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Early 30s military couple, 2028 FIRE goal!
Old 04-02-2018, 03:15 PM   #1
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Early 30s military couple, 2028 FIRE goal!

Been reading these boards for a little bit and thought it was time to introduce myself. This site is such an invaluable resource! Thank you all for all your contributions and for the inspiration, truly.

A little bit about the spouse and me:

Dual military officersóMajors/O-4sówith 10 years to go until military pensions (both 'on track' for O-5). No debt, no mortgage (until our 2020 relocation), with no plans to own a long-term rental home. Two kids under 3 this year. They will be 10 and 12 in 2028 when we want to be FI.

Goal: Achieve FIRE by the 20-year mark in the Air Force, ages 42 and 43 (2028). Aiming to live on military pensions and taxable account income, if necessary, until retirement accounts kick in. Still pondering where to settle down during the kids' high school and college years, but it'll absolutely be a state that doesn't tax military pensions.

Our retirement accounts consist of Vanguard Roth IRAs and Thrift Savings Plans which are maxed out annually and invested in target retirement funds. $353K.

Total in non-retirement accounts is approx. $185K, and consists of the following:
Brokerage is 28% bonds, 72% stocks, mostly in VTSAX and VBTLX. $68K
529, $250/mon. $5K. (The other kid will get my MGIBill)
1-year CD, 2.05% APY, matures 2019: $15K initial deposit.
4-year CD, 1.98% APY (I know, ouch), matures 2020: $70,500 initial dep.(Did I mention this was a mistake?)
Cash, 1.45% APY, $22K
Combined AGI in 2017 was $133,144 (not including housing allowances). Current annual expenses are $77K in our HCOL area + daycare expenses.

Iím not sure what else we should change or do in addition to the above to reach our goal of FIRE by 2028. Iíd love your thoughts! And it's great to meet you.
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Old 04-02-2018, 03:21 PM   #2
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Welcome TDub to this wonderful site.
What are your expected yearly pensions and are they Cola'd? Do you have an estimate of retirement expenses?
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Old 04-02-2018, 03:29 PM   #3
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Welcome TDub to this wonderful site.
What are your expected yearly pensions and are they Cola'd? Do you have an estimate of retirement expenses?
Thank you!

The pensions are Cola'd, and according to the DOD's High-36 calculator (here) we would each make $45,275 after taxes each year if we retired at exactly 20 years, 0 months. (Unlikely my spouse will retire at exactly 20 years since she loves this profession, but it's possible, and the most conservative calc.)

We estimated our retirement expenses to be no more than $75K-$80K, so we're hoping the difference between our pension income + what we can save in 10 years is enough to cover any expenses we aren't considering today (e.g. caring for elderly parents).
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Old 04-02-2018, 03:48 PM   #4
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Thank you!

The pensions are Cola'd, and according to the DOD's High-36 calculator (here) we would each make $45,275 after taxes each year if we retired at exactly 20 years, 0 months. (Unlikely my spouse will retire at exactly 20 years since she loves this profession, but it's possible, and the most conservative calc.)

We estimated our retirement expenses to be no more than $75K-$80K, so we're hoping the difference between our pension income + what we can save in 10 years is enough to cover any expenses we aren't considering today (e.g. caring for elderly parents).
Sounds good overall, but many with military backgrounds on this site can probably delve deeper.
Is moving away from your current HCOL area a real possibility, i.e. are parents/ other family near you currently which could make it more difficult to uproot?
Are there currently any college savings?
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Old 04-02-2018, 03:51 PM   #5
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Retired E8 here. I'll let other comment on the nest egg stuff. But, Tricare is also going to goose your pre-65 years (as well as pick up a lot of the 20% that Medicare leaves on the table). Health insurance is sorta in shambles right now. We've been tapping Tricare for about 9 months, and we are very satisfied. We're not near a base, so not using on post care (and I'm happy with that - had some real issues with mil docs and prefer not to deal with that).

Happy travels!
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Old 04-02-2018, 06:41 PM   #6
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Sounds good overall, but many with military backgrounds on this site can probably delve deeper.
Is moving away from your current HCOL area a real possibility, i.e. are parents/ other family near you currently which could make it more difficult to uproot?
Are there currently any college savings?
Hey, Dtail. Once we're out of the military we'll have flexibility in terms of finding and moving to a LCOL area. (One set up parents are FIRE, the other live in a LCOL area). Also, we know that for 7 of the next 10 years the military will take us to LCOL areas, so that'll help!

