Ask Joe, Your Benefits Guru Says…Know the Facts Before You Make a Decision
Someone recently said that a lot of the decisions we make would have more predictably favorable outcomes if they just had their basis in facts rather than emotion. That’s not to say that emotion has no place in our life decisions, but rather, the “facts” should be considered as well.
Leaving the service or considering retirement is a good example where facts can have a significant impact. Many active duty Soldiers, for one reason or another, just walk away after six to ten years of service without giving any thought to the option of joining the Army National Guard or Army Reserve. With a relatively small commitment of their time, they could continue their service and be eligible for a retirement check and TRICARE at the age of eligibility (usually age 60). Obviously, that’s their choice, but if they don’t take the facts into consideration, then that decision is emotion-based and not fact-based.
The MyArmyBenefits website (https://myarmybenefuts.us.army.mil) has a retirement calculator that can help present the facts to consider and see what they might be leaving on the table. It provides a means to convert active duty time to Reserve points and then projects an estimated retired pay and the service obligation (if applicable) needed for a Reserve retirement. Having the relevant facts makes for an educated decision.
In another recent instance, an Army Reserve medical doctor (Colonel) did not consider all of the facts when her plan to continue to serve overrode a thorough examination of the facts available, and clouded her decision process. This mistake was going to cost her a boatload of money.
In this situation, the doctor was trying to make sense of whether or not to go ahead and enter the Retired Reserve at her Mandatory Removal Date (MRD), or to extend until age 65. Her MRD was age 58.75 and she had enough mobilization time to qualify her for reduced age eligibility to receive retired pay at age 59 vice 60. Alternatively, because of her career field, she could extend until age 65. What to do?
She liked the work she was doing and wanted to continue serving. After all, she reasoned, she could accumulate 300-400 more points towards her reserve retirement, which would equate to more retired pay. So her mind was pretty much made up.
A quick run on the MyArmyBenefits retirement calculator showed that if she transferred into the grey area (retired reserve) at her MRD with her current points, then she would be eligible to start receiving retired pay of $4324 a month, at the age of 59, just 3 months later. If, on the other hand, she extends to age 65 and then retires, based on 75 points per year additional accumulation she will begin receiving $4735 retired pay at age 65. At first glance, the additional $411 per month (at age 65) looks like the way to go. After all that’s a car payment, right?
By simply putting pencil to paper, more facts become evident and the answer she was leaning toward becomes less attractive. By not retiring until age 65 she is actually leaving over $300,000 on the table in retired pay (6 years of retired pay at $4324 per month for 12 months). Alternatively, at the $411 per month extra pay starting at age 65, she would have to live past age 100 to recoup the $300,000 she declined to collect by not retiring at her MRD. When put to her that way, she was astounded. After thinking about it for a day or two, she decided that her best option was to let MRD run its course.
So get the facts before you decide. MyArmyBenefits can help.