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Sirs and Ma'ams,

Just back from TMF headquarters. Things are looking good for the future of military Foolery. First off, they're thinking of publishing a special Rule Your Retirement issue for Military Fools.
To make this happen, TMF HQ wants to hear from you! Give us your five biggest issues specific to military investors.
These can be things you would like to know about, things from your own experience, or things that you think new military investors will want to know. Look forward to hearing from you!

Fool Up, Troops!
Magicflight
@MilitaryFool
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Medical costs didn't matter previously, until, our Free Medical Care for the rest of our lives, now are slowly disappearing.

What's the 'workaround' Alternative(s) Plan.
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Was Justing about this the other day with a fellow retiree getting hit with the removal of Tri-Care Prime areas... Now he has to switch to tri-care standard.... so much for free health care promised to us all...
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Kahuna, Tigermn, thanks for the feedback.

So far we've got:
1) Military retirees are losing retirement medical benefits. What can we do about that as retirees?

2) The military pension program is stronger than most. (With my follow-on: can we remain a more aggressive investor with a strong pension to fall back on?)

Good stuff so far. I'd love to hear more!

Magicflight
@MilitaryFool
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Hi magicflight!

One timely issue for active duty Fools would be a comparison of pro/cons for the new Roth TSP option versus the traditional TSP program, as well as interactions with Trad/Roth IRA contributions. There are some unique aspects involved, for example, TSP contributions for members in tax-free combat zones (and the fact that those do not go towards deferred caps), that many active duty types do not fully grasp.

cicciano
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TSP/SDP compare and contrast while members are in a combat zone. Redux is still an important topic. Math behind how to determine if the Survivor Benefit Plan is right for you. How to capture the value of your military retirement and apply it to asset allocation in preparation for retirement.

-Ryan
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Kahuna,
Happy to discuss military Foolery in any way you'd like!

-Magicflight
@MilitaryFool
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Holzapfel, Cicciano, Ryan, thanks for the input!

Great ideas.

So far we've got:
1) Military retirees are losing retirement medical benefits. What can we do about that as retirees?

2) The military pension program is stronger than most. (With my follow-on: can we remain a more aggressive investor with a strong pension to fall back on?)

3) Traditional vs Roth TSPs. Especially taking into account military tax-free pays.

4)Savings Deposit Program - if I understand the question right: Should you max out the SDP instead of the TSP when able. Very interesting question.

5) Redux vs full retirement. And how about 15 year early retirement vs 20?

6) Is the Survivor Benefit Plan right for you?

Ryan, could you elaborate on this one? I.e. what are good alternatives and considerations for choosing?

Well done so far, what else is out there?

Magicflight
@MilitaryFool
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Regarding TSP, recommendations on allocations among the various funds would be good.
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I think how to best invest while military members serve and have a steady paycheck coming in would help. The retirement pension is nice, but for most it is not enough to fully depend on.
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Military Fools,
Thanks for all of the ideas!

folgore, thanks for the input. I'll add it to the list. You might also be interested in reading some of my blogs. They'll get more complex as we go, but I'm focusing on the TSP right now. http://beta.fool.com/Magicflight/

tredadda, taking into account the retirement pension as part of our investment portfolio definitely seems to be a popular topic. Good stuff.

Anybody have opinions on the topics so far?

Magicflight
@MilitaryFool
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6) Is the Survivor Benefit Plan right for you?

Ryan, could you elaborate on this one? I.e. what are good alternatives and considerations for choosing?


Only about 3 weeks late in responding to this one. Less about alternatives, but more about what factors should be considered when choosing whether or not to enroll in the SBP. This may fall closer to the retirement planning arena in general, but I find that most of my members who start looking at retirement get scared of the idea of not having an income for a spouse at some point and seem to leap at the SBP. Alternatively, some see as too much of a cost and opt to forgo enrollment.

What should drive that decision beyond a members total amount of retirement savings? Future employment plans? Current liabilities? Etc. Take my situation, both my wife & I are AD, each expect to reach retirement. One will likely have 75% and the other 50%. With retirement savings solidified, neither one of us will need to depend on the others retirement for income. So we will most likely forgo the SBP.

Smart decision? Dumb decision? I think it's sound logic, but I could be way off base. Exploring the right questions may lead people to the right answers with regard to the SDP.

