San Diego Housing Market News and Analysis

Yes they should (for those who were not injured during their time of service). For those who were injured, it's the least we can do for their sacrifice (i.e. take care of them financially for the remaining of their life, since the likelihood of them finding a job when injured is reduced, especially if they lost both legs and an arm). They should pay active military men and women more (at least similar to police), give them 401k & SS. But since even with prop B, police pension are preserved.

I think the person we sent overseas to get shot at deserves a pension much more than the rude B&^%$ behind the counter at the DMV.

I made my points on the other thread (before it degraded into name-calling by those who didn't seem to have any actual counter-arguments.)

Here's a summary:

- Any long-term obligation made by managers/politicians is fraught with peril, and history has proven this. Pension contracts make commitments that must be met anywhere from 10-60 years in the future. Anything that is promised that far in the future by someone who isn't accountable for honoring it is going to have a tendency to be overgenerous or generally prone to corruption.

- Think about how a pension works: You make promise to pay someone a yet-to-be-determined amount in retirement when they start working (say age 25) The exact amount of the obligation isn't typically determined until the final years of their employment (30 years later), and the money isn't completely paid out for decades after that. There's a lot of hard math and guesswork involved, and plenty of incentives to cheat along the way for short-term gain. If anything goes wrong - a miscalculation, an overly-generous agreement, etc. in the decades-long process, the whole thing can collapse. It's just too brittle a system.

- The reason private-sector pensions are going away is because shareholders have become wise to the issues described the prior points, and accounting changes have made it is harder to hide the obligations on the financial statements. Basically the market has spoken. Government has been able to get away with hiding pension costs longer because taxpayers don't scrutinize the books as much as investors do.

- Military pensions are also a growing problem as life expectancies increase, but we don't see the impact because it just gets piled on with the national debt that will be monetized away eventually. Plus "half-pay" doesn't sound very generous - if you do the math you see that it can be though. But the public doesn't do the math. Of course military pensions are also political land-mines, as no one dares question military pay.

Let's not forget about the relationship between the people who make the promises and the ones who benefit from them.

Milton Friedman, Reagan's man on economics, said we should outsource our military.

The Brits outsourced to Indians during the days of empire and we could do the same. Big burly Indians can be very effective killing machines.

-Enlisted military pay just isn't very good at all, and there are roughly 5x more enlisted military than officers. A decent chunk of officers are in highly skilled professions (doctor, pilot) where sticking around for full retirement comes with a significant earnings cost. Retaining good talent in the military is already a problem, and cutting pensions without increasing salaries would only make that problem worse. Of course, with the ends of the wars in Afghanistan and Iraq we should be able to continue cutting our forces, unless Romney gets elected. Then, we're probably screwed in terms of over exuberant military spending and use of force.

Cutting a pension isn't necessarily "screwing" anyone, and I think that there really isn't much evidence to support the idea that replacing pensions with more predictable forms of compensation is some sort of underhanded negotiating tactic. Pensions are just a form of compensation, period. As long as we have a free labor market, companies don't ultimately have the power to "screw" anyone. People leave jobs for better paying ones all the time - if someone feels they are being "screwed" they can go work somewhere else.

Like I said, do the math and you might be surprised.

Take the typical enlisted retirement package after 20 years service and calculate the NPV of the cash flows. You'll find the number turns out to be a pretty substantial bonus for someone who may be less than 40 years old.

The "1/2 pay after 20 years" convention for military pay has been in existence and untouched for a very long time. I don't remember the exact year the basic parameters were set but it was around the 1920s for the current system and has historical roots back to the civil war. People live much longer today and the system will need to change to reflect that reality. Today it is not uncommon to be paying a military retirement for 40 years after they've retired with 20 years service. A system that pays people 60+ years as compensation for 20 years work is just not sustainable.

Wow. I just do not understand why folks with self-professed liberal attitudes say such things.

Anyway, between the white settlers and the rangers and maybe Custer there are not many left to do this job for you. Try Mexicans.

All benefits including pension & perks are part of compensation. As harvey put it: stockholders of companies have become more alert to the consequences of such long term plans. The debates on this site indicates that only a few taxpayers have gotten wise to it so far.

The little guy is so busy screwing himself (or herself) that not much contribution is needed from the corporations in this department. What else you call folks who prefer to buy IPads before saving up for a rainy day? On basis can somebody with a negative net-worth, $0 in retirement funds think they need an entertainment device?
And they vote, actually they might be the majority of the population.

