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Military family looking to FIRE in Hawaii by 2019
Old 02-08-2012, 02:48 PM   #1
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Military family looking to FIRE in Hawaii by 2019

Hello, I found the early retirement.org forum about a week ago while searching for information on retirement in Hawaii. I have enjoyed reading through the forum immensely and I am learning a lot. Here is some basic information about me:
1. I am 40 years old, married, with 4 children from ages 13 to 2.
2. I am an active duty Army captain with 22 years of service (prior enlisted) and my wife is currently in nursing school.
3. Assets:
a. TSP and T IRA: $60,000
b. Roth IRA: $22,000
c. Taxable investments: $105,000
d. 20 ac Land (will probably sell before retirement): $30,000
e. Equity in home: $80,000
4. Debt:
a. Home: $330,000 (30yr at 4.375%)
b. Cars: $30,000 (5yr at 3.25%)
5. Kids all have 529s ranging from 20k for the 13yo to 1k for the 2yo that we contribute to monthly along with their grandparents.
6. We currently spend about $6000/mo and save $2000/mo (into TSP then Roth then taxable, plan to start the Roth TSP when its rolled out)
All of my investments are stock based mutual funds. I also have an emergency fund of around 10k in cash. My current plan is to retire/ semi-retire in 8 years. I will be eligible for military retirement with 75% of O-4 pay at that time (estimated about $5400/mo after SBP premiums are taken out). I should have around 550k not counting my home equity (with my current savings plus what I save every month estimating a 5% return to be conservative). My wife and I would love to sell everything and move to Hawaii with the kids (still donít have an exact location but we love the islands). My wife and I would try and retire and enjoy the kids and the outdoors or semi retire and work part time or seasonally if needed/ wanted. I am going to do my best to get an assignment in Hawaii as my final job, but no guarantees.
PS: I am also almost finished with the Military Guide to Financial Independence and Retirement. A great book that has given me confidence that early retirement may be a possibility. My thanks to Doug Nordman and the rest of the contributors on this forum!
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Old 02-08-2012, 03:11 PM   #2
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Originally Posted by PrayforSurf View Post
PS: I am also almost finished with the Military Guide to Financial Independence and Retirement. A great book that has given me confidence that early retirement may be a possibility. My thanks to Doug Nordman and the rest of the contributors on this forum!
As I was reading your post I was thinking "He needs to get Nords' book", then I came to your final paragraph. You are already ahead of the game.
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Old 02-08-2012, 08:31 PM   #3
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E komo mai, glad this is all working out!

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Originally Posted by PrayforSurf View Post
I am going to do my best to get an assignment in Hawaii as my final job, but no guarantees.
Yeah buddy, the assignment officer can hook you up with a sweet deal on PACOM's watchfloor...

I don't have any idea how easy it is to get stationed out here-- but among Schofield, Shafter, and PACOM you would think that you'd have a chance. And if your spouse knows someone at Tripler then that has to help.

One of my friends is in USARPAC G-1, and he's just hit 20 so he's suddenly started thinking about retirement. (He's getting a free copy of the book.) Let me know if you have questions for him or want to contact him about assignments.

I think that between the downsizing and the recent boost to Hawaii's military housing, you won't have a choice. But living in base housing will give you a chance to save some more cash while scouting all the neighborhood retirement options. I guess it depends on whether your kids want to stay in the same school district after you retire.

You'll send your kids to whatever public schools are by your duty station, and those are all pretty good. During the elementary school years our daughter took great comfort from Kumon math/reading to help boost her skills and avoid test anxiety. As the kids approach middle school/high school you'll probably want them to gravitate toward the AP classes, and they'll do fine for college prep. The reason I'm mentioning this now is because you'll hear a lot of hype & hysteria about Hawaii's public schools. Don't sweat it. You don't have to start saving for private schools, either.

Sounds like you're about financially independent already, but have you run FIRECalc on your numbers?

The Roth TSP proposed rules just came out today. Literally this morning. I haven't had a chance to parse the 13 pages of densely worded text yet, but we can learn together: https://www.tsp.gov/PDF/bulletins/regs-roth-2012.pdf
You might want to keep an eye on this option, and check today's post for Ryan Guina's advice on any tax-free contributions you may have made to the TSP over the last few years.

Seems like you've covered all the other issues. However you have one important question left to consider: Do you have a pickup truck for a stand-up paddleboard, or will you stick with a longboard?

Did I mention that surfing is now a Hawaii interscholastic varsity sport? Kids, stay in school...
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Old 02-09-2012, 11:04 AM   #4
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Thanks, It was actually one of Nords posts that led me to early-retirement.org when I was searching for hawaii retirement. I found the book link on the bottom of his post.

