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Old 08-14-2015, 03:05 AM   #21
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Originally Posted by haloFIRE View Post
A VA disability rating of 50% or higher triggers Concurrent Receipt. At that point the VA gives you tax free dollars in addition to your military retirement.

For instance: if your military retirement is $X and you have a VA rating less than 50%, the VA will replace a certain amount of your military retirement with tax free VA disability dollars. You can look up the amounts on the VA website. So, imagine your military retirement is $1000 a month, and you have a VA disability rating that equates to $200. The $200 from the VA replaces $200 from DOD. You will still get $1000; 800 for DOD and 200 from VA. The benefit is that VA dollars aren't taxed.

If your VA rating is 50% or higher, VA pays additional tax free dollars....without reducing your military retirement.
So again, if your military retirement is $1000 a month and your VA rating is greater than 50%, you will receive $1000 from DOD and additional dollars from the VA. I think married with 1 child equates to roughly $900 at 50%. So You Would Draw $1900. $1000 taxable from DOD and $900 tax exempt from VA

Hope this helps
So what you're saying is, once I reach 50%, my income rockets up an additional $12k/yr. That'd be great, and would be a nice kicker for all the damage that has transpired over the years. I think there can also be significant state benefits for a high rating as well (property taxes/license plates, etc), which essentially increases that even more. I do have a lot of issues, so I think getting to 50% would be possible. It's that dang VA math though. On the plus side, I do have an issue where I start at 30%, so that'll help. After looking at the VA schedule of disabilities, I have conditions that "should be" rated at 30, 10,10,10,10, and that doesn't even count the ones that are tenative. I think that gets me to 46%, rounded to 50%, but of course, you never know what they're going to rate you. I'm all too familiar with how long it can take to get your rating, and unfortunately, the fighting to get it increased.
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Old 08-14-2015, 07:06 AM   #22
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So what you're saying is, once I reach 50%, my income rockets up an additional $12k/yr. That'd be great, and would be a nice kicker for all the damage that has transpired over the years. I think there can also be significant state benefits for a high rating as well (property taxes/license plates, etc), which essentially increases that even more. I do have a lot of issues, so I think getting to 50% would be possible. It's that dang VA math though. On the plus side, I do have an issue where I start at 30%, so that'll help. After looking at the VA schedule of disabilities, I have conditions that "should be" rated at 30, 10,10,10,10, and that doesn't even count the ones that are tenative. I think that gets me to 46%, rounded to 50%, but of course, you never know what they're going to rate you. I'm all too familiar with how long it can take to get your rating, and unfortunately, the fighting to get it increased.
The VA has a chart of rating math that goes like this, starting with the highest rating and working you way down to the lowest:

30+(70*10)=37+(63*10)=43+(57*10)=49+(51*10)=54%

The chart is:38 CFR Book C, Schedule for Rating Disabilities - Web Automated Reference Material System subpart A 4.25 Combined Rating Table.
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Old 08-14-2015, 11:39 AM   #23
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Originally Posted by DFA View Post
The VA has a chart of rating math that goes like this, starting with the highest rating and working you way down to the lowest:

30+(70*10)=37+(63*10)=43+(57*10)=49+(51*10)=54%

The chart is:38 CFR Book C, Schedule for Rating Disabilities - Web Automated Reference Material System subpart A 4.25 Combined Rating Table.
With that math, I'm even closer to 50% than I thought; that is good news. Clearly, I need to go back and look at the math and update my spreadsheets. Thanks for this info, DFA, it's very helpful.
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Old 08-14-2015, 12:13 PM   #24
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Yes, of course, the budget. We spend under 50k/yr.

We have been homeowners before and understand the costs involved.

For the disability, I know enough to be dangerous and understand the offset. I will be on the border so that can be a swing of a few hundred a month. With the figuring I have done, I'm guessing it will increase the pension by around 500/mo ($476 to be exact), but I don't want to "count on that", so I don't include it in projections, other than, it will be something. I'd rather under- than over-project. I'm also aware that the number of kids you have affects that, and that number is with 1 kid, but God-willing, there will be a few more.

