Hello readers, today I have another guest post for you. This one comes to you from my friend over at The Incredible Cash Dummy. He is another personal finance blogger who serves in the military, but his website isn’t really military-focused so he offered to write a guest post for me. Today he’s going to tell you about how he might have to leave the military early. By early I mean earlier than planned – he is at the point where most people assume retirement is a given.
I’m sharing this post with you for two reasons. One, because it’s yet another example of a friend leaving the military earlier than they expected. I’ve said it before and I’ll keep saying it – sometimes life doesn’t work out they way you expected. Sometimes it’s for a great reason, like an opportunity you didn’t foresee. Sometimes it’s a hardship that snuck up on you. Bottom line, though, it’s impossible to predict how your life will actually turn out.
Two, there is less than a month left for people who are eligible for the Blended Retirement System to decide what to do. I know, I know, I’ve been harping on this for over a year. But it’s an important decision and as of today, only about 20% of eligible people have opted in. Meanwhile, less than 20% will make it to military retirement. All those that haven’t switched to BRS that end up separating before retirement are leaving free money on the table.
Because of that, a whole bunch of military bloggers are putting together a #BRSBlitz this December. We want to make sure everybody is making this decision after thoughtful consideration of their options. Unfortunately I’m still receiving questions about BRS every day that indicate eligible members really don’t understand the program. Myself and the other bloggers are doing everything we can to reach as many of those people as possible. I don’t care whether or not people actually switch, but I do care that they make the decision knowledgeably. I hope you feel the same way.
Take it away, Mr. CD.
I Just Realized I May Leave the Military with (Almost) Nothing
I’m a few months shy of my fourteenth anniversary of active duty Naval service, and I’ve just recently arrived at the realization that I may not make it to retirement.
What does that mean?
For anyone not in the military, under the previous “all or nothing” retirement system, military members had to serve at least twenty years of active duty (or accrue a certain number of retirement points in the reserves) in order to retire and receive a lifetime pension ranging from 50-75% of the average of their highest three years of pay. Retirement also includes other benefits, such as lifetime base access, shopping privileges at base exchanges and commissaries, and access to lower-cost health insurance through Tricare for Life.
I may well lose all of that by having to separate from the military at the fifteen-year mark, because another aspect of the old system is that if you leave with less than twenty years of service (not counting situations like medical retirement), you get NOTHING. No base access. No healthcare. And in my case, no pension that could amount to over $1M depending on how long I live. All I would have is the $48,000 I’ve managed to set aside in my TSP over the course of the last fourteen years.
“You’re crazy,” some of you may be thinking. “Why the hell would you say no to a million dollars and low-cost healthcare? Just suck it up and bang out those last five years! Don’t be a p****!”
Here’s the problem: I’m not convinced that my marriage would survive another five years of this lifestyle.
The Backstory
Mrs. CD and I met, dated, and married over the course of a single three-year tour between 2011-2014. I had been in the Navy for nine years by the time we PCSed (permanent change of station for any non-military folks), but our move from Washington to Maryland in 2014 was the first time in 30 years that my wife had lived more than 45 minutes from where she was born.
We were confident that we knew what to expect but the move was a difficult one. While it was business as usual for me, Mrs. CD had to leave her whole family (with whom she is extremely close), all of her friends, and a great job she’d had for over eight years with great benefits, to live with me in a place neither of us had ever been on the opposite side of the country. That experience can be an extremely isolating one, and the reality of it was much more challenging for our new family than we predicted.
The sensation of loneliness that Mrs. CD felt being so far from family and friends, especially once we started having children, never really went away despite finding some new friends and getting involved in several military spouse organizations. On top of that, she also developed multiple medical issues that needed months of appointments with specialists and ended up necessitating her enrollment into the Exceptional Family Member Program (EFMP). It was difficult for me to be there for her as much as I wanted to because of the demands of my military duties, not to mention the mental and physical challenges of two pregnancies over the course of our three-year tour.
Our time in Maryland wasn’t all bad by any means, we did find some meaningful friendships and it was a tremendous learning experience for all of us. It didn’t, however, do anything to improve our family’s affinity for military life. Nor did our next PCS to our current duty station in central Florida, even farther away from both of our families and support systems.
What’s Next?
The last five years have been a roller coaster, filled with some great highs but also some crushing lows… and that’s with me being in two consecutive non-deploying jobs. At the end of our current tour I’ll PCS to a ship for a solid four years of high-tempo operations and multiple deployments. Unless the stars align, and we manage to catch one of the tiny handful of sea duty billets in my career field close to Mrs. CD’s family, she’ll have to face those four arduous years once again alone, in a new place, now having to single-handedly care for two young children.
Not exactly a recipe for a happy marriage.
Before anyone starts saying things like “You should have married someone more resilient” or “Your wife knew what she was getting into”, though, let me explain something: the hard truth is that the military truly is a challenging lifestyle, which is why fewer than 20% of all active duty servicemembers ever make it to the 20-year mark or beyond. Having to pack up everything you own, pluck your kids out of school and away from friends, force spouses to quit jobs, and drag them to who knows where every few years eventually takes its toll on all of us.
Mrs. CD is an amazing person for whom I have a tremendous amount of respect and deep love, and with whom I’ve built an incredible family. When it comes down to it, I wouldn’t trade that for anything in the world… not even a $1 million pension.
What Does This Have to Do with the Blended Retirement System?
Even though I’m not eligible for the Blended Retirement System due to my time in service, my situation is just one example of exactly what it’s designed to address. So many service members leave the military prior to retirement, and unless they diligently invested in the TSP, they’ll leave with nothing. I didn’t invest in the TSP more than I did because I assumed I would stay in at least twenty years, and would get a nice fat pension for the rest of my life.
If you only take one thing from my story, it should be that no matter how dedicated you are, or how dead certain you are that they’ll eventually have to force you out due to old age, making it to retirement is never guaranteed. A debilitating injury, family issue, or other factor could crop up at any moment between the day you set foot in basic training until the day the ink is dry on that DD-214.
My friend Military Dollar is a big proponent of the idea that the BRS is a lifestyle choice masquerading as a financial one, and my experience has convinced me that this idea is 100% correct. It’s not about whether you could eke out an extra couple of percentage points under the old system. It’s about knowing what you want your life to look like after your military service ends, because it could end a whole lot sooner than you think.
Thanks to Mr. CD for sharing his story, and good luck to him and his family.
CD, you always need to do what is right for you and your family. The money issues tend to work themselves out over time. Leaving active duty and foregoing the pension is worth it if it saves your family and improves your quality of life.
That said, there may still be ways to leverage your military time toward your retirement goals. This could include transferring to the Reserves and serving another 5 years to reach your retirement eligibility. Or another option is taking a job with the civil service and buying back your military time – that would give you a 15-year head start on a FERS retirement.
Neither of those two options gives you the immediate retirement pension around age ~38-42 range. But they still offer a great way to leverage your time spent and still earn the valuable pension and other retirement benefits.
Do what’s best for you and your family – but keep your eyes open to other opportunities!
My dad served 18 years before he had to medically retire due to a combat injury. It was hard for him to leave early (he always assumed that he’d work until they kicked him out, haha).
Oh my, please tell him thank you from me! It would be so hard for me to leave early too.