California retirements that give 3% per year of employment with no cap or age penalty for police and fire are just not sustainable. Military pay, and retirements come no where close to this. Even Federal law enforcement get only 1.7% per year of service with a penalty age of below 55.

California is almost double Federal pension calculations.

Actually, I don't see how outsourcing our military is incompatible with liberal values.

I'm sure we could create an "American Legion" of the biggest baddest fighters in the world. Fighters could be lured by the promise of becoming American citizens and that itself is compensation. It would be a win-win.

This is one topic that I can actually add value to. I've been lurking on here for years. I retired from the Marine Corps last year, as an E-8 with 22 years and 1 week. My retirement pension is worth just under 30K a year, it will never decrease and will only increase with whatever COLA raises we get. It is not enough to live on but it helps.

We do have medical insurance that covers our family, this year it only costs $548; which is great, however, in the next few years it will increase upwards to $1500 a year.

I was 40 when I retired, during my service I used tuition assistance to earn a bachelors degree and the post 9/11 GI Bill to earn an MBA, so I was able to find a second career after I retired.

The pension helps in the wage gap in the civilian world. I had to start over at a software company, I am not complaining I really enjoy my job and my coworkers, but the average 40 year old at my company is making much more money than I am, because they have much more time in the civilian workforce. My pension helps close that gap.

The military is looking at switching to 401K systems; the problem is that whoever joins now is signing up for the pension system, so whatever changes are made will not take effect for at least 20 years. The pension and other benefits are a great retention tool, although most service members get out after their initial contract, but those of us who stick it out and take advantage of the benefits are pretty lucky and happy.

Thanks for the data. We can use your example to "do the math" as I was suggesting.

Counting just your $30K income and assuming you live to age 70 (and using a typical 4% discount rate), your pension is worth a little over $500K.

What that means is that if you had a 401K you'd have to accumulate that much in your 22 years of service in order to withdrawal $30K a year for life after retirement. Of course you could not live as long or live longer but age 70 is a pretty typical life expectancy for a 40 year-old today.

The S&P 500 had roughly a 6% annualized gain over the past 22 years, so if you simply invested in the market you would have to save over $11k per year, each year, for the past 22. That's fairly significant for someone who made $60K at the end of their career.

This doesn't count medical benefits, which makes the value of your pension much higher. It also doesn't count COLA increases but some would say the discount rate I used is on the low end, which offsets the COLA.

So, that $30K per year might not seem like much, but it easily makes you half-a-millionaire. Not bad for a 40 year old.

No doubt you earned it, but my concern is that our country cannot afford to promise $500K+ pensions to many thousands of military retirees.

That's a pretty good summary, harvey.

You forgot about survivor benefits. The wife will likely live to 80.

I learned from my first Finance class to look at money in terms of NPV. Best way to compare to apples to apple.

MIght also want to add in the value of a college degree and MBA as well as years of housing. It sounds like a pretty good gig and clearly the poster understands and appreciates that.

Because people use the flag and patriotism to bash others who have different opinions.

In reality, the patriotic thing do to is to debate things and rationally come up with pragmatic solutions that benefit the whole country.

As harvey pointed out, doing the math is the best way to look at compensation.

It's worth noting that $1500/year is about what families pay for a decent medical insurance policy if they don't have one provided by their employer (e.g. small business owners or private-sector retirees.) If the military premiums are going up this high, it probably means that they aren't going to cover much of the expense at all. But if you are only paying $500/month now that means you are effectively getting another $10K year from your retirement benefit in the form of healthcare (for now, at least.)

Medical benefits in a retirement package can be a very valuable perk.

harvey, I believe you meant that families would pay $1,500 per month (not per year) for health insurance if they had to pay out of pocket.

He's paying $548 per year for family coverage. That's a smoking deal.

For example, a self-employed architect would likely pay $1,500 per month for health insurance for his family, if his wife did not work for a company that provides insurance.

Yes, there's a typo in my previous post and I meant to say $1500/month in the first sentence.

I'm self-employed and that's about what I pay.

Thank you for your contribution, Always studying. You are fortunate enough that you made it as far as E-8 from your humble beginnings as a post-HS graduate enlistee. I have no doubt your savvy decisions to continue your education both on and off base and on shipboard and actually obtaining a bachelor degree and post-grad degree while STILL in helped you rise through the ranks. The vast majority of enlistees only obtain a few undergraduate credits while in and finish their bachelor degree work after they get discharged or retire. You obviously must have had a very supportive spouse/family who didn't mind you constantly studying in your scant precious time at home and likely during standdowns and leave.

