Why would you stay in the military with a CSP and a Master’s degree for enlisted pay?

 

In Air Force Safety, we hire (cross-train) 45 active-duty and up to 70 Guard/Reserve Airmen annually. They’ve typically been in the military 4 to 6 years and are looking for a job with both military and civilian future potential. Their first safety training is at Lackland Air Force Base, where the safety students learn from some of the best military safety instructors in the business.

Somewhere in the 6-week course, they learn that a CSP earns $109,000 on average. I have the opportunity to meet with many of the students, and inevitably, the question arises;

“Why did you stay in for enlisted pay if EHS pays so well on the outside?”

(NOTE: The questioner is usually great at math and appreciates an answer with more numbers than emotions.)

My favorite Department of Defense actuarial report (don’t roll your eyes yet) is the “STATISTICAL REPORT ON THE MILITARY RETIREMENT SYSTEM”. Published each fiscal year (FY16 is the latest report), it details the cost of military pay and retirement plans.

Some highlights I like to use to answer this question:

An E-7’s retirement at 20 years of service is worth $689,299, or $2,181 a month for life (with cost-of-living increases.) To build up such a high lump-sum, the E-7 would have had to save $1,645 a month for 20 years!

An E-9’s retirement at 20 years of service is worth $862,177, or $2,728 a month for life (with cost-of-living increases.) To build up such a high lump-sum, the E-9 would have had to save $2,058 a month for 20 years!

Using that math, when an E-6 separates from the military for a larger civilian CSP salary, at the 8 or 10 year mark, they are giving up between $689k and 862k in pension benefits alone (not including healthcare, etc.)! To make up this pension difference in a civilian safety career, if they got out after 8 years (and would have retired as an E-7) they would have to save $3,400 a month at 6% interest. That’s nearly $41,000 a year for 12 years. That level of required savings takes a lot out of the $109,000 average CSP salary!

Bottom Line? Even with the 2018 changes in military retirement (Blended Military Retirement), the military’s defined benefit pension is a fantastic option for the safety professional looking to make a difference in the military and in their career path by choosing higher education/credentialing.

Some of my other favorite parts of the DoD report:

  • They know when you’re going to die (on average): Page 283/284
  • They know where you live (state and country): Pages 28 and 33
  • Should you take the Survivor Benefit Plan? Here’s the actuaries’ own calculator (Excel file) to tell you the probability of it paying off for you.

There are MANY reasons to continue to serve (and separate) after achieving advanced degrees and certifications.

How did you make your choice?

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