Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Any ideas for a military man
Old 11-22-2005, 09:02 PM   #1
Dryer sheet aficionado
 
Join Date: Nov 2005
Posts: 32
Any ideas for a military man

Hi everyone.
* * I'm glad I ran across this site. I'm becoming very obcessed with the idea of early retirement. My wife is 38 and I'm 32. I've been in the Air Force for 5 years. We're hoping to be able to retire when I'm between 47-53. I've been the primary provider with the wife just now slowly getting back into her home daycare business. I'm estimating our present income to be around $48,000 with all my allowances and pays plus her small income. I've been saving for a little over two years now. My military pay is modest but I've been able to put away about $7600 in my tsp(military 401k) and 12000 in our IRA's. With the wife working I'll be able to increase my yearly savings to a total of around $13000. I'm hoping to buy a home in a few years once we're back stateside.
* * Is it even possible for me to retire at this age range? I would like to have around $50,000 a year in todays dollars at retirement. If I put in the minimun of 20 years in the Air Force then I'll get around $21,000 (about $31000 if I stayed in for 26) in a yearly pension with inflation cola and health care.
__________________

__________________
aimhigh is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Any ideas for a military man
Old 11-22-2005, 09:20 PM   #2
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,445
Re: Any ideas for a military man

Welcome Aimhigh, and thanks for serving in the Air Force.
Retiring as you mention is as easy as saving enough money to close the gap between your retiement pay and your desired total. It sounds like you are well on your way.* You might want to mention what funds you have your $$ in so the board can pick you apart
Regarding a house purchase in the military, I would advise you to be very careful as some areas are not real hotspots, and if you get reassigned quicker than you had hoped, you could take a bath when selling your home.
As you pursue your dream of an early retirement I hope you will put enough green aside* to see whatever part of the world you happen to be in.* I know the USAF has some bases you might want to forget as quick as you can, but they also have some places that end up being a once in a lifetime opportunity to explore. Don't plan for the future so much that you forget to live for today.
That ought to be enough preaching from me :* Good luck.
__________________

__________________
JPatrick is offline   Reply With Quote
Re: Any ideas for a military man
Old 11-22-2005, 09:32 PM   #3
Dryer sheet aficionado
 
Join Date: Nov 2005
Posts: 32
Re: Any ideas for a military man

thanks.
* * My Air Force afsc (job) tends to keep me in one place for at least 4-5 years sometimes longer if I choose to leave my dream sheet (base wish list) blank.* I just figure if the government is going to make my house payment and the VA helping with no money down, then I can't loose. I see what your saying though about some pretty bad areas, thankfully the Air Force has it a little better off then the say Army . I've looked into my stateside options and most have pretty good stats on home resale.
* * As far as funds go my tsp is on auto pilot with their L funds for 2030. My IRA's are with janus. Growth and income, research fund, and small cap fund.
I'm also presently taking your advice on not getting to carried away with my savings that I don't live as well. We're presently stationed in Germany and have been able to see more then ever imagined. We've done the D.C. vacation, a month at mammoth caves Kentucky, as well as a tour of ground zero N.Y. to mention a few. Being in the military has been hard but it has also been rewarding as well. I have children as well and I make sure they don't do without. I think all these things also played a large part in my savings goals. I want to be able to visit my kids as well as continue to see the World in retirement.
__________________
aimhigh is offline   Reply With Quote
Re: Any ideas for a military man
Old 11-22-2005, 09:57 PM   #4
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,445
Re: Any ideas for a military man

Good old Janus Funds.* They are making a comeback from their recent problems and the funds you mention seem to be fairly decent if the expenses are in line.* I had several Janus funds in my kids account , but I dumped them all except Janus 20, which I consider to be their best.
As you add cash to your IRA I'd start working towards at least 20 % in international fund/s and maybe 5% in an emerging market fund.
I'm glad to see that you appear to keep away from those clowns that hang around the bases pretending to be hotshot financial planners*
__________________
JPatrick is offline   Reply With Quote
Re: Any ideas for a military man
Old 11-22-2005, 10:01 PM   #5
Dryer sheet aficionado
 
Join Date: Nov 2005
Posts: 32
Re: Any ideas for a military man

thanks for the info. 15 years is so close I would just love to kick back and not have the stress of work. And military life can be very stress full.
__________________
aimhigh is offline   Reply With Quote
Re: Here's a few ideas...
Old 11-22-2005, 11:31 PM   #6
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,563
Re: Here's a few ideas...