-Ryan
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We have retired to northern WI and just got the letter about no longer going to be able to be Tricare Prime. There are very few Tricare providers in this neck of the woods and the regional medical center is at Wright-Patterson, the area we moved from. We are a couple of years out from Medicare and are trying to figure out our options :(
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Tri-Care Standard
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Tricare Standard it is!
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The resizing of the Prime Service Areas (PSA) doesn't have anything to do with sequestration or the current budget problems. In the previous generation of TRICARE contracts the healthcare contractors submitting bids pretty much all included 100% Prime coverage in their bids, even though it was not in the contract solicitation. As the next generation of TRICARE contracts have finally expired, 100% Prime coverage is still not in the solicitations, however this time the contractors did not include it at no cost in their proposals. Thus, the TRICARE coverage is returning to the original PSAs, with TRICARE Standard in the non-Prime areas. Any beneficiary who wishes to live outside a PSA should assess their health status and then strongly consider a good TRICARE Supplemental policy.

e.j.
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I'm not sure if a Tricare supplemental policy is all that cost-effective for us. As I understand it, the maximum out-of-pocket for Tricare Standard is $3000/family. For my husband and I, ages 61 and 56, I found rates from $1272 to $1752. $1272-$1752 every year seems like an awful lot to ensure against a merely possible $3000 cost.

We hate losing Tricare Prime.
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That doesn't seem worth it.
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Sorry that this took so long to post: I read (and religiously save)Tammy Flanagan's "Retirement Planning" column in Government Executive (GovExec.com). A line in her most recent column is most appropriate to this discussion: "At this stage of life, you need to be sure that your health insurance coverage matches your health concerns." This stage of life is all about risk management. If you (and your family, if appropriate) are healthy then a TRICARE Supplement may not be necessary. If you have on-going health issues, then you should strongly consider a supplement. Only you can make this decision and only you should, but there is nothing more sad then to be on the Health Benefits Advisor side of the desk and to hear a customer describe how their illness bankrupted them when all you can do is ask why they (or their sponsor) didn't make adequate plans.

E.J.
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I'm not worried about being bankrupted with a maximum annual out-of-pocket of $3000. We spend more than that on our dogs and cats.
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That's a good point, especially for your dogs and cats, however others who read this might be in different circumstances. In addition, the TRICARE Catastrophic Cap isn't all inclusive. Per the TRICARE Manual: "The catastrophic cap does not apply to cost-share amounts for services that are not TRICARE-covered; point-of-service charges; TRS, TRICARE Retired Reserve, and TRICARE Young Adult premiums; or the additional 15 percent above the TRICARE-allowable charge that nonparticipating providers may charge."

I wish I did HTML, because I would bold "does not apply to cost-share amounts for services that are not TRICARE-covered; POS charges or the additional 15 percent above the TMAC that nonparticipating providers may charge."

e.j.
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"does not apply to cost-share amounts for services that are not TRICARE-covered; POS charges or the additional 15 percent above the TMAC that nonparticipating providers may charge."

The supplementary plans I looked at didn't appear to cover much else that TRICARE didn't cover, but then I wasn't looking for services that we would be unlikely to ever want or need.

We live in an area that appears to have an adequate range of network providers, but I can understand others needing to rely on POS or nonparticipating providers.

If circumstances change, we may re-assess after being on Standard/Extra for awhile.
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Mitch,
Sorry I am late to this discussion....

In addition to the SBP discussion, there is the whole area of RCSBP (Reserve Component Survivor Benefit Plan). The MOAA (Military Officer's Association of America) had some good article awhile back about the subject, but it is always timely.

Also, with respect to holistic portfolio planning for retirement: Yes, you *must* take into account the annuity stream from the retirement. It is the equivalent to a HUGE (virtual) fixed-income (semi-inflation adjusted no less!) investment. Assuming a gross retirement check of $25,000.00 , that is essentially equivalent to an ~$820,000 annuity if one were to purchase it today**

Based on discussions I have had with others, they are not even considering this when making asset allocation decisions.

R/

Joe


**per calculations at http://www.1728.org/annupay.htm, using the following inputs:
25,000 payout
40 year timeframe
1% annual interest
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