On Military Retirement

A reader forwarded two stories to me, both of which are pertinent to my readers. First, I’m going to write to a group that doesn’t necessarily read this blog -- members of the military. I know there are some out there and I’m asking you and them to forward this to your friends that are making a career in the armed forces.

Here’s the background; A story that ran on CBS News.

Radical overhaul of military retirement eyed

”The proposal comes from an influential panel of military advisors called the Defense Business Board. Their plan, laid out in a 24-page presentation "Modernizing the Military Retirement System," would eliminate the familiar system under which anyone who serves 20 years is eligible for retirement at half their salary. Instead, they'd get a 401k-style plan with government contributions.”

First, for those that don’t read this blog, I was a civilian air traffic controller employed by the United States Department of Transportation -- Federal Aviation Administration. The most pertinent fact is that I was among the last to have a standard government pension -- CSRS. Shortly after I was hired, the Federal government started switching everyone over to FERS -- a 401k-type retirement. I do not care to get into the specifics of each program or a detailed comparison. I am not a retirement expert. I’m just an average guy that doesn’t want to think about money any more than I have to. And therein lies my advice.

Whatever anybody tells you, whatever promises are made, a 401k-type retirement isn’t worth what a standard civil service retirement -- a pension -- is worth. Don’t let Congress change your retirement plan. That’s my advice. Read on if you like.

It’s a given that FERS isn’t worth a CSRS retirement. The very fact that they are trying to change to a “cheaper” way of funding retirements tells you that. But that is only half the problem. FERS forces you to become an “investor”. Here’s a news flash. Not everyone is cut out to be an investor. That’s the reason the world is lousy with financial advisors.

You will be tempted to play around with your retirement. At the very least, you will be required to choose what type of funds (stocks, bonds or securities) you want your money in. Most of you aren’t qualified to do that. I know because most air traffic controllers aren’t qualified to make those decisions.

Look at it this way. Do you think a Wall Street trader could sail a destroyer without training? Do you think one could call in artillery fire? Do you think one could work an arrival push into LaGuardia? Of course not. But you’re supposed to figure out where to invest your money with no training. Even if you planned to put your money in nothing but the safest investments, you have to keep your eye on your money. Like a dog worrying over a bone. And as we all know now, your Triple-A portfolio can transform into a “toxic asset” when Wall Street decides to get too greedy.

On the other hand, if Uncle Sam looks after your retirement, it’s as safe as it can get. I’m about to show my other readers that it isn’t completely safe. It’s just as safe as anyone can make it. Trust me on this. There won’t be a Wall Street without a United States government. And you folks are the ones that ensure there will be a United States government. You deserve every penny you earn -- pay and retirement -- and all Americans know it.

Now, on to story #2 and my regular readers:

Postal Service proposes cutting 120,000 jobs, pulling out of health-care plan

This is from page #1 (emphasis added):

”For health insurance plans, the paper said, the Postal Service wanted to withdraw its 480,000 pensioners and 600,000 active employees from the Federal Employees Health Benefits Program “and place them in a new, Postal Service administered” program.”

This is from page #2:

”The USPS said it needs to reduce its workforce by 120,000 career positions by 2015, from a total of about 563,400, on top of the 100,000 it expects by attrition. Some of the 120,000 could come through buyouts and other programs, but a significant number would probably result from layoffs if Congress allows the agency to circumvent union contracts.”

I hope I have the attention of the air traffic control crowd now. Remember when Congress interfered with our contract? Successfully? Now they are going to come after the rest of government employees.

This is the position your profession holds whether you like it or not. You are the front line. That is the reality. If Republicans can take on the controllers and beat them, they can take on the rest of civil service. It was that way with PATCO. (Remember the 1970 newspaper image with the PATCO slowdown and the postal contract negotiations on the same page?) It’s that way today. You should know it. The rest of government employees should know it.

To steal a pertinent line; You can all hang together or you can all hang separately.

You must bear in mind that our current financial difficulties are temporary. This is the worst situation in 75 years. Don’t let Congress destroy our long-term institutions over a short-term problem. The Armed Forces and Post Office are older than any political party in America. If you’ll stand up and fight, they’ll be here long after the current political parties are gone.

Don Brown
August 18, 2011