Quote:
Originally Posted by aimhigh
We're hoping to be able to retire when I'm between 47-53.
My military pay is modest but I've been able to put away about $7600 in my tsp(military 401k) and 12000 in our IRA's.
I'll be able to increase my yearly savings to a total of around $13000.
I'm hoping to buy a home in a few years once we're back stateside.
Is it even possible for me to retire at this age range? I would like to have around $50,000 a year in todays dollars at retirement.
If I put in the minimun of 20 years in the Air Force then I'll get around $21,000 (about $31000 if I stayed in for 26) in a yearly pension with inflation cola and health care.
Welcome, Aimhigh! I'm a retired submariner and we have at least one other USAF retiree, GD-ER, on the board. There are a dozen others like you at varying stages along the military ER path.

Your ER can be done in 21 years and it might be feasible in 15. If you're planning to spend $50K/year in retirement and your pension is $21K then you need to fund expenses of $29K/year. Withdrawing $29K/year as 4% of your portfolio means the retirement funds should total $725K.

You already have $19,600 in tax-deferred accounts that can conservatively appreciate at 7%. In 15 years that'll grow to about $55K. That leaves $670K to go.

Saving at an annual rate of $13K and an assumed return of 6% would give you a bit over $300K in 15 years. However you're going to be getting pay raises every year at the ECI, not the CPI, so you should be gaining on inflation more often than not. I'd say that $300K is a conservative compounding and $350K is achievable.

Making up the other $325K is the trick.
- One way to accomplish that would be to add in your Social Security earnings. You'd be spending down a big chunk of your savings-- perhaps above a 5% withdrawal rate-- from age 47 to 62. Then you'd be withdrawing an SS benefit of somewhere between $5K-$10K/year, but estimate your SS income from the earnings calculator at their website instead of your paper statement. Your portfolio would take a huge short-term hit but might survive in the long term.
- Another way is to retire as soon as you're eligible and let your working spouse support your profligate spending habits in the style to which you've become accustomed until your portfolio reaches the FI numbers. That strategy is working for several of us here.
- Another way would be to retire and take a part-time or a full-time job until you hit your numbers. You have to make your own decision here and avoid the brain-washing of the transition briefings.
- A riskier way would be to retire and start spending your portfolio at an unsustainable rate until your spouse starts collecting her own pension. The success of this tactic depends, of course, on whether or not your spouse vests in a pension plan.

I'm presuming that you entered the service after 1986 and are eligible for the REDUX bonus when you hit 15 years of service. Don't take it!! Your pension COLA will permanently lag the CPI by 1% and $30K is far less than the present value of what you're giving up in COLA. There are DoD REDUX briefings floating around your command's financial staff where you can check the math and satisfy yourself. Ask more questions if you don't understand this subject and we'll cover it in excruciating detail.

It's good that you're in the Thrift Savings Plan. Next month the salary percentage limit will be lifted and you can contribute as much as $15K/year. (My spouse won't get a penny from her Reserve paycheck in 2006-- it'll all be going into the TSP.) You might want to consider being able to put all of your $13K/year savings in the TSP (especially if its expense ratio is lower than Janus) or spreading out your asset allocation. And if you get bonus or special pay, it can go into the TSP above the $15K limit. You can adjust your contributions on the DFAS "MyPay" website and read more about the limits at TSP.gov.

