CSB Redux: What is it?

What is the CSB/REDUX retirement plan?

If you read my last article, you now know what the US Military retirement system looks like, and how much you stand to be paid at the end of your service should you serve a cumulative of 20 years of active service.  I had mentioned the CSB/REDUX plan very shortly during the last article; giving a TL;DR statement that the CSB/REDUX is generally not a good deal.

So what is the CSB/REDUX?   It stands for Career Status Bonus, which is a part of the REDUX retirement system.  It sounds like they are two separate things; and in a way they are.  But they are a package deal, as you cannot opt for one without opting for the other as well.  The CSB bonus is a one-time payment of $30,000 to the Soldier enrolling in the CSB/REDUX program.  It is payable on the first day of the 15th year of active service.  This cash payment is taxable, though if you elect to receive the CSB and you are deployed to a Combat Tax Exempt zone on the 1st day of the 15th year of your service, it will not be taxed so long as your total compensation does not eclipse the pay of the CSM of the Army (as is tradition).

The thought process is that, at your 15th year of service, you should start looking to the future for what you will do when you retire.  $30k of cash can open lots of possibilities up to you when planning for the future.  Investing in a possible future business venture or civilian training or even a major purchase can help make sure you are ready to separate when the time comes.

But this bonus does not come free.  As stated above, you must elect also to use the REDUX retirement system.   The REDUX system changes your retirement pay in two key ways; it changes how your retirement multiplier is calculated and it changes the way your cost of living adjustment is calculated each year when you do retire.

So, let’s review the normal retirement (High 3 or 36) calculation for a refresher.

For the REDUX system, the equation is altered at the “Retirement multiplier” portion.  But the change is two fold.  The first 20 years of active federal service count for a multiplier of 2.0 instead of 2.5.  Every year after the first 20 count for a multiplier of 3.5.  So, the equation becomes more complex:

So the immediate implication of the adjustment is that, should you decide to retire at 20 YAFS, your retirement percentage would be 40% instead of the 50% that you would be getting with the High-36 system.  REDUX attempts to make up for this by adding a whole point to the per year increase of the retirement multiplier (3.5 vs the 2.5 for High-36).  Using this increased multiplier, a service member can get back to the whole 50% by their 23rd YAFS, and fully catch up to where the High-36 system would be comparatively by the 30th YAFS (though, it is worth noting here that very few service members are able to make it to their 30th YAFS due to the limited availability of promotions and slots).

The second change to the REDUX package compared to the High-36 is the COLA adjustment.  As stated in the last article, the High-36 package adjusts retirement pay each year according to the percentage change in the Consumer Price Index (CPI).  Normal adjustments are between 1-3%.  REDUX plans the same way, except that the adjustment will be reduced by 1% point.  For example, if the CPI increase for the year was 3% and someone with a High-36 plan had their pay increased by 3%, a REDUX plan increase would only be 2%.

The REDUX plan makes up for this with a one-time re-computation of retirement pay at age 62.  The first adjustment is to the retirement multiplier.  This adjustment effectively returns the multiplier to where it would be if the service member would have retired under the “High-36” system.  For example, if you retire with the REDUX plan at 20 years, at age 62 your retirement multiplier will be changed from 40% to 50%.  The same adjustment applies for any other YAFS calculation.  The second adjustment is to the COLA.  Like above, the COLA rate is caught up as if you were on the High-36 system.  So every 1% that was missed out on is now adjusted back to the full percentage.  However, after this adjustment, further COLA adjustments are still calculated at 1% below the CPI adjustment.

*As a non-footnote footnote, if a service member elects to receive the CSB and fails to reach 20 YAFS, the service member must repay a pro-rated share of the bonus. 

The thought process behind the Armed Forces actually offering the CSB/REDUX package is two-fold.  First, the system encourages long term service.  This helps the Armed Forces keep more personnel in beyond the 20 year drop off, expanding the talent pool so that when promotion time comes around, the Armed Forces can select the highest possible qualified personnel.