You didn't mention (perhaps you haven't been "retired" long enough to know) that for several recent years, military retirees (along with OASDI-SS, SSI, SSD and VA disability recipients) received zero COLA, due to the Federal Gov't determining their had been no inflation the previous year.

You also didn't elaborate on your personal working and living conditions during all the years while still earning this pension. I seriously doubt too many young Piggs here have lived aboard ship in a 27" bunk with another bunk both above and below and have only a 1-2 sf by 6 ft high locker to store all their "worldly possessions." Nor do they sleep on concrete floors in a line with their heads on a seabag and eat out of vending machines in military airports while waiting 4-30 hours on the "manifest" taking turns boarding planes as they trickle in one by one to pick them up. And these are the "good" working conditions which would not be considered to be forward deployed or stationed in the thick of a "war zone" :=0

IMO, you have "earned" every penny of your "pension." Congrats on your ability to obtain civilian employment right after retirement!

Uh, folks ... this is "Tricare Prime." It's not exactly the same as what you may be "accustomed to." It's more like an HMO where you don't get a huge choice of providers. In addition, if you live in an area where military facilities abound, the only way to get "free" care is to use military hospitals and clinics. In any case, there is an office visit co-pay and a hospital co-pay with TP if using civilian facilities (ex: Sharp Rees Stealy Urgent Care). If, as a TP "beneficiary," you seeking authorization for elective surgery, for example, Tricare Prime may approve it done ONLY at a military facility. If you were thinking TP "beneficiaries" are enjoying "free brand-name" prescriptions and having their cancer treated at the Mayo Clinic, think again. They have to wait in line at a military facility and pull a number to turn in a paper prescription if they want it for "free." And it better be written properly as a "generic." To get refills, you call a NAVHOSP number and they are mailed to your home in 5-10 days. Refills are NOT instant, you can't get them in person and you can't just have your doctor call them into Rite Aid, lol. If you need a refill and don't have any left on your prescription, you have to go back to the dr, get another paper prescription and go back to the military pharmacy pull a number, rinse and repeat.

No, it's not the same as Aetna or Anthem Blue Cross, etc PPO's. Not by a long shot.

Uh...."survivor benefits," known as SBP are cheap for minor children (abt 2% of the monthly pension for one or more children). Of course, they will eventually turn 18, at which time their SBP will terminate (unsure if a FT college student under age 23 can collect it). For a spouse they are VERY expensive and thus are not taken out by all married soon-to-be military retirees. SBP must be elected PRIOR to retirement. IIRC, the spouse SBP deduction is roughly about 18% of the monthly pension amount. Thus, the sponsor is actually paying in these high monthly "premiums" to ensure their spouse receives 50% for life of their monthly retirement at the time of their deaths. If the spouse predeceases the sponsor, these premiums are forfeited.

Correct me if I have any of this wrong, Always studying or Allan from Fallbrook.

Regardless of the semantics and the details, $1/2 million NPV for the pension is in the low range. Add medical, spousal benefits, educational subsidies, VA mortgages, etc... and we end up with much more.

As harvey mentioned, can we afford this largesse?

BG, BTW, my good buddy is a retired Navy pilot and we talk about it. He knows he got a great deal.

As the real estate "expert" in our group of friends, I even helped him buy his house with a no money down VA loan.

He did sleep on ships and barracks in his younger days. But later in his career, when he was in Korea for 2 years on assignment, the government rented him a luxury $3,500 per month (nomimal money in the early 2000's) apartment in central Seoul.

The government trained him straight out of college, and gave led him all the way. He had a lot of time off and goofed around a lot.

Most of us in the private sector have to provide our own training else companies won't hire us.

My first job out of college was in NYC. A la-z-boy recliner was my bed for the 6 months in a friends 200 sq ft studio apartment.

brian, your "Navy pilot" friend was an officer. Always studying was an enlistee who entered the service right out of HS. There is a chasm of difference. Did your "Navy officer" friend remain single throughout his career? The typical "enlistee" marries and has kids early and if their spouse proves not to be self-reliant and supportive of their "career" (incl repeated and back-to-back deployments), their "civilian lives" can easily spiral into a living nightmare. To spend likely their entire military career earning 6+ years worth of college credits part-time is asking A LOT of their spouses and family. Even in the rare instances when they are actually home for long-stretches, they are studying. This is NOT the norm for enlistees. Most of them return home to a mismanaged quagmire that needs to be unraveled (mostly financial mismanagement by the spouse and spouse desertion ... yes, even with the kids :=0). I don't have to tell you that the divorce rate is sky-high among enlistees.

