Wednesday, February 10, 2016

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

Guest Post by Navy Wife Jill

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 swearthat 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there are the people who look at it and feel that financially, our current retirement system is extremely expensive and out of date.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  It looks like a windfall, out of date, and too good to be true retirement package that needs to be updated.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 cannotfor 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.


References: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

About the Blogger:

Jill is a Navy Spouse, find more of her writing on her blog Keep Calm and Have a Cosmo

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6 Responses to “The Invisible Military Spouse – how the new retirement proposal misses a huge piece of the financial planning puzzle”
  1. Kristen says:

    Love this Jill! Thanks for sharing it on My Military Life. We are definitely a piece of the puzzle and should not be overlooked. Thank you for explaining it so well!

  2. Coast Guard Wife says:

    Holy Crap – so glad another professional noticed this trend. Everywhere I move, my profession considers my selection a liability, not to mention the personal costs to keep professional licenses updated to the higher standard. I have to work harder to get less. My husband entered at 27 instead of 18, our prospects for re-employment for either of us are really limited. Do they want to not bring in more mature candidates to the military or family support systems? I see limited scholarships all the time for wives to access “medical” training to become a coder, medical technician, or pharmacy technician, but these jobs barely pay above minimum wage. If they don’t want to see indebtedness tying members to the susceptibility of the market while soldiers are touring, they really need to reconsider that this creates the burden for many houses to enter alternative markets, where one military members’ spouse may have to consider joining the military just to make ends meet and then, we worry about family instability. In my book, you are right – it’s a matter of not if but when the retirement system changes. You were kind to suggest it makes us invisible, but quite frankly, their blatant disregard pisses me off because they aren’t out there pounding pavement and are listening to ten year old rhetoric about 401K’s without the lessons.

  3. Janet Farley says:

    Bravo Navy Spouse Jill. Well said.

  4. Jill–That is the BEST explanation I’ve seen about the impact of changing the retirement system on military families (and really military readiness because YES more military members will have to make a practice decision to leave even when they truly want to serve.) You should be testifying in front of congress!

  5. whoops…my spelling error….of course I meant more military members will have to make a practical decision to leave.

  6. Megan says:

    I love this post!

    When we heard about the proposed changes I turned to my husband and for the first time in my life (I grew up military) I said maybe we shouldn’t wait to retire if this gets passed. I’ve always encouraged staying in and making it a career, the military is all I know and frankly I’m seriously scared of transferring to the civilian sector with no net, no guarantee, that we will be employed tomorrow or next month. But this made me think that maybe we should just get out now (well at EOS) and not waist the time if the changes are made, we are over ten years in.

    See, the issue is I don’t work, I have committed to homeschooling my kids, his income is all we have, and all we have had since we’ve been married (I went to an occupational school, and working to pay daycare just isn’t worth it). We have no saving because we’ve over extended our selves a time or two (one specifically involving a pay issue which had a domino effect). We are counting on that retirement pension to catch us when he retires and help us get settled into another job. There is no guarantee that he will get into a well paying job right after he retires, that pension is needed. Besides hasn’t he earned it anyways? The constant deployments, the constant duty days, I don’t know any civilian counterpart who would stand to get paid equally for the same amount of ‘time on the clock’, I always thought the retirement made up for it.

    I enjoyed reading your post, thank you!!

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