Great recommendation about the DAV and others! I am a member of the VFW and will reach out to those organizations when that time gets closer. I have a few binders full of medical records at home due to all my issues. Getting a copy of them at retirement is necessary, but with the shift to electronic records, it's not like it used to be. You still have your old record, but now everything new is put into "the system", and it has been that way for a few years now. Do they just print it all out for you? I'm guessing yes, but we'll see...
I have a lot more to comment on, but time is short. I retired from the AF last December and yes, all STRs (med records) are electronic, but guess what? The VA never got them. I physically had to mail them to the evidence processing centers. Also, your mileage with a VSO may vary...I didn't use any because of the poor service several of my retirement brethren had to endure. I instead made sure I had all my ducks in a row and filed a FDC. It took 5 months to get processed, but would have been much shorter since I held off on sending my STRs until the VA gave up on the AF.

Also, can you clarify your understanding of the offset? Do you expect to pay that high of a tax to get an additional $400'ish a month? Just wanted to make sure that you truly understand that any disability under 50% will effectively be NO more than the tax savings of the offset.

Sent from my mobile device so please excuse grammatical errors.
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Greetings!!! Military Officer approaching retirement
Old 08-14-2015, 12:23 PM   #25
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Greetings!!! Military Officer approaching retirement

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I have a lot more to comment on, but time is short. I retired from the AF last December and yes, all STRs (med records) are electronic, but guess what? The VA never got them. I physically had to mail them to the evidence processing centers. Also, your mileage with a VSO may vary...I didn't use any because of the poor service several of my retirement brethren had to endure. I instead made sure I had all my ducks in a row and filed a FDC. It took 5 months to get processed, but would have been much shorter since I held off on sending my STRs until the VA gave up on the AF.

Also, can you clarify your understanding of the offset? Do you expect to pay that high of a tax to get an additional $400'ish a month? Just wanted to make sure that you truly understand that any disability under 50% will effectively be NO more than the tax savings of the offset.

Sent from my mobile device so please excuse grammatical errors.
Regarding the offset. I understand it competely, and the tax savings, and when you hit 50% it's concurrent receipt. I think I must have had two thoughts going, sorry for the confusion.

Good to hear about you sending your info straight to the VA. I thought they had to receive the exam info from the military. I understand you sent your supporting documentation, but what about the exam?

Looking forward to hearing any other of your input!
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Old 08-14-2015, 04:17 PM   #26
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Regarding the offset. I understand it competely, and the tax savings, and when you hit 50% it's concurrent receipt. I think I must have had two thoughts going, sorry for the confusion.

Good to hear about you sending your info straight to the VA. I thought they had to receive the exam info from the military. I understand you sent your supporting documentation, but what about the exam?

Looking forward to hearing any other of your input!
When I had my "exit exam" (from the AF), it was really a joke. All I did was have the Dr. put down some complaints that weren't already in my STRs...there was really no exam at all. Now as for the C&P exam from the VA, that was done once they finally got my STRs from me. Also, the VA had *some* of my records, but only for the last 3 years or so. Everything from 1993 until about 2011'ish they DID NOT HAVE and never got them.

I do understand that they are making headway in the STR business (sharing, etc.), but be fully prepared to do the work YOURSELF. I know there is a bif push to use a veteran's organization, but as you very well know...if YOU want it done right, you have to DO IT YOURSELF. There are so many good resources out there to get you in the right direction, it's not even funny.

As a side note, a colleague of mine retired a month before I did. He elected the BDD (benefits due at discharge). He got his rating 2 months *after* I did and he has yet to get his retroactive pay and they STILL haven't corrected his dependent status. In my case, I got a the retro pay 3 business days after I had the decision email and where my dependent status was wrong, it was corrected (and paid) within about 5 business days. So...as you can see, there are lots of variables and your mileage may REALLY VARY!
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Old 08-15-2015, 11:30 AM   #27
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Greetings ER Community! Long-time lurker, first-time introduction. I learned about the forum from Nords book (The Military Guide to Financial Independence and Retirement)...
Thanks!