The college savings we have right now are a 529 for Kid #1 (2 years old) to which we allocate $250/month. The current balance is $5K. We'll start a 529 this year for Kid #2, as well, but 36 months of Kid #2's higher ed will be covered by my GI Bill (wife's GIBill is gone).
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Old 04-02-2018, 06:51 PM   #7
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If you're not familiar with Nords (long-time poster here, who now spends a lot of time on his blog, etc.)...he and his wife are retired military and he's got a website and book dedicated to the military and retirement. Check it out:

https://the-military-guide.com/


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Old 04-02-2018, 06:57 PM   #8
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Two 0-5 pensions? You don't need to save a penny and you will live well over a 40+ year retirement.
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Old 04-02-2018, 07:01 PM   #9
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Retired E8 here. I'll let other comment on the nest egg stuff. But, Tricare is also going to goose your pre-65 years (as well as pick up a lot of the 20% that Medicare leaves on the table). Health insurance is sorta in shambles right now. We've been tapping Tricare for about 9 months, and we are very satisfied. We're not near a base, so not using on post care (and I'm happy with that - had some real issues with mil docs and prefer not to deal with that).

Happy travels!
Hey, Red Badger. First of all, congrats on the retirement at E-8! That's an awesome accomplishment.

You said you've been satisfied with Tricare these past 9 months but that Tricare will goose our pre-65 years. What do you mean that it'll 'goose' us? I feel like I'm about to learn a well-known Army term
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Old 04-02-2018, 07:05 PM   #10
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Originally Posted by omni550 View Post
If you're not familiar with Nords (long-time poster here, who now spends a lot of time on his blog, etc.)...he and his wife are retired military and he's got a website and book dedicated to the military and retirement. Check it out:

https://the-military-guide.com/


omni
Thanks, Omni! It was actually his book Military Guide to Financial Independence and Retirement that led me to this awesome site. I haven't thought to check out his blog, though. I'll definitely check it out.
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Old 04-02-2018, 07:10 PM   #11
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Two 0-5 pensions? You don't need to save a penny and you will live well over a 40+ year retirement.
That's what my FIRE parents tell me, but even after running the numbers, I have such a hard time believing it. Also, it would feel strange to stop saving. (I don't think I have the b@lls for it). We live below our means but we don't feel deprived at all, so maybe we'll just keep doing that and not worry about it.

Now we just need life to go exactly as planned for the next 10 years...
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Old 04-03-2018, 08:21 AM   #12
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Recently retired O-6 here - in a relatively LCOL area, you can easily get by on your pensions, especially at your current savings rate. Have you transferred you GI Bill yet? That's a massively generous program, if used right. We are actually coming out slightly ahead with our daughter in college now, once we include the books and housing allowance in the equation.
The other thing I would suggest is a visit with your local VA rep - 10 years from retirement is not too soon to be considering your post-military health care. Starting to understand the system now will really help, and give you that extra mental filter when getting medical treatment over the next few years.
Feel free to PM with any questions, and congrats on being so far ahead of the game!
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Old 04-03-2018, 08:34 AM   #13
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retired O-4 at 23 and DW is a retired CWO-4 at 21. You mentioned one GI bill is gone? That seems strange. If you are active why didn't you use tuition assistance for master's degree? Try to restock that gi bill.

TSP. Stop or minimize. Going forward use taxable accounts. You will need access to that money from 42 until 59.5. I am against the 529 unless it is transferable from one state to another. GI bill covered college for both of our kids. DD has 19 months left of mine for her graduate degree. Good luck and congrats. When you are getting close to retirement make sure you allocate at least a few months of GI bill to each child. You can always transfer them back but only if they are listed. We gave each child at least 3-4 months on each of ours. I also gave DW 2 months of mine just in case she wanted more education. She didn't so I transferred it back over to DD. Good luck and welcome.
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Old 04-03-2018, 08:47 AM   #14
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Hey, Dtail. Once we're out of the military we'll have flexibility in terms of finding and moving to a LCOL area. (One set up parents are FIRE, the other live in a LCOL area). Also, we know that for 7 of the next 10 years the military will take us to LCOL areas, so that'll help!

The college savings we have right now are a 529 for Kid #1 (2 years old) to which we allocate $250/month. The current balance is $5K. We'll start a 529 this year for Kid #2, as well, but 36 months of Kid #2's higher ed will be covered by my GI Bill (wife's GIBill is gone).
It all sounds good to me. You only live once and never know how long. Do it as soon as you feel you can.
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Old 04-03-2018, 09:03 AM   #15
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Recently retired O-6 here - in a relatively LCOL area, you can easily get by on your pensions, especially at your current savings rate. Have you transferred you GI Bill yet? That's a massively generous program, if used right. We are actually coming out slightly ahead with our daughter in college now, once we include the books and housing allowance in the equation.
The other thing I would suggest is a visit with your local VA rep - 10 years from retirement is not too soon to be considering your post-military health care. Starting to understand the system now will really help, and give you that extra mental filter when getting medical treatment over the next few years.
Feel free to PM with any questions, and congrats on being so far ahead of the game!
Thank you!

