and reference the federal law, which should be enough for even Army HRC. Or maybe the Army MILPER message refers to keywords like Title 10 U.S. Code Section 3911:
https://www.law.cornell.edu/uscode/text/10/3911

Here’s the text:
(a) The Secretary of the Army may, upon the officer’s request, retire a regular or reserve commissioned officer of the Army who has at least 20 years of service computed under section 3926 of this title, at least 10 years of which have been active service as a commissioned officer.
(b)
(1) The Secretary of Defense may authorize the Secretary of the Army, during the period specified in paragraph (2), to reduce the requirement under subsection (a) for at least 10 years of active service as a commissioned officer to a period (determined by the Secretary of the Army) of not less than eight years.
(2) The period specified in this paragraph is the period beginning on January 7, 2011, and ending on September 30, 2018.

Note that although you’ll have more than 20 years of service, you’ll reach eight years of commissioned service in August 2018 and the waiver legislation expires in September 2018. The issue will be whether the Army is willing to waive your commissioned service down to eight years, or whether they’re trying to retain officers in your specialty and want you to stick around for a couple more years.

Great point, Ranger Vic– thanks!

I’m glad to read your comment, Steve! You’re the first CSB/REDUX retiree I’ve read about who’s succeeded with it instead of using the money to deal with debt or losing it in a business.

For everyone else reading this post, you won’t be tempted much longer. The CSB program (and its REDUX retirement) will end on 31 December 2017. That applies to everyone in the military now, not just to those who join after 2017. Servicemembers will only be able to sign up for the rest of 2017.

The details of the death of REDUX are in paragraph 10 (at the end) of the implementation guidance document for the Blended Retirement System:
https://militarypay.defense.gov/Portals/3/Documents/BlendedRetirementDocuments/FINAL_BRSImplementationGuidance.pdf?ver=2017-02-27-084532-740

I’ve never heard that rumor before, Frank! You probably have credit for a good year during that time and have not lost any longevity.

You could check it by reviewing your point-count records. If your anniversary date is still based on when you joined the military, then being in the IRR did not change it. If you have credit for a good year during that first year since your anniversary date (after active duty) then the IRR didn’t affect your good year. If you obtained any drill points while you were in the IRR and those are on your point-count record, then they transferred correctly into the system.

If you check more details then we can figure out what else may have happened. Maybe you already had a good year when you left active duty for the IRR. For example, if you leave active duty exactly on your anniversary date (no extensions or stop-loss or other delays) then you enter your first Reserve/Guard year (drilling or IRR) with zero points. However if you stayed on active duty past your anniversary date (longer than exactly three years & zero days) then your days of active duty after that anniversary date would be credited toward your point count in the first year of Reserve/Guard duty.

IRR is still a bad deal if you’re trying to reach 20 good years. All of the services have recently made it very hard to obtain points in the IRR, especially for correspondence courses. In addition if you transfer to the IRR from drill status, even for a single day, then you lose eligibility for Tricare Reserve Select health insurance. You have to be a drilling Reserve/Guard member to maintain TRS coverage.

I’m not sure about badges or conduct awards. All of the services have different rules for those, and I’m not familiar with the details.

Mark, I have an e-mail in to DoD. Our milblogger huddle hasn’t come up with any answers yet. This question is on my tickler list and (as many of my XOs used to tell me) it will be tracked to completion.

However there’s speculation about the calculator’s assumptions and their cumulative effect. (https://militarypay.defense.gov/Blended-Retirement/BRS-Comparison-Calculator-Technical-Reference/) You may have already seen this, but for the rest of the readers here’s a few of the non-intuitive ones:
1. Basic Pay Table and Growth Rates
As of December 2016, the Board of Actuaries’ annual across-the-board basic pay assumption is 3.25% per year. [Note: this assumption excludes promotion and longevity increases]

5. Thrift Savings Plan (TSP) Elective Deferral
The calculator assumes the annual cap is increased, on average, $500 annually to account for anticipated IRS cap increases. In reality, IRS maximums are not increased at a set rate each year, but have averaged approximately $500 annually since 1996. The cap will be adjusted accordingly each year, no later than December 31, based on the actual IRS elective deferral set for the following year, resulting in subsequent adjustments to all future years as a consequence.

