Friday, August 19, 2011

A little note from my friend Kristy

The true financial costs of military service

by Kristy McGinnis on Thursday, August 18, 2011 at 7:25pm
So many articles, blog entries and editorials have focused on the physical, emotional, and mental toll a 20+ yr military career can take - and why the current 20 yr pay out retirement system is a necessary result of that toll. I'd like to focus on another aspect, in this military-civilian comparison game. The financial toll this career takes on a family.

While my civilian counterparts have been busy working hard and establishing their careers- enjoying the long term savings and job security that comes with tenure in any field, I find myself (once again) pounding hoof to the pavement. I apply to jobs I went to school for (actually 3 schools, in 3 states and 6 yrs, to get that associates degree.) Paralegal, legal assistant, legal secretary, even clerk positions. When I can get my foot in the door for an interview, I find myself grasping to explain the inevitable employment gaps all military spouses experiment. Why no, I don't have any local legal contacts. I didn't go that that great local college with the job partnership opportunity this firm participates in. I don't meet all of this states special certification requirements (yet.)

I look to retail jobs ("Yes, it's true my application reflects a varied job background but there's a reason for that..."), entry level office jobs ("What brings me to Hawaii? Well... err.... my husbands job...."), usually at some point I find myself looking to food and beverage positions (jobs I'm frankly getting a little too old and too arthritic to do for long!)

While my friends from "back home" have established careers, and socked away nice little nest eggs in their own 401K type plans, I have found work when and where I could- and have simply waited with faith that one day my husband's military pension along with the modest TSP we pay into would support us in our old age. My friends and their spouses will both enjoy retirement plans eventually, that they certainly earned- in our family though, I will have to be content to simply share my husbands.

The financial hits don't stop there. You see, as my civilian counterparts were working so hard at establishing their careers (and their own retirement plans) they are also enjoying another perk of stability and long-term residency. They are home owners. They started with a patient starter home and every 7 or 8 yrs they steadily upgraded, earning equity and increased credit worthiness with each upgrade. My family on the other hand, transfers every 2 to 4 years on average, and those transfers are never local. We have no owned home, no equity to enjoy. Many military families find themselves home owners eventually- only to get orders out and find they actually lose money on trying to unload said home in time to transfer out on their required military orders. We know we will not have 30 years of home ownership, to set us up in an already well financed house when we are ready to retire. Here is the thing- most of us don't resent that, we accept it as part of this life style. It's a financial price to pay, but one that is mitigated- at year 20, when finally said service member is eligible for retirement. Don't have a home 3/4 paid off by then? Not the end of the world- that retirement check will help pay for that house, as you take on a second (hopefully less punishing to the body) career.

There are incalculable financial losses over a career- setting up a new home every 2-4 yrs is not cheap even with moving allowances. New curtains, new appliances if need be, replacing broken items from the less than careful household goods movers. There are the pricey but necessary special tutors for the child who left one school district to find the new one had very different expectations. The tens of thousands of dollars spent over a career just to get home once every few years to visit Grandma. "The life" isn't always cheap- but on most days it is worth it. Always, with the knowledge in the back of your mind the financial hits will be reimbursed someday- "someday" being at around year 20.

The proposed 401K nonsense isn't just an insult because of the physical and mental stresses service members face- but because it fails to compensate those members and their families for the financial hits a "military career" exacts.

-Kristy McGinnis

So I have a little to add:  I did everything "in order" in my life.  I went to college and grad school, started a demanding but lucrative career, met and married a great guy, passed my CPA exam and then had children.  I started a nest egg for my retirement.  So I didn't face as many of the challenges that Kristy and other wives face as they struggle to finish a degree and start a career while moving every 18-36 months. 

However, compared to my other friends who moved near home after college, I have certainly had additional challenges and costs.  I left two jobs just before an important and lucrative promotion.  I paid daycare, full-time, when my friends had Grandma or a sister to help watch the kids for much less than full-time daycare.  I hired an extra nanny to pick up my baby and give me an extra few hours at work when it became impossible to have both dropoff and pick-up responsibilities with a husband out to sea and 50+ hours a week in the office.  I signed up for these extra expenses when marrying a man in military service, so I don't begrudge the Coast Guard, but we did our math to accept them based on the current contract he signed.

My husband has been offered jobs two and three times his current salary to leave the Coast Guard.  We discuss the offers,and each time, turn them down because the stability of his current paycheck, and the PROMISE of a comfortable retirement make up for our current sacrifices.  He has ten years in, just ten more years to go before we can settle into our forever home, begin building equity, send the boys to high school all four years in one school, and allow me to re-join my career as a CPA, without explaining to my clients that I'll probably have to  move again in two years.

The pension makes many of our sacrifices worth the costs of our current lifestyle.  I don't disagree with changes for future recruits, but he idea of changing the contract that Ryan and thousands of others signed 10 years ago is ridiculous.  Anything but a grandfather clause for current members is a sick joke.  Talk of transition plans with a payout for current members into their "new 401K" plan cannot possibly come up with an appropriate amount to compensate what I've lost financilly in my career due to our choice for Ryan to stay in the Coast Guard.  He's served 10 years at sea with 10 more to go and based on the current retirement plan, and though we'll never be rich, we planned a simple, modest retirement.  If they change the plan, he'll get out and we'll begin the process of mitigating the damage done to our long-term plans.  But we'll be 10 years behind.


  1. OK, I'm now going to have to go Google what's going on with the 401k situation, because I'm obviously not up-to-speed with military life. BUT it sounds like you're being done a terrible disservice; I agree, if you signed a contract promising one thing, you should be grandfathered in. ESPECIALLY when it comes to long-term finances and stability in retirement.

    That said, I have to say that Kristy is vastly overstating the benefits of home ownership, at least in regards to today's economy. We bought our home in August 2006 (our five year "house-iversary" is next Wednesday), when things were booming. Five years, one refinance and one addition (we added on a sunroom), our home is worth roughly $12k less than we've put into it. The only reason we have ANY equity in our home is because (A) we paid for our addition in cash and (B) we paid extra mortgage payments while I was still working. But if we'd just paid our mortgage monthly and financed the sunroom, we'd be truly underwater. Sadly, I think people who DON'T own a home at this point (and have the advantage of buying a home at a great deal in the current market) are at an advantage!

  2. But Elizabeth, you forget that you can STAY in your home, even though you're underwater. In 3 years (after owning this home 8 years) we'll be forced to sell or rent or walk away from this house, probably still underwater. We don't get the choice to stay and wait for the market to improve.

  3. I have to completely concur with both Kristy and Sue. The ONE advantage both Kristy and I have (and other now prior service married to AD) is that we KNOW personally what the AD member in the USCG goes through on a daily basis. We can identify with 'the other side of the fence' and do so without complaint.

    I'm grateful for the education opportunity serving has given me and with the new benefit to use my husband's GI Bill, but those programs we PAID into as cash-strapped E2/3's so that our future's would have a glimmer of light. This new military pension crap is the biggest slap in the face to every single person who has served and is serving - even to those who are in the process of enlisting/commissioning.

    When will the hard-swallow stop? Answer: When the military refuses to serve a self-serving Congress that keeps heaping the slop on our backs.

    At the cusp of voluntarily sacrificing 25 years of his life and many dreams, this is the thanks my husband has to look forward to eating? I think not. There is a fight looming on the horizon and the Hill will not be victorious.