Second, the program saves the government a significant chunk of money.  There are several reasons for this, most of which I will get into in the next article.

But let me end with this.  I do not look down on those who choose to take the CSB.  In fact, it can be an extremely useful pot of money to draw on.  It may not be in your financial best interests to take the bonus in most circumstances, but if it is wisely used, it can increase your quality of life and even help you navigate to a good career after retirement. 

But the key word in that sentence was “Wisely”.

That being said, I am now back from my break.  I will not be publishing a comic this week, but look forward to a new video on Monday!

CSDP- The National Stock Number (NSN) and Line Item Number (LIN)

This is one of the few videos I really had in mind when I started this project.  Without some sort of common base of knowledge on what the codes on your hand receipt mean, you can be totally lost in the sauce.  It is tragic, too, because it is SOOOOO SIMPLE.  But it is not immediately obvious what these numbers are, what they are comprised of and what they mean.

But they are the key to knowing basically everything you need to know at the user level.  And you know it is one of those things that, yea, they probability brush over it during your initial entry training somewhere, but in a non-significant way or even in an off handed way.  Without a goliath attention span, you will not catch it.

It is a shame too, because this is one of those things you are just expected to know.  While you may catch on to it fairly quickly as you deal with supply, it would be better if you did not have to catch on, but if you already knew it.

So here you go.  This video is not all inclusive, as I could have gone into what the first letter of the LIN corresponds to (generally, the first letter of the generic nomenclature of the category, like M for Mask and T for truck, ect) or how to find out what non-standard LIN or NSN goes with what item.

I will be taking the next week off of making videos as I PCS from one station in Germany to another.  I also expect to take the middle two weeks of July off as I am going home to visit my family and attend a wedding.  However, I will post blogs one way or the other.  Thanks!

New-Guy Tricks

If you watched my first video, you will remember I very briefly mentioned how sometimes we Army folk like to play new-guy tricks.  The list is never-ending and everyone has a favorite.  I am partial to the exhaust sample myself, and I will explain why at the bottom

There are two types of people that play new guy tricks.  There is the type that is simply trying to assimilate the new guy, almost like a right of passage or an ice-breaker.  This kind is harmless fun, and in the end it can actually help the new guy integrate, so long as it is not taken too far.  

The other is mean spirited and vile.  The kind of person who does it in a mean spirited way plays the tricks because they need some sort of self-validation, and by demeaning others, they get this validation.  The challenge is to know which one is going on and to avoid the mean spirited one.  I say this because if someone tries to play a new guy trick on you but it is harmless, there is nothing wrong with being tricked or playing along.  But if it is mean spirited, it will hurt you.  But it will also quickly tell you who is not to be trusted and should be gotten rid of.

When I was a cadet, I had cadet troop leader training at Fort Hood with an Engineer Company.  I was paired with an overly ambitious cadet who was very, very eager to please.  Now, I am prior service, so I had all the new guy tricks played on me already.  But he was not.

So when we were doing a PMCS with one of the squad leaders, he said the truck was due for an exhaust sample.  He handed me a very large pickle jar and asked me to collect some of the exhaust from the tailpipe while he revved the engine.  I immediately called him on his bullshit and handed it back.  The other cadet not only believed him, but yanked it out of his hands and started walking to the tailpipe.

I swear I told him he was playing with us.  But he did not believe me.  So I just let it happen.

We take the sample to the Motor SGT, who opens the jar, takes a sniff, and says, "You had better take this to the XO, this is off"

We took it to the XO, who did the same thing and said, "It smells like we have a blown engine."

He walked with us into the Commander's office, who also smelled it and looked panicked.  "We have to let the Battalion XO know now!  But I can't leave! Cadets, can you take it?"

My battle buddy was so excited.  I told him that he was on his own on this one.  