I can tell I need to get a LOT smarter on both the GIBill and post-mil health care. Honestly, I didnít even know it was possible to come out ahead with the GIB! And Lord knows the VA and post-mil care seem so complicated itís easier to just put off learning how it works.

Thanks againóI appreciate for the sage advice. Iíll start the learning process now while I have some time!
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Old 04-03-2018, 09:12 AM   #16
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retired O-4 at 23 and DW is a retired CWO-4 at 21. You mentioned one GI bill is gone? That seems strange. If you are active why didn't you use tuition assistance for master's degree? Try to restock that gi bill.
My DW in our young, dumb LT days decided to pursue an expensive MS degree and opted to use her GI bill. I didnít know it could be re-stockedóIím going to look into that ASAP. So thank you for that!

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TSP. Stop or minimize. Going forward use taxable accounts. You will need access to that money from 42 until 59.5. I am against the 529 unless it is transferable from one state to another. GI bill covered college for both of our kids. DD has 19 months left of mine for her graduate degree. Good luck and congrats. When you are getting close to retirement make sure you allocate at least a few months of GI bill to each child. You can always transfer them back but only if they are listed. We gave each child at least 3-4 months on each of ours. I also gave DW 2 months of mine just in case she wanted more education. She didn't so I transferred it back over to DD. Good luck and welcome.
This is really interesting, hadn't considered this. Iím guessing you and your DW went heavy on taxable accounts? I think we just started maxing our TSPs because it was what we were ďsupposed to do.Ē Youíre absolutely right, though. Bridging the gap between early 40s and 59.5 is the issue here.

Iíll definitely check the terms of our 529 before adding any more contributions. We assumed the GI bill wouldnít be enough, and that we only had one GIB to use anyway (since my wifeís was ďused upĒ).

::Running out of the office to go re-think everything:: But seriously...
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Old 04-03-2018, 09:12 AM   #17
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It all sounds good to me. You only live once and never know how long. Do it as soon as you feel you can.
Amen to that!
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Old 04-03-2018, 02:58 PM   #18
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Welcome! Iím relatively new to the site too, and in a similar situation as you. We are both O-5ís (I just pinned on 2 days ago!) and also only have one GI Bill. I used mine when I was enlisted in the Guard, when it was the MGIB.
We are moving back to a HCOL area this summer, but overseas now. (By the way, overseas is a financial hit since you canít keep any extra housing allowance.)
Iím interested to read the other replies to your thread. It was interesting about the VA rep to start thinking about future medical needs. Both my spouse and I have put off seeing the docs for much because we are so busy at work. Plus PCSing makes it so hard, Iíve given up on some medical issues due to effort exhaustion from starting over at each base.
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Old 04-03-2018, 03:43 PM   #19
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Hey, Red Badger. First of all, congrats on the retirement at E-8! That's an awesome accomplishment.

You said you've been satisfied with Tricare these past 9 months but that Tricare will goose our pre-65 years. What do you mean that it'll 'goose' us? I feel like I'm about to learn a well-known Army term
Thanks. Probably could have said it better. A lot of ER folks spend $10K or more for health care each year. Then, at 65, Medicare only pays 80%. So folks buy supplemental policies or risk that 20% exposure. Not being exposed to ACA type costs and the Medicare 20% will make more of your pensions and investments available for discretionary (read - fun) spending.

I retired at 60 from megacorp last year (my army stint was approx 15 years active / 15 reserves, so no Tricare until 60). At megacorp (after ACA was passed), my deductible was $3K, copay of 20% for the next $3K, and a monthly premium of $400+. Not a fortune, but def a PITA expense.

Like pensions, decent (and affordable) health care is getting scarce. My army and corporate pensions are one leg of our retirement stool (though "earned," I'm grateful for them). SS and IRA being the other two. Decent, affordable health care just makes the stool a couple inches taller.
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Old 04-03-2018, 06:34 PM   #20
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One additional thought that came to me, thinking about this: you might consider bulking up your life insurance now, to lock in some term policies while your rates will be low. I had always planned on carrying a term policy to "military retirement plus ten years" to make up for not participating in SBP, with the idea to replace the first 10 years of retirement pay should something happen to me. Our profession is not without risks, after all.

The mistake I made some 15 years ago was calculating a dollar-for-dollar replacement of 10 years of retirement pay, and not calculating the value of the effective annuity that provides the retirement pay, and then using TSP, etc. plus the lump sum from life insurance to replace the annuity that essentially goes to zero when I die. So now I'm paying $$ for another policy at age 50 to make up for that and make sure the family has enough at a 4% withdrawal rate to approximate the pension.

Your cases will be different because of the dual pensions of course, but something to consider
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