Friday, October 28, 2011

The Invisible Military Spouse: how the new retirement proposal misses a huge piece of the financial planning puzzle

Even as Secretary of Defense Panetta starts to back pedal about the proposed radical changes in military retirement, there is a lot of fear of the unknown.  Just today I overheard a conversation between a military spouse and an active duty nurse while trying on some jeans at the mall.  It seems that nobody really knows what is going on.  There are people who swear that retirement "can't" be changed.  They believe that the bait and switch of it would be such an affront that it just isn't possible and are comforted by the fallacy that the public would be too outraged to allow such a change. Then there are the people who look at it and feel that financially, our current retirement system is extremely expensive and out of date.

As is true with most organizations, people are pricey.  Whether it be salaries, benefits, or retirement, the human factor of most budgets is enormous.  In the military, keeping up with the costs for retirees who have earned free health care and a pension is draining.  In today's system, a young person can enlist at 18 and retire at 38, then go on to collect their pension and medical benefits while working a second career.  As people live longer and require more medical care, the costs are higher than ever.

At first blush, I get where "they" (The Defense Business Board) are coming from when they take aim at my husband's retirement benefits.  It looks like a windfall, out of date, and too good to be true retirement package that needs to be updated.  The times, they are a changin', right?  Yes.  But as this committee seems to have missed completely, the ways of the world have changed in more ways than one.

Recently a PowerPoint was distributed to active duty military members outlining the proposal.  Lucky for them, I was just geeky enough to read every last word.  My background is not in economics or finance nor am I particularly in love with researching it.  But there is no excuse for putting your head in the sand and willing this issue away.  I want to be educated because my husband and I are a team, this is my money and security too. I am not naive enough to think this won't be on the table again for another 10 years when my husband will be eligible to retire.  Please.  Panetta might be able to stiff arm it for now, but retirement is going to change - it is just a matter of when and how.  And the more we know a spouses, the more we can question the people making these decisions and hope that the decisions are smart and fair.

Reading this details to the retirement changes made me feel invisible as a military spouse.  It made me wonder if the people who created it and researched it actually gave thought to the military family as a whole and not just to my husband as a monetary expense that needs to be lowered.  I actually searched the document and in 24 pages the word "spouse" isn't mentioned one time.  The word "family" is mentioned one time.  It made me sad and really illustrated the painful truth that at the end of the day, the military doesn't truly get the sacrifices that the whole family makes.  Or how retirement benefits are for the family, not just the service member, especially in this lifestyle.  My rose colored glasses are officially off. 

Even more laughable was how the entire presentation was comparing the military lifestyle to the private sector.  If I have learned anything over the past eight and a half years, you cannot for one solitary second compare the military family experience to the private sector experience.  I'm not going to go into some whiny diatribe about why but it is painfully obvious that the DBB glossed over some really important factors when making their recommendations.

When I was a brand new military spouse and in graduate school I was completely naive to how draining starting and stopping a career is.  How every time I move, even if I am lucky enough to land a new job, I am exhausted the whole first year while I learn a new system, culture and set of personalities and responsibilities.  Since my husband and I were married in 2003 I have left two wonderful jobs where I earned good money and benefits.  Two tenured jobs.  I realize how completely golden tenured positions are in this economy, and I have walked away from both of them because Uncle Sam needed my husband somewhere else.  The latest one just last fall.   In between those jobs I didn't make an income.  Our family had to depend on my husband's salary only. When I'm not working, we save less.  Simple math.

In a report I did for a class back in 2005, I researched the losses that military spouses experience while being married to active duty service members.  Here is a small excerpt (references will be at the end of the post):

On average, military families earn substantially less annually than their civilian counterparts. Hosek (2002) states, over the 1997-1999 period, husband-and-wife family earnings totaled $51,115 on average for civilian families and $40,587 for military families, or $10,527 less (p.xii). Military families often times have a great deal of difficulty making ends meet. 41% of wives married to E-3 and below characterized themselves as being "in over [their] head" (Bureika, et al, 1999). Importantly, the primary reason for this problem is the lower earnings of military wives as compared to earnings of civilian wives. It has been documented that military wives may be willing to accept jobs at lower wages rather than spending more time to find a higher wage job (RAND, 2003, p. 2). Lower earnings for military wives often stem from variables over which they have no control, including frequent moves, undesirable duty stations, lack of seniority, and overwhelming familial responsibilities due to deployments. The total undiscounted loss of a three-year rotation policy is fully 40% of what the wife would have earned had she been able to remain at one location for six years (Gill & Haurin, 1998). Military families are also three times more likely to have an out-of-country move during their career. The longer distance moves entail a greater financial loss due to decreased work time for spouses (RAND, 2003).