Although 15 more years seems like a small price to pay for FIRE, the stress & family issues might be too much for you to go the distance. If I was doing it all over again I would have paid more attention to the Reserves and taken it one tour at a time. The military runs on the Reserves (some headquarters commands are 30% staffed by full-time Reservists) and you can work most of a year or cut back to the minimum drills. Mobilizations are far less painful than assignment officers who figure that they "own" you when you reach 15 years of service. So take the tours that make you happy, learn all you can from the Reservists you see at your commands, and don't sign any long-term contracts.

Home ownership is not all it's cracked up to be when you're paying high trading costs every few years. You could end up holding the hot potato when the music stops, and I think that the orchestra's final aria is warming up now. If you find your dream house in an area where you KNOW you'll be spending seven years or more then the stability of ownership is worth the risk (and the hassles), but if there's any possibility of becoming a remote landlord then it's far easier to pay rent than a mortgage. Some areas of CA are actually much cheaper to rent than to buy, as some high-equity landlords are learning to their chagrin, and I'm sure that other parts of the country are similarly inverted. So do your due diligence and rent in an area for 6-12 months instead of reflexively buying the weekend before you report to your new command. Not that there's anything wrong with that, but once we ended up holding the property for 12 years before we broke even...

Use this board's search tool to research some of the topics that you have questions on, or ask more detailed ones here. And if you want to keep an eye on military topics with small weekly doses, sign up for the e-mails from MOAA.org & military.com. So far I think they're the best of the bunch.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Any ideas for a military man
Old 11-23-2005, 12:23 PM   #7
Full time employment: Posting here.
 
Join Date: Sep 2002
Posts: 506
Re: Any ideas for a military man

Welcome to the board Aimhigh.* I too am in the AF and have 4 yrs 6 months til the magic 20 point.* It has been a good time.* I will probably do the reserve option once I retire now that we can go that route.* I am currently on an AEF rotation and there are a lot of reservists and retired recalled folks that are doing the same.* For me I do want to work some so part time reserve should fit the bill.

Nords has some good info for you.* I do own a primary residence and two rental properties.* We have done well in real estate and the primary house and one rental property should be paid off before I leave AD.* If you go back and search the archives you will find some pretty good military specific posts.*

When I think about how much I want to have when I retire I really don’t think about it as a specific amount but rather a range fan.* I want to be inside that fan and the closer I get to retirement the more certain I know I am going to land in that range.* I also work on things that will reduce my cash flow requirements.* I have built a couple of good spreadsheets that help me with how different variables and portfolio structures affect me in the range.*

Keep you eye on what the AF is doing personnel wise.* There were two good articles this week about the challenge of funding major weapon systems and paying for people.* We are letting a lot of LTs go and I expect you will see more force shaping things occurring in the near future.* As other military folks will tell you the issues of today want be the ones of tomorrow but they will come back around.*

I think you definitely need to strike a balance between today and tomorrow.* Take advantage of what the military has to offer but also keep your eye on the goal and things will work out.

Welcome again!

Tomcat98
__________________
JDARNELL is offline   Reply With Quote
Re: Any ideas for a military man
Old 11-23-2005, 01:50 PM   #8
Dryer sheet aficionado
 
Join Date: Nov 2005
Posts: 32
Re: Any ideas for a military man

thats alot of great info Nords, thanks. I don't plan on taking the redux. It seems to be more of a savings plans for the government. I'm getting the feeling that I should just save as much as I can then see what happens. If I make crazy returns then maybe I can do it in 15. More likely I'll end up working part time in some simply easy dream job to help add some income and leave my savings to grow like you suggested. I just can't see taking the risk of relying on SS.
Thanks Tomcat98, glad to see you coming so close to the 20 year mark. I bet that really feels nice.
__________________
aimhigh is offline   Reply With Quote
Re: Any ideas for a military man
Old 11-23-2005, 02:02 PM   #9
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,445
Re: Any ideas for a military man