7. Thrift Savings Plan (TSP) Continuously-Applied Rate of Return
The default rate of return for the BRS Comparison Calculator is 7% (in nominal economic terms). This is based on the TSP C-Fund average 10-year annual return, which is currently 7.36% after expenses.

(and, since that’s a nominal return,)

2. Cost of Living Adjustments (COLA)
As of December 2016, the Board of Actuaries’ annual inflation assumption is 2.75% per year.

(So DoD appears to be assuming that annual pay raises (3.25% in #1) will exceed inflation.)

9. TSP Withdrawal Age
TSP withdrawal age is set to age 67, the federally-defined full Social Security retirement age for the majority of current Service members.

15. Continuation Pay Contribution to Thrift Savings Plan
The default is set to 0%. Total user contributions, including individual contributions from basic pay combined with the continuation pay, cannot exceed the annual IRS Elective Deferral limit.

16. Continuation Pay Installment Payments
The default is set for continuation pay to be paid in one installment.

That’s a good question, Em, because you’re considered 100% disabled by the military and the VA.

I think you’re eligible to make a penalty-free distribution, but some conditions apply. The best way to handle this question is to consult a fee-only CPA or tax preparer. If you’re near a military base then you could also consult their VITA office (during tax-prep time), but that only helps for deciding what to do next year.

Let me answer your question for both the Thrift Savings Plan and IRAs.

Here’s the IRS rules for permanent disability:
A person is permanently and totally disabled if both 1 and 2 below apply.
1. He or she can’t engage in any substantial gainful activity because of a physical or mental condition.
2. A qualified physician determines that the condition has lasted or can be expected to last continuously for at least a year or can be expected to result in death.”
https://www.irs.gov/instructions/i1040sr/ar01.html#d0e111

The TSP website says: “Permanent Disability – For the purposes of determining whether Roth earnings are qualified, the TSP cannot certify to the IRS that you meet the IRC’s definition of a disability. You must provide this justification to the IRS when you file your taxes.”
https://www.tsp.gov/sitehelp/content/glossary.html
That’s also in the TSP withdrawal instructions.
https://www.tsp.gov/PDF/formspubs/tsp-77.pdf

You probably meet the conditions for a TSP withdrawal, and the TSP will probably give you the money.

The IRS Pub 590-B handles disability withdrawals:
“Disabled. If you become disabled before you reach age 59 1/2, any distributions from your traditional IRA because ofyour disability are not subject to the 10% additional tax. You are considered disabled if you can furnish proof that you cannot do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued, and indefinite duration.”

“A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements:
1. It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and
2. The payment or distribution is:
a. Made on or after the date you reach age 59 1/2, or
b. Made because you are disabled (defined earlier)…”

You’ll also need the correct distribution code on the 1099-R that your IRA custodian issues for tax returns:
“Number codes. Some of the number codes are explained below. All of the codes are explained in the instructions for recipients on Form 1099-R.
1—Early distribution, no known exception.
2—Early distribution, exception applies.
3—Disability…”

That’s on pages 21, 25, and 30 of this PDF file, and the flowchart on page 32:
https://www.irs.gov/pub/irs-pdf/p590b.pdf

Good questions, Paul!

Once you have your NOE in hand then you can start planning your service options. (Wait for that NOE, because sometimes the services have problems with auditing days of duty and point counts.) The retirement rules are a little confusing and there have been a number of changes in the last few years.

First, you only need three years time in grade for O-5 and above. Here’s the federal law for officers:
https://www.law.cornell.edu/uscode/text/10/1370
Note that the three years can be waived down to two years.
And for National Guard enlisted:
https://www.law.cornell.edu/uscode/text/10/3963
With more details here:
https://the-military-guide.com/reserve-retirement-time-in-rank-and-high-three-pay/

Once you have the appropriate time in grade for your rank, your first option is to simply “retire awaiting pay”. You’ll continue to gain longevity in your retirement rank (just as if you were on active duty) but you’ll no longer have drills or military duties.