40% over six years, people!  Do that math over 20 years, then add interest that the money lost would have made. Because the military expects families to PCS every 3 or so years, they are asking military spouses to sacrifice a lot professionally.  And if the Defense Budget Board is going to start comparing the military to the private sector, they are going to have to start looking more closely at the choices families living in the private sector are making.

It is a sad fact that many families need to be dual income in order to survive.  Especially ones in the income range of military members.  The idea that a woman will stay home when the children are born and dad will work to earn enough to live on and retire is "a thing of the past" and the demise of pensions is a large part of that.  In order to afford to live and play for tomorrow, two incomes is the norm.

Here is the crux of the issue (sorry this has taken me so long):  If the military models their retirement after the private sector then we cannot afford to stay in the military.  If every penny we make today is the only money that we will ever have to invest and save, then I need to be working.  Full time.  Just like a gigantic portion of the civilian population.  We can't afford for me to take a 40% hit every 6 years if the military removes the pension security blanket.  My husband loves his job and is extremely loyal, but we are not martyrs.  And I refuse to jeopardize our future, the future of my children's college educations, and our comfort because the military decided that somehow our lifestyle mirrors that of a doctor or accountant.

The pension isn't perfect, but it offers some financial security that allows us to live this unique lifestyle, that allows my husband to serve his country without worrying about how he is already making a fraction of what he would make at a private engineering firm.  If the military decides that we aren't worth the pension, I have a feeling that many valuable assets (people) will decide to go make a go at the 401K system from the comfort of a job that doesn't send them away for 12 month deployments or ask their kids to change schools 3 times in 6 years.

I hope that the DBB, the President, the Secretary of Defense, and all other powers that be start paying more attention to the finances of the military family and not individual service member when making these retirement changes.  If they do, I think they will realize that stripping the pension would make the military unaffordable for many families.  And a financial sacrifice that many good people aren't willing to make.


Bureika, R., Riser, M., Salvucci, S., Maxfield, B., & Simmons, R. (1999).
Effective strategies to assist spouses of junior enlisted members with employment: analysis of the 1997 survey of spouses of enlisted personnel. Defense Manpower Data Center Report 99-007, Arlington, VA.

Gill, H.L. & Haurin, D.R. (1998). Wherever he may go: how wives affect their husband‘s career
decisions. Social Science Research, 27, 264-279.

Hosek, J., Asch, B., Fair, C.C., Martin, C., & Mattock, M. (2002).
employment and earnings of military wives compared with those of civilian wives.
Monica, CA: RAND

RAND Research Brief. (2003).
13, 2005, from The employment and earnings of military wives. Retrieved April


Megan said...

I couldn't love this more!!! Shared with all of my friends and I would like to share it on my own blog, if you wouldn't mind.

On a change of subject, did you blog when you went through your IVF with Kate? I'm getting ready to start my first cycle and looking for all the insight I can find!

Jill said...

Megan and anyone else, feel free to share!

Also, feel free to add any thoughts (whether you agree or disagree). I plan on reformatting my thoughts in a more formal format and mailing it off to the powers that be. Anything that you could point out would be helpful.

Anonymous said...

There was a time when the military was made up of mostly single males. And they had to get "permission" to get married. Eventually someone realized that more and more members were married, that families "should" be acknowledged. "Navy wives have the hardest job" slogans on the grocery bags at the commissary seemed to do it for the military brass, although it did leave us wives wondering where their heads were. Certainly their hearts weren't in acknowledging us! I was an ombudsman 3 times...2 COs were enthusiastic and helpful. 1 was definitely not! None of this "appreciation" changed the pay schedules, the ridiculous scrambling trying to make ends meet, the outrageous phone bills (this was before cell phones, internet, etc.) We figured my husband's pay (using 24 days since he was deployed and unavailable to us...) $2.37 per hour!!!!!!! And "they" think that the military member is the only one who earned that pay?!! Yes, The times, they are a changin' and attitudes and thinking needs to change also. Thanks for the good work.