Quote:
Originally Posted by aimhigh
thats alot of great info Nords, thanks. I don't plan on taking the redux. It seems to be more of a savings plans for the government. I'm getting the feeling that I should just save as much as I can then see what happens. If I make crazy returns then maybe I can do it in 15. More likely I'll end up working part time in some simply easy dream job to help add some income and leave my savings to grow like you suggested. I just can't see taking the risk of relying on SS.
Thanks Tomcat98, glad to see you coming so close to the 20 year mark. I bet that really feels nice.
Now that you mentioned the possibility of working post retirement, here's a tip that many on active duty don't think about.* If and* when you start seeking employment, one of the most valuable tools you can have is your security clearance.* Whatever you do, before you leave AD, find a way to get your clearance upgraded to as high as you can. Then, if the environment is as it has been since 9/11, employers will beat a path to your door for all kinds of jobs - some good, some bad, but the high clearance will get you in the door.

Things could change, but that's how it is at present.
__________________
JPatrick is offline   Reply With Quote
Re: Any ideas for a military man
Old 11-23-2005, 02:07 PM   #10
Dryer sheet aficionado
 
Join Date: Nov 2005
Posts: 32
Re: Any ideas for a military man

Another good idea. I looked a little into that as well. I'm an aircraft crew chief but I know my security clearance can land me a job with many companies. I think they save something in the area of about $250,000 when you walk in with security clearance in hand. Any sites you know of that I may have missed?
__________________
aimhigh is offline   Reply With Quote
Double your money...Double your Fun...GO GUARD!
Old 11-27-2005, 09:36 AM   #11
Recycles dryer sheets
Dogcliff's Avatar
 
Join Date: Feb 2004
Posts: 52
Double your money...Double your Fun...GO GUARD!

Hello Aimhigh,

Great thread...great advice...amazing goals.* Like you, I am a Crew Chief, currently displaced in the Maintenance Analysis shop, with a home Day Care provider as a partner.*

Have you considered Alaska for your next PCS?* Despite the perception of an ultra high cost of living here, several recent studies have revealed that it is really no more expensive to live here than many places in the lower 48.* To our benefit, the Fed’s have not really figured this out yet, so as a Staff, you would get almost $500/mo in COLA and $1421 in BHA.* There is no State or local income tax, Anchorage has no sales tax, and if you establish residency, each of you will receive a piece of the state’s oil wealth, paid each year (Alaska Permanent Fund Dividend).* All of this in addition to a nice, small city with a good quality of life.

When I hit the nine year point as a Coast Guard 'AE', I found myself longing for a homestead opportunity as my brood grew to two, and then three (plus the little woman).* Although the lure of a 20 year Active Duty retirement is strong, I made a personal prediction that at 42 with three young uns', starting a new career at the bottom of the ladder would be neither comfortable nor easy.* Also, I think the use of the word 'retirement' in conjunction with the stipend the military pays enlisteds after 20 may be a stretch.* Finally, after several years of looking for a full time Reserve/Guard gig, I traded in eleven-plus years of Active Duty for a like number of years as a full time Air Guard Technician in Anchorage, AK, impersonating a GI during the week, and 'in' as a weekender. No more PCS’s, and the chance to stay in (and pay off) one home.* I am presently 51, and just three short years away from the greener grass on the other side.*

The 'double your money' part comes in as follows: Federal civilians (my Guard Technician position) can buy their military time for 3% of their total base pay for the period of service.* All of these years now count as both Federal and Military service.* MRT’s (Military Reserve Technicians) are a special class of Federal employee’s; full (unreduced) retirement may be available as early as 50 with 25 years service. At age 54, I will have 31 years as a Federal Technician, and retire with more than 20 years worth of 'points' towards my military retirement.* I can collect my Civil Service retirement @ 54, and because it is the year in which I turn 55, I can tap my TSP without penalty.* I will receive my military retirement @ 60, SS at 62, and the wife's SS when I'm 64 (thank God for Firecalc, where I can input all of the variables easily).* One major advantage offered by Civil Service vs. Mil is that your TSP contribution will be matched, up to 5% of your salary.

The home day care gig has some really generous tax benefits.* Your wife should be able to shelter most of her income, as many of the expenses you incur as a homeowner can be applied as business expenses.* The home office deduction rules are lax, and can apply to a large percentage of your living space.* Get a good tax preparer, or smart about taxes yourself.