Another option (once you have time in grade!) is to transfer to the IRR and wait until later to file for retirement. You’ll no longer have to show up for drills or AT. Mobilizing from the IRR doesn’t happen very often, so you won’t have many duty obligations. However good years can be a problem in the IRR, because the Reserves and National Guard have made it difficult to earn points in the IRR. (There are very few correspondence courses which are still approved for Reserve/Guard points.) You might be able to get points (by volunteering or by finding the funding to pay for your orders) but you might not get enough points within 12 months to receive credit for a good year.

When you’re in the IRR you’re also competing for promotion with all of the Reserve/Guard members who are still drilling and completing more achievements than you, so IRR promotions are relatively rare. Even if you manage to get leadership schools and brief mobilizations, you’re still competing against drilling Guard members.

To answer your specific questions:
(1) I’m not aware of any laws or programs which allow filing for retired awaiting pay and then continuing in the IRR. Some services allow retirees to volunteer for no-cost orders to earn points (not pay), but those opportunities are rare and they’re not considered IRR. If you have a program name or a link then I’ll research it.

(2) Leadership schools are generally funded by HRC (for service-wide career development) or by individual commands (out of their own operating funds, for their billet needs) or on no-cost orders (at your expense). In general, if you can find the funds (or pay your own expenses) then you can get the school– if they have space available. Again, you’d get points for attending the school, but it doesn’t necessarily lead to a promotion or even a good year.

(3) I know that many Reserve/Guard members have been promoted for their performance during mobilizations, but I’m sure it depends on the type of duty and the length of the mobilization. I wouldn’t assume that a mobilization would lead to a promotion any more often than for servicemembers who are doing drills and training.

Jon, we don’t have any recent data on payment times. You might want to e-mail or call every few weeks so that the company doesn’t “forget” about their policy.

Kevin, that seems like a brilliant insight! I’m also going to pass your thoughts on to other milbloggers and on social media… as well as back to the BRS staff at DoD.

Excellent question, Ben!

The amount that you sent from the Roth TSP to the Roth IRA is just a rollover. It’s not a contribution to your IRA because it was contributed to your Roth TSP. (You could still contribute $5500 to the Roth IRA for that year.) The amount of the rollover is indeed a combination of the Roth TSP’s contributions and growth, but it’s still counted as a rollover. (There’s no tax due on the gains.) The TSP will send a 1099-R to the IRS (and a copy to you) classifying the move as a rollover, with no penalties or taxes due.

After five tax years you can withdraw the amount that you rolled over into that Roth IRA, and that amount is free of penalties & taxes. You can’t give the same treatment to any gains in the Roth IRA which happened during the five tax years, but the rollover amount is free for you. Click through that link to Michael Kitces’ “Nerds Eye View” site for the details of the tax code which allow this great move.

Good question, LTC!

Federal law requires three years’ time in grade above the rank of O-4. The service secretaries can waive that requirement down to two years. (https://www.law.cornell.edu/uscode/text/10/1370) It’s not clear whether that law requires a Reserve/Guard member to earn good years for their time in grade, but the specific answer seems elusive. Do your best to complete good years for your time in grade, and avoid the IRR if possible (because it’s so hard to get a good year in the IRR).

Once you’ve served at least two years’ time in grade (ideally two good years) then you could apply for “retired awaiting pay” status. When your retirement request is approved for the higher rank then your longevity will continue to accrue in that rank while you’re in gray area (just as if you were on active duty) until you begin drawing your pension. Even though you could apply for retirement when you’re around 23 years of service, your pension would be calculated from the maximum longevity column of the future pay tables in effect when you start drawing your pension

Sure, Deserat!