Glad to hear the public school system isnt as bad as many people seem to think. That was a concern for us, but I think there is a lot more to education than what you learn in school. I do want my kids to be competitive for college if thats what they choose to pursue though.

According to FIRECalc, I am ok. My biggest concern is the cost of living increase moving from the mainland to Hawaii. We are low maintenance and would be outdoors most of the time, but we still have to have a house big enough to fit our family and feed everyone. In one of the cost of living comparision tools, to meet our current expenses of 72k a year we would need 125k in Honolulu. I think that may be exaggerated, but I want to ensure I do my due dillegence. For that reason, Id like to move over before I retire to really get a feel for what we would need, but if not Ill probably move over and rent for a year and see how it goes. If it doesnt work out it'll be an extended vacation.

Oh and Ill be surfing and SUP ;-)
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Old 02-09-2012, 12:12 PM   #5
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Glad to hear the public school system isnt as bad as many people seem to think. That was a concern for us, but I think there is a lot more to education than what you learn in school. I do want my kids to be competitive for college if thats what they choose to pursue though.
Teachers are paid extra to certify & teach AP courses, and that's driving science & engineering tracks in the bigger high schools. The trade unions are reaching way down into sophomore year with classes leading to apprentice cards, especially at Pearl Harbor Shipyard. (Our daughter is still annoyed that she never had enough schedule time to take "Building & Construction.") And of course the healthcare & tech industries have to build a local infrastructure.

Frankly there's also a diversity card. If a college is looking for an unusual student, there are a lot more "unusual" ones in Hawaii than in Virginia or CA or Texas. Some servicemembers have come here to make their kids more competitive for service academies, although perhaps that's a problem with the parental priorities.

Between Kumon & AP classes, our daughter got into Rice. It was a stretch, and perhaps NROTC helped put her over the top of the application process along with all the other factors. However being the first Kumon Hawaii student (and one of the first in North America) to finish all their math curriculum didn't hurt. She's haulin' her own weight in Rice's civil engineering curriculum and should be a shoo-in for the submarine force. For whatever that's worth...

She went to high school with another family's brother/sister who absolutely trashed the state science fair for over five years and went on to become national finalists in several of them. Today they're both on free rides at Harvard, and their third sibling is going for the family program too.

Don't get me wrong-- a number of the local schools have major problems with dropouts, drugs, and mismanagement. They're a mirror of Hawaii's multicultural and multilingual society. The good schools are in neighborhoods where the parents are involved in their kid's education.

Quote:
Originally Posted by PrayforSurf View Post
According to FIRECalc, I am ok. My biggest concern is the cost of living increase moving from the mainland to Hawaii. We are low maintenance and would be outdoors most of the time, but we still have to have a house big enough to fit our family and feed everyone. In one of the cost of living comparision tools, to meet our current expenses of 72k a year we would need 125k in Honolulu. I think that may be exaggerated, but I want to ensure I do my due dillegence. For that reason, Id like to move over before I retire to really get a feel for what we would need, but if not Ill probably move over and rent for a year and see how it goes. If it doesnt work out it'll be an extended vacation.
That sounds high, unless you're planning to apply for a $500K mortgage. You drive less here, you eat differently from the Mainland, you don't pay heating bills (and might not pay a cooling bill either), you spend less on clothes & shoes, you live a healthier outdoor lifestyle, and entertainment is much cheaper. You don't have to "winterize" stuff, and the summers are much milder than the southern Mainland. I think the living-comparison websites are trying to compare apples to mango. Mango & papaya are practically free here. Raspberries & blueberries... that's a different story.

Our living costs here in the 1990s were lower than San Diego, and a lot lower than Monterey. But that's the last time we did a comparison.

You're absolutely right to try for a farewell tour here, or at least to rent for 6-12 months. Let the military store your household goods until you decide where you want them to end up.

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Oh and Ill be surfing and SUP ;-)
Gotta have priorities! Depending on the kids, you'll need to add about $2-$5/month to your budget for surf wax...
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Old 02-09-2012, 05:38 PM   #6
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As a non-military type who moved from the Midwest to Hawaii, I can more-or-less validate those cost-of-living comparators - especially for housing. However, as Nords points out, if you learn to live Island Style, things get a lot less expensive (say good bye to fresh blueberries, however).

Other than base housing (or military allowances) "decent" housing in HI is very expensive - especially if you are used to living in fly-over country like I was. There is almost no way around that IMO (speaking of when you are no longer military). On Oahu, decent 3/2 condos start at $400K and quickly go up while decent houses are $550K to start. (By the way, condo fees are $500 to 600/month or more). Rents for condos, figure $1800/mo or better for a 2/2. Houses, 1 1/2 times that - or more. Yes, if you take your time and have a little luck, you might come in under that. Choosing the Big Island is probably the only "bargain", housing wise - and then you may pay for that in other ways (e.g., a plane trip to Oahu for many (most?) "significant" medical tests and procedures.