Bee said...

"It made me wonder if the people who created it and researched it actually gave thought to the military family as a whole and not just to my husband as a monetary expense that needs to be lowered. " - I'm pretty sure that sums up the majority of the DOD powers that be. (Though I recognize several skippers we have had that have been VERY supportive of the military family.)

You are spot-on on this. Definitely send something in writing to as many people as you can. I don't think the average civilian is paying attention to this right now... bet they'll pay attention when a whole bunch of the military gets out early if these changes happen. It already has our family thinking. :o(

Good job, Jill.

Anonymous said...

Don't forget to vote your conscience come next November

Jill said...

Bee, I couldn't agree more about having supportive skippers in the past. On a social level, I absolutely adore the military community and support system. Everyone has been wonderful and John and I have had a blast. I have no bones to pick there at all. But obviously when you start thinking about your future, and realize that you must weigh dollars and cents carefully, this proposed retirement plan just doesn't add up. Especially when I am already slightly frustrated about my professional life to begin with.

Megan said...

My husband and his "guys" have talked about this extensively and the general consensus seems to be this: If they make any radical changes to military retirement, they will be taking away the incentive to stay in for the long haul. Like you said, we're not martyrs. Service members will be more and more likely to get out after that first or second term. Our Armed Services will lose its seniority and will become even more young and inexperienced. I read somewhere that those who are proposing these changes never even retired from the military and not all of them even served! If they're looking to save money they should start by cutting the salaries of some of the people who are proposing these changes. I guarantee you they make more money than we'd see in many, many years on a a military salary.

Paul said...

Thanks for being a voice on this, Jill. I hope you can be even louder. There are more parallels between military and clergy (me) than there are between either and the private sector.

My grandfather was career Air Force (starting in the Army Air Corps). My grandmother never re-married after his death because she would lose the pension and they moved so much she rarely worked (let alone their over-seas assignments).

Again, thanks for being a voice for this!

Gwenny H. said...

This is the perfect articulation of everything I feel as a spouse. Excellent job! I wish you could get it out there for EVERYONE to consider....

Anonymous said...

Please send this to Washington, DC! Good stuff! Well said!

Michelle said...

A friend shared this post and I am so glad she did. I have a JD (law degree) and a MA and am married to an Air Force JAG. We have been assigned to 5 bases in our first 6 years of marriage and dealt with two deployments.....and lived overseas and had 2 baby boys (both special needs, as it turned out). The ba exam costs thousands of dollars and can only be taken in March and take in July, you need to apply by March and as we all know military families have little notice of mo0ves. Given how frequently we move, it has not been worth the time, hassle, and expense of re-taking the bar exam, which means I have been a stay at home mom since our first son was born.

Thank you for the well ressearch and stated blog post.

Anonymous said...

Can we just all print this and send it to DC?

Homefront Six said...

I, too, have seen the writing on the wall and think it's best to be educated about the possibilities that are on the table. There is a change coming. My hope is that the change is phased in and focuses more on new recruits rather than those that have already "paid their dues", so to speak.

I understand that the current pension system is unsustainable but to yank the proverbial rug out from underneath families that have endured multiple deployments and separations is reprehensible, at best. If they are going to go this route, I'd like to see them do so only for incoming servicemembers.

The thing that really gets me is that there are many other avenues of pork, waste, fraud, and excess that could be explored in order to trim up the budget. Instead, they are focusing on retirement, commissaries, and tuition assistance. It's as if they made a list of the top benefits of military life and they are looking to cut from the top.

I agree with the above comment - vote your conscience come November.

Karen said...

You raise some excellent points!