Here’s a basic post from Brandon, the blogger who popularized the term:
http://www.madfientist.com/how-to-access-retirement-funds-early/
It includes a number of examples, and the potential taxes are based on income-tax brackets (as well as deductions & credits). He even suggests when it might be smart to just pay a penalty.

Here’s a more detailed post from Justin, who you know from Early-Retirement.org as Fuego:
https://rootofgood.com/roth-ira-conversion-ladder-early-retirement/
It includes his family’s personal plan.

Here’s a very detailed post (with links to the applicable tax code) from CFP Michael Kitces, cofounder of XY Planning Network and FinCon veteran:
https://www.kitces.com/blog/understanding-the-two-5-year-rules-for-roth-ira-contributions-and-conversions/
He addresses the concerns of those who wonder whether this is too good to be true.

And finally, here’s my post with more military details about the TSP (including the Roth TSP) and those who might opt to use the Qualified Reservist Distribution:
https://the-military-guide.com/early-withdrawals-from-your-tsp-and-ira-after-the-military/

Thanks for your analysis, Peter!

I think a DoD match in an aggressive TSP asset allocation to the C, S, and I funds stands a very good chance of compounding faster than the High Three pension. I agree that Gordon’s Law predicts lower returns, but I’m not going to predict that returns will be lower for more than the next few years (or the next recession).

Veterans can tap both their TSP and their IRA accounts after leaving the military and before age 59.5. The law allows the “Roth IRA conversion ladder” to be done free of penalty, and it may even be free of taxes.

Outstanding question, Steve, and an impressive service record! That’s the most points I’ve ever seen.

I think you’re correct: your Guard pension is a better deal than your active-duty pension. Let’s check a few parameters from your e-mail.

You’ve used the phrase “final basic pay”. The term “Final Pay” has a specific meaning for those who’ve entered the military before 8 September 1980. Since you also say that you have 40 good years, it would imply that your Date of Initial Entry on Military Service (the date you first received a military ID card) is in the 1970s. If that’s correct then your Reserve/Guard pension is indeed calculated from your final base pay.

You might have to educate a few pay clerks in NGB and at DFAS. If they’re struggling to calculate your pension then you’d direct their attention to the DoD Financial Management Regulation (DoD 7400.14-R, volume 7B, http://comptroller.defense.gov/Portals/45/documents/fmr/Volume_07b.pdf). You’d refer to paragraph 010102.A.1 (Final Pay) and .B (the pay tables in effect immediately before starting the pension).

Paragraph 030501 entitles you to the most favorable pay formula. This means that the calculation has to be done for both active-duty (regular) and Reserve/Guard (non-regular) retirements, and you’d get the higher amount.

030501 also means that DFAS might have to do a Tower Amendment verification. I don’t think the Tower Amendment will affect you but I’ll describe it in case someone mentions it. It requires DFAS to check the pay table increases against retiree COLAs for the years after you made E-9. The calculation verifies that (if you’d filed for retirement at the moment you made E-9 on active duty) you’re still getting the highest pension to which you may have been entitled, especially if retiree COLAs were higher than active-duty pay raises.

Finally, check Table 3-1 Rule 13 on the FMR’s page 3-28. That describes the non-regular retirement formula (including a bunch of footnotes) for your rank and years of service. This is also the table that DFAS will use to check the amount of active-duty pension you might be eligible for, as well as any differences under the Tower Amendment.

If your Guard pension is based on Final Pay at age 60, then you have another bit of flexibility that I’ve only seen in a few people during the last decade: the base pay at which you start your pension.

A Final Pay Reserve/Guard pension uses the pay tables in effect when you reach age 60. If you’ve deployed to a combat zone since 28 Jan 2008, or mobilized for some national emergencies, then your pension could start a few months earlier. See paragraph 010208.F of the DoD FMR and read Ryan Guina’s summary here:
https://themilitarywallet.com/national-guard-and-reserve-early-retirement-age/

If your pension starts in late 2018 then it’d be based on the 2018 pay tables. However if you elected to delay your pension by a few months then it could start at the pay in effect on the 2019 pay tables. If you’re turning age 60 in November or December 2018 then it might make sense to start your pension in January 2019, when the pay tables are (hopefully) 1%-2% higher. You’d lose a month or two of pension deposit but you’d make it up over the next 50-100 months of your life at a higher pension. The law which lets you do this is reflected in FMR 010801.D

And if you’re eligible to start your pension in late 2017 (because of mobilizations for an earlier retirement), then you might want to wait until January 2018 when that pay raise kicks in.