My SWAG is that your biggest problem will be sending your kids to university. Unless they go to UH, they will probably need to go to the mainland and then they will be "out of state" (higher tuition for state school - outrageous tuition for ALL private schools no matter where your kids come from). Transportation (Xmas/Spring/Summer breaks, etc.) could also be problematic. The one bright spot is the ability to get assistance. I would suggest you work on that now by learning the (current) FAFSA rules. There are ways to be "poorer" looking. Having college funds set up already is NOT one of those ways IMO. Better for grandparents to set up a stash of money to slip to the kids when the time comes - or else help pay off student loans later. (Having 4 kids may turn out to be a blessing for the first 2 or 3. That last one will likely cost you big time.)

Nothing against UH, but (even locally) it doesn't have as good a reputation, academically, as most mainland schools. Niche schools (e.g., marine biology) might be an exception. We looked into bringing our youngest over here to UH, but our (old) state school said NONE of her credits would be accepted. Not even the first year stuff every university student is expected to take (English and other "humanities").

One more time (at least) I'll plug a book. It helped me a lot, not just with financial stuff, but also culturally and in choosing an island or a neighborhood. Amazon.com: So You Want to Live in Hawaii (9780966625301): Toni Polancy: Books

Your pension and military-retirement health care are your ticket to HI. Without them, your retirement stash would be far too small (IMO). AND, currently, they (and SS if any) are exempt from our outrageous State Income tax. That's another reason to emphasize Roth investments rather than deferred tax investments such as IRAs and 401(k)s - again, IMO. The last thing you want to do is pay 15% Fed tax and 9% state tax on money you only deferred at (fill in the blank for your current state tax rate) %.

As always, I suggest you visit often and for more than a week or 10 days (vacation). Find a cheap, trashy hotel in the bowels of Waikiki, leave the kids with the grandparents and you and DW tour the island(s) with a thought of how you might live here once retired. Take 3 weeks or more just to keep it from being overwhelming. Note neighborhood "flavors", look up rentals and see a realtor about local housing. Ask around about schools, although, as Nords points out, those near military bases are generally much (MUCH) better than some of the neighborhood schools. Don't even consider private school. You don't have that much money! (Somebody must have it, but I don't know them!)

Well, I'm rambling and you should take this all with a grain of (sea) salt. Best of luck and hope to see you soon. Don't forget, YMMV.
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Old 02-09-2012, 11:45 PM   #7
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Nothing against UH, but (even locally) it doesn't have as good a reputation, academically, as most mainland schools. Niche schools (e.g., marine biology) might be an exception.
I graduated from UH and made it to ER.
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Old 02-10-2012, 06:11 AM   #8
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@Koolau: Thank you for the info. Cost of living is my biggest concern too, particularly housing. Coming from North Carolina its a big jump (not so bad if you're coming from NYC or SoCal). I hadn't considered costs of travel associated with attending an out of state college for the kids. We have been 6 people living on one military income since day one. We have tried to balance saving for retirement and the kids college as best we could without living in squalor. I tell my kids that I will ensure they can go to college if they want it. If we move to hawaii, that would probably be 4 years at UH or two at a community college and 2 at UH. If we stay put, it'll be 4 yrs at UNC or 2 at a CC and 2 at UNC. They have opportunity to attend college. If they want something else then they can: get an academic or athletic scholarship, go to a service academy, get an ROTC scholarship, join the service for 4 and get out with the college benefits, work part time, etc. That's my take, I'm sure its not everyone's.

I will definitely check out the Hawaii book as soon as I finish Nords book. I have researched the other islands, and it looks like the big island is the most affordable for housing, but right now I think somewhere on Oahu would suit us best overall. I do need to visit though. My wife and I love Hawaii. We lived in Panama for a few years and in Puerto Rico for four. We think that Hawaii is the best bet for the laid back, tropical beach lifestyle that we love while still having the benefits of being in the US for schools, access to quality medical care, etc. I think we are on track to be financially independent, but financially independent in the south eastern US is not financially independent in Hawaii. My wife had the conversation yesterday if we had to choose between being completely retired and living in say, Alabama, or living in Hawaii and one or both of us continuing to work. She says Hawaii with no hesitation. I tend to agree, but my priorities are: 1. providing a safe, healthy environment for my kids with opportunity to achieve what they want to achieve, 2. Being financially independent (I dont mind working but don't want to be trapped in a situation where Im forced to work in a place where Im not happy), 3. Live in Hawaii. In her priority list, 2 and 3 are probably flip flopped :-)
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Old 02-10-2012, 10:41 PM   #9
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I hadn't considered costs of travel associated with attending an out of state college for the kids.
Well, you're pretty much screwed there. They're flying home during the 2nd or 3rd week of December and flying back during the first week of January. You know, when 90% of the country is singing "Oh, There's No Place Like Home For The Holidays" as they take out mortgages to buy their plane tickets.