So he walked to Battalion, but I stayed at the Company.  The Commander asked why I did not go, and I told her that I knew that we were being led on a wild goose chase.  My battle came back around looking dejected.

"The XO said that the sample expired and I have to go get a new one"

So the Commander said, "You had better go now!" And he did.

Hilarity ensued when he got back.  He was mad, but the next day he had gotten over it and calmed down a little.  Hell, he turned into a cool guy to be around.  I guess it taught him not to over do it or take the Army too seriously.  No more new guy tricks were played after that, but he did get to take the pickle jar home with him.  And it was signed by everyone in the motor-pool.

High 36 Retirement- What is it?

I was helping a Warrant Officer in my shop on a mission to turn in some vans we borrowed from another unit about two hours away.  This involved driving out there in a convoy and carpooling back.  While we were waiting in a traffic jam that had occurred on the Autobahn, I had decided to listen to a book on tape about Alexander of Macedonia and his adventures.  I had a hard time paying attention, because one of the NCO’s with us was discussing his plan to take the REDUX retirement plan and use it to pay off his mortgage. I started eavesdropping about his situation and I became very interested.

Now, I am going write about this topic through several blogs.  But to save you time if you do not care to follow it all the way through, here is my “Too Long; Didn’t Read” summary:

TL;DR- The CSB/REDUX retirement plan is not worth it except in unusual and very specific situations.  I highly recommend that you avoid it.

So, to understand the CSB/REDUX retirement plan, first you have to understand the normal, or “High 36”, retirement plan.  Once a service member has accumulated 240 months (20 years) of active duty time (can be combined with reserve time, but it only counts days actually served and it is a complex formula), he or she is eligible for retirement pay.

Retirement pay is calculated as follows:

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OK, let’s do some math!  Let’s say that, at the time of retirement, you are a Major with 20 Years of Active Federal Service (YAFS).  You were a prior service NCO and two years ago you were promoted to Major (when you were at 18 YAFS).  Assuming you were never paid higher than the last three years, we will go with the pay tables as if you retired 31 December 2014:

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I simplified the High 36 for convenience, adding the three years of highest pay and then dividing by three instead of adding 36 months and dividing by 36, going with the assumption that the past three years were our highest paid.

Not too Shabby, eh?  One more thing I want you to notice is the 2.5 x YAFS part.  This means that if you choose to stay in past the 20 year mark, that part of the equation gets larger.  Effectively, this part of the equation calculates your percentage, or your retired pay multiplier.  So, let’s change the numbers a bit.  Let’s say that you are in a similar situation, but retiring as a LTC with 27 years in.  You were promoted to LTC last year, so you only received LTC pay for one year.  Let’s see the numbers:

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Did you notice the difference? The high 36 only went up by about $700, but the monthly retirement payment went up by about $1700!  That is some major money.  But just FYSA, once you hit 30 YAFS, the retirement multiplier stops increasing yearly except in very specific circumstances (like you are asked to be a four star general or something).  So your retirement multiplier is capped at 75%.

Remember, though, that the 36 months of average highest base pay means the highest in your career, not the highest at the end.  So, if you are a Sergeant First Class and you get in trouble and get reduced causing you to take a pay cut, that may be irrelevant in the end.  It is all about the average of the highest 36 months of your pay while in the army (not necessarily consecutive).

But there is one more component to retirement pay that you need to know, and that is the Cost of Living Adjustment (COLA).

COLA for retirement is different than overseas COLA, but the concept is similar.  As time goes on, the value of the US dollar is changed due to inflation or deflation in the economy.  When the economy is experiencing inflation, the purchasing power of the US dollar goes down.  This is the normal order of things, and nothing to be too worried about.  Because of this, the Military will adjust retirement pay according to the inflation.