The main reason my husband left AD and cut back to reserves is that in his MOS, once you do your command, the jobs become extremely 'office' driven, which is something he wasn't interested in. By taking a federal job (his org. isn't on the GS scale but rather an equivalent), it ensures that he is able to do what he loves in the field and not be tied to a desk. He will get federal retirement and then collect a full military retirement (if he continues to make the reserves a career) at age 59. I am not going to lie, the safety of two retirements is very comforting because my career has been very impacted by my husband serving his country in both the military and another organization.

Federal organizations such as the CIA, State Dept., and the FBI need to continue to make the pension/retirement a selling point, just like the military because these organizations tend to move families every couple of years and pull the member away from the family for extended periods of time. And also send us to places that aren't exactly ripe with quality employment positions. I have a Roth IRA in place for 'my' retirement and that is it, because in my 7 years of being married, I haven't lived in one place long enough to meaningfully invest in a 401K. As you mention, military members aren't martyrs and if our government doesn't approach retirement with a delicate hand, then there will be a mass exodus and recruitment of 'quality' personnel will be incredibly difficult.

There is no doubt that our economy is ugly and changes do need to be made. I think the first changes need to be made to the military healthcare system before even touching the retirement.

Kristen said...

Thank you for taking the time to read, research, and write! I appreciate the voice you are giving to military spouses! I'll share, and I hope everyone else does too!

Anonymous said...

I absolutely love this as well! totally what I have been thinking and feeling, especially when it comes to my career as a nurse. I can't advance far enough since we are never in an area long enough for me to get my masters (with clinicals and such). But better believe if they do change the system, we will be getting out. just hope they are ready for our country to not be protected. maybe they should put on some uniforms and get out there and serve themselves! ya right...

Vegi4Life said...

I feel so stuck. My husband is in the Navy & if I want to be w/ him.....I move where he is assigned, right? So do I go to graduate school only to find out my career will be impacted by so many moves? Do I settle for a mediocre job? Do I just plan on not working? What would you suggest? Well written piece!!!

Leadmanwalking said...

OK. enough talk. We need an action plan here. We parents of those serving with families ( I have two) want to know who we should write, where we can protest (Occupy the Pentagon?), or how we can be useful. AARP is a very effective lobby for us senior citizens. Who is carrying the ball for servicemen and women and their families?

Anonymous said...

In two-and-a-half months I'm married to my amazing Naval officer for twenty years. We have made those financial sacrifices too. I'm a chemical engineer and it isn't a career you can transport just anywhere. After our second of three was born, we started moving places I couldn't work. So I've been home working as a volunteer in my numerous communities for the last 13 years. I can say every community we live in knows they have had an educated, caring, leader helping them out for free. Now, we're paying out of pocket for my MA in secondary education in math and science. (There's no way our savings for our childrens's education is going to be used for mine.) Now, finally in the last decade of my husband's career I'll be able to contribute to our finances again. Yes, we're going for 30 yrs. Will the new laws affect our family? Probably not. However, that doesn't mean I don't feel a responsibility and camaraderie for my fellow military families. I suggest everyone write their congress person's and especially the first and second ladies. If you quote and cite this blog, all the better. Military families are in the minority of US families. We're a small group. However, we need a vast majority of our small group to stand up and shout. Think "Horton Hears a Who" and you'll get the picture. It's that last yelp that matters. So don't wait, you might just be that last little Who who makes a difference.

Katy said...

Based on the previous comment. I would add something to your final letter about the immeasurable contribution in hours that spouses give to their communities. It is a rare military spouse who doesn't serve her community through volunteering. So, not only does the husband or wife, serve the country the spouse does too. I don't know if this can be quantified, but qualified it can. I leave the verbiage to you as you do have a gift! :)

Tamara said...

Hi Jill,
My husband (retired) came home the other day thrilled to share with me that the NEW Chairman JCS had defended the military retirement system to congress. It was refreshing! See below:

" I reject the characterization of our military retirement program today as kind of gilt-edged, and the comparison to civilian retirement programs. Look, it might turn out that our current plan is unaffordable and we'll have to do something about it. But when we put a retirement program together, it's because these young men and women, who become old men and women, who serve for 20 years, who put themselves in harm's way, who move 10 or 15 times, who can -- some of them can buy a house, some of them can't, the spouses rarely can have employment because we move them around -- not voluntary, they move because we tell them to go where the nation needs them -- that retirement program needs to be fundamentally different than anything you find in the civilian sector, in my view. We can figure it out. We need the time to do so. If it's unaffordable, we'll react. But I want to reject outright the idea that somehow my retirement program or, more important, Sergeant Major [inaudible], should be compared to someone else's. " (October 13, 2011, HASC Testimony with Secretary Panetta and Gen. Dempsey, Washington, D.C.)