When spouse and I were at Annapolis, her squad leader was from Hawaii. His mother would only pay for his plane ticket home if he had a semester 2.50 GPA or better. By November the guy would be in an absolutely foul mood.

Summer flights are a little cheaper. Summer school is the cheapest option, especially if that lets them graduate in three years.

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If we move to hawaii, that would probably be 4 years at UH or two at a community college and 2 at UH.
That'll work. The worst part of attending UH is the commute to Manoa (same for the commute to Chaminade or HPU, for that matter). UH West Oahu is under construction on the Ewa Plain and slated to move from its "temporary" home (of the last 30 years) at Leeward CC to the new campus in 2014. That should dramatically improve the back-to-school jams.

UH has a very good reputation in biology (both critters and biofuels), oceanography, business, and law. If you believe that contacts & classmates matter more than the college then UH is the best place to start a local career in business or law. UH also has a good reputation for medical school (rare tropical diseases) and there's a desperate nursing crunch. We have a big inferiority complex here about tech, engineering, and most sciences. However somehow we still manage to graduate our per capita share of computer experts, engineers, and scientists. My guess is that each corner of the world finds its own little niche in which to excel, and Hawaii is no different-- just a much smaller niche. With year-round surfing.

UH is the best college in the world for getting a doctorate in the Hawaiian language...

There's a belief here that kids raised in Hawaii need to "cut the cord" by going to a Mainland college-- preferably one where it snows. One reason for that belief is the teens at local colleges usually end up being commuters instead of paying up for dorm life. Another reason is that those who are stereotypically most vocally critical of Hawaii are the residents who were born & raised here and have never lived anywhere else. Mainland college life gives even the most diehard Hawaii hater something to love about these islands.

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If they want something else then they can: get an academic or athletic scholarship, go to a service academy, get an ROTC scholarship, join the service for 4 and get out with the college benefits, work part time, etc. That's my take, I'm sure its not everyone's.
We revive that thread every month or two, but you have no moral reason to delay your ER just for the sake of their college.

We were a bit surprised to learn that ROTC now only offers the first year free.

If both you and your spouse have quenched your thirst for higher education then you could transfer your GI Bill benefits to your kids. It's better to use the GI Bill for you two if you have a need for it, but if not then you might as well transfer it.

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I have researched the other islands, and it looks like the big island is the most affordable for housing, but right now I think somewhere on Oahu would suit us best overall.
You're right about the Big Island, and the other islands also have their pockets of affordability.

My paranoia about the neighbor islands is having to commute to Tripler for veteran's benefits or some sort of chronic disease therapy. I think there's a VA center on the Big Island or Maui but I haven't been paying attention.

Another long-term issue is moving here, then having your kids to go the Mainland for college and starting their careers/families there. Next thing you know you're flying to the Mainland 5x/year to visit the grandkids. Many military who retire here also face the same travel issues with aging parents. My spouse and I have been relatively lucky in the aging parents regard, and we're hoping that our daughter decides to return here to fix Hawaii's infrastructure after her military service. But that's her problem. If she wants us to see our grandkids then she'll probably put them on a plane to Honolulu.

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We think that Hawaii is the best bet for the laid back, tropical beach lifestyle that we love while still having the benefits of being in the US for schools, access to quality medical care, etc. I think we are on track to be financially independent, but financially independent in the south eastern US is not financially independent in Hawaii. My wife had the conversation yesterday if we had to choose between being completely retired and living in say, Alabama, or living in Hawaii and one or both of us continuing to work. She says Hawaii with no hesitation. I tend to agree, but my priorities are: 1. providing a safe, healthy environment for my kids with opportunity to achieve what they want to achieve, 2. Being financially independent (I dont mind working but don't want to be trapped in a situation where Im forced to work in a place where Im not happy), 3. Live in Hawaii. In her priority list, 2 and 3 are probably flip flopped :-)
I'm hardly objective regarding the quality of life, but I also think you'll find plenty of employment opportunities here-- both in uniform and in aloha attire. Around here, military veterans are highly respected and quite employable.
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Old 02-11-2012, 01:32 PM   #10
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Great information Nords, mahalo. We definitely want the kids to stay close, but there are no guarantees no matter where we live. Appreciate the comments about employment opportunities for vets as well. Most of the information Ive seen on the net has been all doom and gloom about moving to Hawaii, but I think its a perfect fit for our family. The advantages outweigh the disadvantages. They're all first world problems anyway.
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