I wish you all the best…you’re way ahead of the game by planning now.

dc

p.s.
Quote:
I will probably do the reserve option once I retire now that we can go that route.
Tomcat 98...Can you point to a reference allowing AD retires to affiliate with the Reserves?
__________________
Dogcliff is offline   Reply With Quote
Re: Double your money...Double your Fun...GO GUARD!
Old 11-27-2005, 10:36 AM   #12
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,563
Re: Double your money...Double your Fun...GO GUARD!

Quote:
Originally Posted by Dogcliff
p.s.
Tomcat 98...Can you point to a reference allowing AD retires to affiliate with the Reserves?
I couldn't believe this either when TomCat mentioned it. But somehow it's even more important to the USAF than golf courses...

http://www.afreserve.com/retiree_adaf.asp
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Double your money...Double your Fun...GO GUARD!
Old 11-27-2005, 11:24 AM   #13
Full time employment: Posting here.
 
Join Date: Sep 2002
Posts: 506
Re: Double your money...Double your Fun...GO GUARD!

Quote:
Originally Posted by Nords
* * *I couldn't believe this either when TomCat mentioned it.* But somehow it's even more important to the USAF than golf courses...

* * *http://www.afreserve.com/retiree_adaf.asp
Yes we have great golf courses.* You build them first then tell Congress you are out of money for the runways.* Works like a charm.

On this current deployment there are so many reservist of all services.* Definately a lot of opportunities out there.

Tomcat98
__________________
JDARNELL is offline   Reply With Quote
Re: Any ideas for a military man
Old 11-27-2005, 11:50 PM   #14
Dryer sheet aficionado
 
Join Date: Nov 2005
Posts: 32
Re: Any ideas for a military man

Thanks Dogcliff,
* * I was thinking about Alaska as an option actually. I'm stationed in Germany at the moment and the cola is very nice. I'm saving all of it. I heard that active duty can stay almost indefinately in Alaska if they choose the option. I'm not sure if that is still an option these days or not. Cola was a big reason why I was looking into it as well as a nice size BHA. I'm origonally from Oregon so minus a few degrees it would almost be like home.
* * I thought about crossing over but I entered the military late(age 27), not to mention my wife really loves traveling and the job security. Also I'm getting to the point that I'm really thinking about cross training. I'm just tired of working in the weather 365 days a year. 20 years in would put me at 47 with 50% pension. I've seen* some real interesting individuals put on E-7 if you know what I mean so I can almost gaurantee I'll make it to Master before I get out. That will allow me to stay up to 26 years putting me at 53-54 with a 65% pension.
* * Crossing over seems like it was a very successful move on your part. I can see that you have set yourself up very well. If I loved my career then it would be something to look at. But I'm just not wanting to stay a crew chief, I'm burning out.
The Air Force tends to PCS(relocate) their members a lot less then other branches of service. I've already done an overseas tour so the chances of getting pulled involuntarily are less likely. Of course I can always get pulled for a remote but that will just be a year away from my family. There are so many people who want to relocate and see the world that unless you have a very specialized career field then you have a good chance of staying in one spot for 5 plus years. Many people I've spoke with have been in one location their whole career. As long as I buy a home in an area that tends to keep good resale value and I don't pay more then my BHA for the mortgage then I should be o.k.
__________________

__________________
aimhigh is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Former Military Social Security credits - interesting Fireup2020 FIRE and Money 1 04-10-2007 09:24 PM
franchise ideas? mathjak107 FIRE and Money 18 11-20-2006 12:26 AM
US Military Invades Pattaya... Lancelot Other topics 24 06-07-2006 08:49 PM
Military "benefits" Nords Young Dreamers 26 01-23-2006 07:19 AM
Military pay (ECI) vs military retiree pay (CPI) Nords Other topics 0 11-05-2005 10:51 AM

 

 
All times are GMT -6. The time now is 12:39 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.