"I am adamantly opposed to changing the retirement benefits for those who are currently on active duty. But I'm also open to look at potential changes to the retirement system as part of our overall look at compensation -- " (October 13, 2011, HASC Testimony with Secretary Panetta and Gen. Dempsey, Washington, D.C.)

"... we've got to keep the right leaders in our military. That means we've got to train and educate them, we've got to continue to inspire them, so that when we need them, and we will, they'll still be there. "
October 13, 2011, HASC Testimony with Secretary Panetta and Gen. Dempsey, Washington, D.C.

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Anonymous said...

I think there is a big part of this dialogue that is missing- that is, there is a legion of veterans who serve this country honorably and upon discharge from military service receive absolutely zero benefits.

A veteran who has spent ten years in the military enduring the same deployments and hardships should be entitled to some retirement plan.

Service to our country should be honored- irregardless of the duration.

sgrossow said...

I am right in line with all of the comments. When this topic first came up, the thought of the system changing made me tremble. I kept thinking that my husband has served 18 years and how in the world were we going to have a retirement if we only had 2 -6 years to put money into what ever they came up with. We have been blessed to be able to put money into IRA's but that would certainly not keep us going.

Then the RIFF was announced. Hubby had troops that were going before the board to decide whether they would be retained. These troops had been in anywhere from 6 -10 years. I kept thinking about them and the families and how, if they got RIFFed how they would make up that time for retirement monies since they'd put in a significant amount of time already and now would be starting over. Thankfully, none of his troops were affected but I know that there are hundreds of families that have been affected. In cases like this having a different retirement system would be good.

We do need to keep vigilant in this matter and let those in power know how the consequences of their choices. We are different from most civilians and they need to look at the entire forest not just the tree.

jill.ingrid said...

This is so well written and so spot-on. MOAA has a military family affairs side of the house that would probably REALLY like to hear this, specifically the research you did (with the quantified data). They may even be strong enough to do something with it!

Proud navy wife for 20+ years and counting . . . jill

Anonymous said...

I too left a tenured position to return to Active Duty in 2002. I finished my obligation and was retired (HYT). I would not have stayed in or returned had the military offered me a FERS or 401K type of retirement. The military is run by Generals who wise they were Corporate Chieftains.
Good Luck, and remember the Guard has all the bennies without the move.

Anonymous said...

I'll never trust the govt. to "take care of us" in a retirement sense. As a military spouse I'm used to picking up & taking care of everything when my husband's gone. Retirement is no different. We're responsible for ourselves. For our family that means even if hubby were to stay in 20 yrs, we'd invest in our own 401K outside of military retirement. We do our own research on financial products & don't just take what someone else gives us as what's best for our family.

Most of all, even with the lower salary compared to the private sector, we live within our means! You don't have to be a 2 income household in the military (or anywhere) if you keep your expenses lower than your income. In our case, the added paycheck of me working is not worth the hassle family-wise, so we make it work just fine. Our household is not stressed because mom's working & dad's deployed, but our finances are very organized and our budgets are well-planned every month. And no, I'm not a crazy couponer or anything, lol! We're just disciplined enough to sacrifice comfort so we can make sure we hit our goals with the money we have.

Moral of the story for us, it doesn't really matter how things change; we'll adjust and be just fine whatever the blockheads in Washington do.

An American in Yorkshire said...

Wow. This is a topic that needs to be discussed more openly! Just read The Price of Motherhood and your arguments go hand in hand with that research. Thanks!

Anonymous said...