The COLA increase is tied to the Consumer Price Index (CPI).  Without getting to far in the weeds, the CPI measures the purchasing power of the dollar.  When the CPI for the current year is higher than the CPI for the previous year, they calculate the percentage difference and increase retirement pay for the next year by that percentage.  So if the CPI goes up by 1.5%, the pay will go up accordingly.

So, with this in mind, the equation to find out what your monthly payments will be in the given year is as follows:

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So, if you were paid $4000 per month in 2013, the calculation for what you are paid per month in 2014 (With a CPI increase of 1.5%) looks like this:

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The increase is $60 a month, or $720 annually.  That is not huge, but over time the percentages can add up.  Every year should be slightly different, but the one thing you can count on is that it will never go negative.  What I mean by this is that should the CPI go down (meaning the economy is in deflation), there will not be a reduction COLA or reduction in your pay.

So now you have the basics on how it works.  You can calculate this on your own if you like to do the math (I do).  But, if you would rather have the internet tell you, check out this DOD military compensation page. It will give you lots of information, along with some handy figures for the total value of your retirement over your lifetime.

Next time, I am going to introduce the concept of CSB/REDUX and how that changes our calculations, where we will see a small up front benefit at the cost of a later reduction in your monthly retirement pay.

CSDP: The ARC (Accounting Requirements Code)

This week, we are reviewing the ARC code.  This code is important in several ways that I talk about in the video.

I mentioned that sometimes TM's and SKO's are wrong on what the ARC code is for an item, if it is listed.  Now, AR 735-5 specifically states that FEDLOG is the official source for what an item's ARC code is.  This can be key when you do inventories of components, as listings can be confused both ways.  I have seen TM's and SKO's list items as non-expendable when they are, by FEDLOG, expendable or durable.  I have also seen the reverse.

Why does this matter?  Well, if a non-expendable item is missing, accountability must be either immediately re-established (i.e. the item is found) or relief of accountability must take place (in the form of a statement of charges or a FLIPL).  This may be true of durable items and, to an extent, expendable items.  But the Company Commander can usually take care of durable and expendables at their level, so that it does not become an issue most time, where the Commander is forced to take a missing non-expendable to the Battalion or Brigade S-4 as soon as they are made aware.

Something that I did before doing assumption inventories (where I am issued or take responsibility for something) is look up the ARC code of every component I could (within reason).  I usually would believe SKO's, but I would look up every TM listed component.  That way, if you run into this, you are prepared.

But it is up to you how you do it.  So here is a GIF of a Bunny opening a letter.

I'm Ready!

Sometimes, we think we are ready for things that, well, we are not ready for. This happened to me on my second deployment.

I was the de-facto commander of a detachment supporting a Brigade HQ. The real Company Commander was filling a trainer role the Battalion Commander had put together with the Iraqi's, and they left the main body of the Company to me. This meant that I was in charge of the Hand Receipt.  

I had no problem with most of the other tasks I had to do.  I had the help of a good 1SG, so not many things got past me. I would even go so far as to say I was really good at the convoy missions we had to pull. But I was not ready for the level of responsibility that the property hand receipt was.

The hand receipt was absolutely massive. It was about 50 pages.  But, it was mostly computers, monitors and weapons. I owned every piece of automation on the base and everyone's weapons, regardless of who they were assigned to. The difficulty of this was compounded by the fact that this was a joint unit, so people were constantly coming and going.

My supply NCO was a specialist that was allergic to work. He was not that good anyway, so I ended up doing most of the organization, even if I was not really trained to do so.

About halfway through the cycle, they decided to switch out the position so I could get some experience advising the Iraqis. Another LT who had been doing an advising role would take over for me, so I organized the inventories. 90% happened with no problem. But 10% was completely screwed up. And that 10 percent was all weapons and computers.

People had moved bases, redeployed, or one of several other reasons leading to me not having good accountability of some items. At the end of the day, nothing was missing.  But it was pretty clear that I did not have a good system set up to keep track of these items. It took us an extra week after the inventories were complete to chase down everything.

