Basically what the title says. I want to know how accurate the BRS calculator is for comparison reasons. For someone who is currently active duty in the military and wanting to be apart of FIRE movement it doesn't make sense to get out the military even at a high salary if FIRE is the MAIN goal. Even staying enlisted retiring as a E-7 is a multi million dollar pension based of the calculator as long as live to an average age. To we get the same amount at the same age (roughly 43 for me exactly at 20 years) I would have to save and invest 7k a month and hope for a consistent 8 percent return over the short time spand 20 years.
F.Y.I. These assumptions also don't consider WO or O which increases the pension significantly or consider my time I've already served which decreased the amount of time I have to invest on the outside.
Also look at other post on my page for SS comparison for numbers
@mintdrake I haven't looked at it recently, but I think the BRS calculator shows the amount of money that will actually get paid out over time.
I wouldn't personally consider that to be the "value" of the pension/retirement plan. I'd say the value is the lump sum that would need to be invested into a diversified portfolio so that you could safely withdraw a similar amount with similar installments over that same time horizon.
Edit: E.g. for a pension that pays out $40k-$60k a year, I'd value it somewhere around $1M depending on how long your long-term time horizon is.
@monkeyroo The pension also increases every year which makes it harder to compare but in a general to get roughly the same evaluation it will take a lot of money. Where the pension you get from the military is mostly from them so if you really wanted to keep most of your salary instead of investing it all.
@mintdrake The pension increases are inflation adjustments. You'd have to adjust for inflation if you want all your numbers in present day dollars. Another reason I'm not a fan of the BRS calculator. I think it fools people into thinking they will be getting some huge amount of money later in life when it's really effectively the same amount just increased at the rate of inflation.
@monkeyroo The BRS calculator should have a button to switch from then-dollars to its net present value in today dollars. I'll admit I haven't checked, but the high-3 calculator has it.
@monkeyroo Yeah I mean most people just don't understand it. Inflation still going to exist inside or outside the military. It still solid because you get basically the same amount of money every year that you get just by showing up everyday. In my opinion it's fine if like free money where even we just consider the first retirement payment at 42k for the year you still need 1.4 million at a 3 percent withdrawal rate to match it which is still hard to do in 20 years
@mintdrake I have found that it's worthless. Unless you have tracked and averaged all of your contributions and returns up to the point you're inputting the information, which is unlikely.
You're better off using a simple 401k calculator and inputting where your accounts are currently at and then calculating from there.
@bevm Yes that's something I can use but most of the military retirement isn't from the 401k it's from the pension that the government sets passed of of rank, time in service, and time after retirement. The 401k calculator can be good for calculating what I would get on the outside but to do that with the military you could be missing potentially millions from the pension payments
@mintdrake Ehm, yea, I get what you think you're saying, but I highly recommend you look at the Pension and the TSP separately.
The pension should be a bonus, but there are a number of things out there that can prevent you from making it to 20 years. You can also manually calculate your pension by taking your expected retirement rank base pay at the 18-year mark and take 40% of that. That'll give you a rough current value to the pension.
That being said, I would recommend planning as if you don't get that pension and budget otherwise.
@bevm Yeah that's fair I'll add it to my list of calculations. I appreciate the suggestion. It definitely helps to look at current values as well because the pension is over your life compared to having access to 3mil at 40ish range. I just like the fact that most of the money isn't coming from you these are still very conservative numbers. I've set it to a realistic career path going the officer route at 10 years and only going to captain and that 3 mil turns into 10 mil with basically the same amount of work. Obviously being and officer is more responsibility but it's still very much an option for me personally at this stage of my career
@mintdrake I've found the fidelity retirement calculator to be far better to insert a mix of all income streams to include your pension. You can put in the age you expect it and the annual increases, as well as your TSP+Match.