I agree with every single word. My husband has been in for 12 years, and I left two wonderful careers behind, one had an awesome retirement package. I only had 1.5 year to go to be vested in and we moved. Thinking about having to start all over again makes me tired already, because I know how hard it's going to be. Now we are overseas, and I can't even work. His retirement was a huge factor in our decisions. If retirement was out of the picture 6 years ago, I'd stay behind at my nice job while my hubby finished obligation and we'd be out. Taking away retirement benefits would be biggest blow to our family. We will recover, but I will strongly encourage my children stay clear from US armed forces.

Anonymous said...

keep calm and Chive on.

Anonymous said...

Thank you so much for bringing light to this topic. I feel like we, as military spouses, don't have a voice to communicate with those higher up to effectly address these issues. It seems at any meetings locally they all blame the people up in Washington instead of being advocates for us. With the facts and research you mentioned it may make them look again to address the issues. Thank you again.

Anonymous said...

Balderdash! A couple of succinct points for discussion:

1. The military is a job. If you don't like the pay, go elsewhere. There are plenty willing to take your place.

2. The vast majority of military members get out after their first hitch. Under the current system, they only get what they've saved. A 401K with a percentage of matching would give everyone something.

3. We can't possibly afford to continue to offer a full pension. It's just to expensive.

4. I challenge you to find any other profession that cares about an "employee's" family a fraction of what the military does.

5. The services, benefits, and privileges afforded the military family far exceed what is reflected on the LES. The general public would pale at everything available to take care of the military family. Shame on the author for omitting everything afforded.

6. My wife was active duty and is now a military spouse. "Military Spouse, toughest job in the..." stickers and logos make her want to gag.

7. When the change comes to the pension system, current members will be grandfathered in. Period. Anyone telling you different is trying to create a controversy where there isn't one. The high 3 change in '86 grandfathered everyone else in so would any other change.

OK. So this is more than a few, but there's some items to chew over.

Jill said...

1. That is my point. The military has worked off of a delayed pay/benefits model for a long time. You take away that huge benefit, people will walk. And I disagree that it is more economical for people to just line up to take their place (especially with jobs that require millions in training such as pilots).

2. True, but it will not encourage retention.

3. I agree it's expensive, and I never said I knew the perfect solution, just that family planning (and circumstances) need to be evaluated when discussing the military. The military cannot be compared to most federal jobs.

4. And I challenge you to find a profession where more is asked of an employee's family.

5. Shame on me? This article wasn't about the commissary or military discounts to Disney. Excuse me for not getting tangential. If you actually read my blog you will see that I talk about many perks in the military. This post was regarding the pension system and my person opinion on an oversight in their planning.

6. I agree with her. I never once implied I had the "toughest job". I illustrated research about spousal income loss due to frequent moves, deployments, and other hardships.

7. Oh yea? Just like the COLA change for retirement? I believe that Congress shot the grandfather with that one.

Anonymous said...

Exemplary post. It brings up some VERY good points. As a military spouse and military member, myself, I know that we will not be staying in if the retirement benefits are changed (even though I make as much or more than my husband), because even for us the separation isn't worth it. I am hearing this largely across the board as well. Again, well done.

Anonymous said...

Also, as far as "Anonymous" above..., I am also one of those female military spouses that wants to gag every time I see one of those "military spouse is the hardest job" stickers. There is a word for those people 'dependopotamus'. And while they do exist, "Anonymous" trying to allude that you are one is ludicrous. You have done your research and have presented a very good argument against changing the pension system. You are NOT emotionally ranting about how you 'deserve' more for no reason other than it being hard.

"Anonymous" may be the type who will stay in Forever just for the warm feeling serving his country gives him and sacrifice his family life for it... and I know a lot of men who feel that way... but most of them enjoy cheating on their wives when they deploy to foreign countries. Normal people miss their families, and wouldn't want to leave them for long periods of time without some pretty great incentives. And I KNOW the only reason I can look forward to a long a prosperous career is because I am also in the military. Unlike MOST military spouses.

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Hi, I'm Jill!

Hi, I'm Jill!
Extrovert. Mom of two. Wife of a cute Naval Aviator. Lover of wine. When I'm not chasing my two kids around town you will find me writing, taking too many photos, and researching the ten future areas the Navy could potentially (but probably won't) PCS us. We are fish out of water, landlocked at 7,000 feet. For now.

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