I did a good job at the on the ground leadership tasks. But I was not ready for the property portion. If I had more training before hand or some experience with a hand receipt, this may have been mitigated. And it nearly costed me a paycheck, if not my career.  Knowing what I know now, it could have been a lot worse.

I had been pretty confident beforehand that I could walk into a Command position and be effective. That experience had taught me that, sometimes, you just need to take your time and learn. They key to success in the Army, it seems to me, is to not shirk from doing things that are unfamiliar or hard, but to know when it may be too much too soon. Or at least know to ask for help when you need it.

PFC John W. Romero and the Cost of War

January 9th, 1945, John W. Romero died in service to his country. How, I don’t know.

He died during the time that his unit, the 87th Infantry Division, was assaulting German positions in the campaign known now as the Battle of the Bulge. He was awarded the Purple Heart, so it is not a stretch to assume that he was killed in action, though he may not have been. 

I bring this up because I had the opportunity to tour the Luxembourg American Cemetery this past week. It was a powerful moment. Every Soldier who has the means to do so should visit an American Military Cemetery in Europe during their life.

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A Graphic overview of the Battle of the Bulge, for the interested.  From the Luxembourg American Cemetery. 

The grave of PFC Romero caught my eye for a shallow reason. He was from New Mexico, and so am I. I did not view every headstone in the cemetery, but he was the only New Mexican that I saw. There was nothing special about his grave. I came across it while touring with a group, being led to the grave of an Easy Company Soldier of Band of Brothers fame. While my group leader was talking, I spotted the grave, noted where John was from, took a picture of his grave, and moved on.

Once the tour was complete, we had some time to walk around on our own for some time. As I meandered around the cemetery, looking at the headstones, I ended up back at John’s grave. I did not intend to, but maybe there was some unconscious effort to do so. Regardless, as soon as I found myself back in front of the grave, the bells in the chapel started chiming Amazing Grace.

I lost it.

I saw the grave as not that of a faceless Soldier who simply shared a home State. I saw it as a neighbor, a friend, a brother, an Uncle. I wanted to sink to my knees and cry. This man, whom I did not know, gave his life in the service of his country. I have no idea if he did it with some reservation, if he was a good Soldier or a bad one. But as I gazed at his grave in a field of marble and grass, I realized the depth of sacrifice these men (and woman, singular in this case) made in service to their country.

How could I measure up to the sacrifice these Soldiers made? Is it a question of opportunity? Is it a question of Scale? Is it a question of willingness?

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I would like to think that, given the same situation that John found himself in during World War II, that I would have been more than willing to give my life like he did. Though I have been deployed many times, I have not faced battle against an aggressive nation state with a sophisticated military. I have not had to enter battle knowing that the casualty count of the war was not in the thousands, but tens and hundreds of thousands.

War is romantic, and society values those who engage in it on their behalf. But the cost of war is painful. I found no romance in Luxembourg that day. I found pain. But I also found exemplars of Honor. And I will remember this for the rest of my life.

Post Script: I have done the most cursory of Google research to determine more about John, and not come up with more than the fact that, yes, he died. When I head home for leave, I will see if I can find out more.  If I do, I will write about it so that you can know too, if I find anything.

CSDP- The Classes of Supply

The classes of supply is one of those things that you always mean to learn.  You will get around to it.  But not today.  It is not really that important.  Anyways, all you really need to know is class V and IX, right?

Well, it is not so important for every-day Army life, but when you start managing Company supply trains and hand receipts, it becomes much more important.  This is one of those deceptively easy things to learn. There are only ten, and the detail on each only goes so far.  

Knowing what system you order supplies through and who you have to request them from can help you coordinate your Company trains.  This will become extremely useful as an XO.

I did not put a video out last week because I was on a trip to Bastogne, Belgium.  That was quite a time.  I will write a post about it later, but suffice it to say that if you get the chance to go, you should.