Active-duty military are eligible for "housing," but it is not "free." Their housing allowance is garnished from their pay when they live in housing. It can be a "hardscrabble existence" for a spouse stuck in housing with kids as the vast majority of enlisted spouses are not "locals" and have never lived away from "home" and many have even written a check in their lives! Many, many of them abandon military housing in the middle of deployments and move back to their "home state" to parents' houses with their kids in tow, leaving their sponsors to "clean up the mess" upon return. Some never move into military housing at all. They remain in their "home state" with parents and await return of the deployed spouse.

It's a culture shock for an 18-23 yo military spouse with kids from rural USA to be dumped in the middle of a SD military housing project days or weeks before their spouse deploys.

Alway studying has come a lo-o-o-ng way, IMO.

BG, no need to thank me, I signed up and reenlisted many times knowing what I was getting into. I actually don't like it how people feel they need to thank the military. I understand why they want to, but don't like it. We are all being compensated for the career choices that we make.

You are right that many service members obtain college credits, I knew many throughout my career who earned degrees while still serving and deploying.

To say that my family has been supportive would be an understatement, my wife is incredible, I will just leave it at that.

Yes my living conditions were not that great, the government never rented me a expensive hotel like they did for Brian's friend. On my 1st deployment to Iraq we slept under the stars as the SNCOs in my platoon gave our 2 man tents to our Sgt's so they wouldn't be so cramped. On my last three deployments to that wonderful country we slept in the old Iraqi air force barracks. It wasn't great but it wasn't too bad either.

My point is that although our living conditions were not great, we all knew what we were signing up for.

I do have a huge amount of respect for all the young kids who signed up after 9/11. When I enlisted out of high school in 1989 there was a thought of going to war, the kids who sign up now, KNOW they are going.

BG, once again you are right that the military housing allowance is deducted when you live in base housing. I only lived in base housing for six months, I would never do it again. The housing in San Diego is privatized. Lincoln Military Housing controls the housing in the San Diego area. I lived in the Linda Vista E-6 and up housing for 6 months, my rent was my full housing allowance ($2400) a month, and the house was in BAD shape.

The issues you bring up about enlisted servicemen having trouble in their marriages is why I support the services instituting regulations that forbid service members on the first enlistment from getting married. Gen Mundy the Commandant of the Marine Corps tried it in 1993, but had to revoke it after 1 day. Young married Marines can be a serious leadership challenge, as they and their new spouse are not emotionally ready to handle the lifestyle of long stretches of time away from each other.

This brings me to another point. Why do people join enlist in the military and immediately start having kids? I have seen 20 year old E-3's with three kids complaining they have no money. And then the media cries that we need to support our military families. What needs to happen is that military members need to realize that the pay sucks, and if you let your wife (or husband) sit at home and pop out babies then your life is going to suck also. End of rant.

Good point, the Post 9/11 GI Bill will pay up to $80,00 for college. I know they paid ASU $45,000 for my MBA, and even paid me a living stipend while I finished my degree for two months after I retired.

The benefits we get are incredible, I wish more servicemembers would take advantage of them. On the other hand if they do, this country will go broke!

Always studying, thanks for the candid posts. Those are the kinds of honest discussions we need to have in order to come up with workable and fair solutions.

*

BG, my buddy had a girlfriend in Corpus Christi who wanted to get pregnant and get married as fast as possible. Plus his sister is greedy and money hungry (gets $90k/year in alimony and still pleads poverty) so he's remained a bachelor. I tell him that if he's worried about dying lonely, he could always bring a poor foreign bride to America and either have kids with her or adopt. She will eternally be grateful, cook and take care of him 'til death do they part (I'm kinda joking here).

I have 2 young cousins who enlisted out of HS and went to war after 9/11. One guy saw combat in Afghanistan, but he's perfectly well-adjusted. The other guy was sent to learn Korean at Monterrey Language Institute. But then they send him to Iraq to some office job.

They are both in college now (paid for by the government). They also get $1,200 per month stipend for going to school (married guy gets more but I don't recall how much). One cousin married the daughter of a pastor and is majoring in political science -- perfect springboard to a political career, IMO.

What's the NPV of that college education?

BG, did you know that after basic training, soldiers don't even have to make their own beds? They have people to do that.