Note that this delay is only worth doing for Final Pay retirees. High Three retirees won’t notice a difference in their 36-month average. Even for Final Pay retirees, this is running up the score after winning the game. You’d need good longevity and a healthy lifestyle to make sure the delay pays off.

With those possible changes in mind, your Guard Final Pay pension is based on your longevity (40 good years) at your final rank (E-9) as though you’ve been on duty the entire time (which, in your case, you have actually done). The 2017 pay table tops out at E9>38 for $7844.70/month. An estimate of your 2017 pension is:
11,313 / 360 x 2.5% x $7844.70 = $6165/month.
Your 2018 pension may be 1%-2% higher, depending on the FY18 budget legislation.

Regardless of the age that you’re eligible to retire or when you choose to start your pension, your Tricare benefits start at age 60.

You also need to make a decision about the Survivor Benefit Program. Let me know if you have any questions, but for most Reserve/Guard members at age 60 the premiums are more expensive than the coverage is worth.

Great question, Dennis, and I understand why you seem a little frustrated by the lack of information from people who should know how the system works. I’m not an expert on the federal law of the civil service, and if you need an expert legal opinion then you should hire a lawyer for a few hours of advice. However I can get you (and perhaps your lawyer) started with the references.

I’d suggest you begin with a current copy of the OPM FERS Handbook. Here’s a link to a sample which might be the current chapter, although it’s from 1998. You’d want to make sure you have the latest edition:
https://www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/c022.pdf
For example, section 22A2.1-2.E on page 8 of that document goes into the detail you seek, and it essentially says that only the active-duty time of your Reserve career counts… but not every period of active duty.
Way back on page 31 of that PDF, the FERS section says that the CSRS rules in section 22A2 also apply to FERS.

I realize that you’re trying to convert points into years/months. In the Reserves, every month has 30 days. That comes from the DoD Financial Management Regulation (the FMR) which has detailed procedures for calculating the Reserve/Guard pension. Once you know your total points of active duty then you can divide by 360 and 30 to get the years & months.

For more general reading on your military service credit deposit, I recommend Ryan Guina’s interview of Eddie Wills:
https://themilitarywallet.com/military-service-credit-deposit/
Eddie also has an extremely detailed guide to the process of obtaining your military service credit deposit. Since you’ve been at USPS for so long, you may have some interest to pay on your deposit. Eddie’s post on the process can help you walk through the paperwork and decide whether it’s still a good deal:
http://gubmints.com/2013/03/26/gubmints-comprehensive-military-service-credit-deposit-guide/

If you haven’t already seen the DFAS part of the process for making your payments, here’s their page:
https://www.dfas.mil/civilianemployees/militaryservice/militaryservicedeposits.html

After you’ve read through these references, if you still have questions then I’d suggest you contact Eddie through GubMints.com. Once he’s answered your questions, then you could either take the USPS’ word for their numbers (which you’d help them calculate) or have a lawyer advise you on any details of the federal law.

I realize that you might not have enough good years to receive a Marine Reserve pension, but federal law has a specific exception to allow you to receive both a civil service (FERS) pension and a Reserve/Guard pension:
https://the-military-guide.com/earning-military-pension-civil-service-pension/

This advice has worked for other veterans with similar questions. Please let me know if you have more questions.

Thanks for the analysis, MilitaryDollar! I’ll pass your link along on my social media, too.

The USAA calculator is expressly designed for simplicity and a high completion rate. Most calculator nerds find it “too easy”, but it’s a great starting point for people who only want a quicklook.