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Expected military pension: 50k/yr after-tax (high-three, and slightly under-estimated on purpose)
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Yes, of course, the budget. We spend under 50k/yr.
No further questions. Who's next in line, please?

Seriously, though, you have more of a "green waste problem" than a portfolio survival issue. You're not likely to suffer from lifestyle expansion, and your spouse might bring in some substantial income. You're probably going to keep tracking your spending in retirement (if for no other reason than to check the new baseline) so keep saving the excess in CDs for your house fund. If you're going to keep living within your pension (which is highly likely) then your only large expenses on the horizon would be paying off the mortgage (at your pace) and possibly some community/state college bills.

You don't specifically say one way or another, but your spouse's SBP decision will affect up to 6.5% of your pension.

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Originally Posted by surferLife View Post
I have looked at the disability schedule and plan on having around a 30-50% disability rating, and since that process is so complex, I don't have any idea how much that will affect my pay other than knowing it will increase it. The above 50k/yr figure does not reflect this assumption.
When you choose where to live, taxes should be less of a concern because of your military pension and VA offset/compensation. If that happens to be California (warm-water surf) then don't let the tax issues drive your location. You're already far ahead on taxes.

I'd also suggest starting your VA claim as part of your retirement physical. Start workign with a VSO at the same time that you start your retirement physical. You can get all of the referrals and special exams/tests done on active duty (instead of through the VA system) and by the time you retire you should have the fabled "fully developed claim".

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We are currently renting in the states and it's frustrating not being able to build equity in a home; we will be moving again in a few years, location unknown. We are aggressively saving so that we can purchase a home outright at retirement.
You're making the right decision, so the best way to deal with the frustration would be to change your attitude toward home ownership.

Lots of people in most of the country felt the same way you did about "building equity" in 2007... just before the Great Recession. Most Hawaii residents felt the same way in 1991 as real estate slid into a decade-long recession. I noticed the other day on Zillow that some Minnesota homes are actually appreciating at less than the rate of inflation.

You're not losing anything by renting. Over the long term across the nation, real estate appreciates at about the rate of inflation. In the meantime you're actually saving hundreds of thousands of dollars (that would be tied up in "dead equity") and investing it in your TSP, IRAs, and taxable accounts to grow faster than inflation.

I'll take it a step further: your pension will be annuitized inflation-adjusted income. Instead of exchanging a large chunk of your investments for land and a depreciating structure, get a 30-year fixed-rate mortgage (after a down payment of at least 20%). You'll be paying off a cheap loan (in fixed, declining dollars) with inflation-adjusted annuity income. You can keep a larger portion of your assets in equities and earn more than inflation, let alone build equity.

This thread has been running for over a decade, including the Great Recession. The equities are far ahead of the mortgage, even at 5% interest:
Covering a mortgage without losing your ass(ets).
I'll pay off my mortgage just before my 80th birthday... unless I can refinance at a rate lower than our current 3.625%.

I wouldn't recommend trying this mortgage arbitrage in a portfolio that has 4% SWR withdrawals or any bond assets. You also have to sleep comfortably at night, so only do it if you appreciate the compounding math and don't worry about carrying the debt. With an inflation-adjusted annuity, though, the math and the statistics are on your side.

Another tactic with large potential gains is to continue renting after you retire, but start visiting open houses 2-3 weekends per month. Learn the neighborhoods (and schools) and start tracking your targets. Eventually something will go on sale at a substantial discount and you'll be ready to buy with cash and no financing contingencies. The 15% discount will make up for a lot of years of saving that liquidity in CDs.

An intermediate option would be taking out a loan to build a second residence on your acres of land, and then use that for aging family or rental income.
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Old 08-15-2015, 12:16 PM   #28
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I'd also suggest starting your VA claim as part of your retirement physical.
Start workign with a VSO at the same time that you start your retirement
physical. You can get all of the referrals and special exams/tests done on
active duty (instead of through the VA system) and by the time you retire you
should have the fabled "fully developed claim".
That's an excellent suggestion Nords. When I filed my Agent Orange claim with the VA several years ago it took them almost 3 years to approve it
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