

Nobody Asked Me But…You Can Have Your Cake and Eat It Too

By Lieutenant George S. Capen, U.S. Navy

In order to view this from the government's perspective, consider the first year our junior officer contributed $4,800. If his retirement base is $6,000 in 12 years (a captain with 22 years), then reducing his retirement check by 2% for that first year of matching contributions means he would get $120 less per month. So, in 40 months (3 years and 4 months), the government has recouped the expense of matching his contributions. If he lived another 25 years, until age 72, the government would save $36,000. For the case above where he contributed for all 12 years, the government would recoup the matching funds in just over four years after retirement and then save an astonishing $518,000.

Let's face it, Uncle Sam will continue to debate cutting military retirement benefits. This plan allows service members more flexibility and more security to determine their own financial health in retirement. At the same time it allows the government a legitimate option to spend less on retirements. The bottom line is that a real 401(k) provides the government a potential savings of more than $4 billion per year in just the retirement account. How can we not do this?

Lieutenant Capen is the Operations Officer on the staff of Commander, Destroyer Squadron 21.


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