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New member - advice welcome
Old 02-05-2007, 02:08 PM   #1
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New member - advice welcome

Hello all!

Here is a little background...a mere 17 months before I reach my 20 years with the military reserve (11+ active years of active duty which helps my pension!!) but I will not collect that pension until age 60. Currently working for state - and purchased my active duty service time so that at age 50, I will have 25 years for the reduced $$$ with full medical bennies at age 50 (but will probably remain until age 55, at which point the $$$ are higher for the "veterans pension") Currently have abt $20K in pre-tax retirement (military TSP) and upon retirement from reserve, will contribute at least 10k/year into the state pre-tax investment program (deferred comp)...In addition, I am looking to purchase a home in about 2 years, and also collect tax-exempt VA disability currently valued at about $500/mo. I have little faith in SS, and have punched numbers into calculators, and have faith that I will definitely NOT be a homeless old lady someday! In the event kids do come along (am 36 now) - I plan to revise savings strategy for their college, and big ticket items that I know will come (tax sheltered of course!)

I am able to live within my means, and choose to afford vacations (reward for my savings!) - but I feel like I am forgetting something. My parents tell me I will be fine (they retired "early" also) but any advice is welcome. Thanks!
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Re: New member - advice welcome
Old 02-05-2007, 03:08 PM   #2
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Re: New member - advice welcome

Welcome to the board, Jen.

Quote:
Originally Posted by JeninNJ
Currently have abt $20K in pre-tax retirement (military TSP) and upon retirement from reserve, will contribute at least 10k/year into the state pre-tax investment program (deferred comp)...
I'm not sure what the TSP has to do with the state's system and the Reserve retirement-- especially if you can max them both and get a match from the state?
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Re: New member - advice welcome
Old 02-05-2007, 03:38 PM   #3
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Re: New member - advice welcome

On the MOAA website last Friday I found that a REP from NJ has submitted a bill to allow retirement at 55 for Reserves with no offset below 60. Should be interesting to see if it goes anywhere. Last Congress any retirement change for reserves ran into Rummy's objection and the Repubs wouldn't buck him of the WH.

Welcome to the boards BTW. You should try running your numbers in FIRECALC. Treat your reserve pension as a reduction in expenses with COLA in the year you're eligible to receive it. You might try that with the state one also. You may be closer to FIRE than you thought.

By paying attention to this board and asking questions I needed answers to my absolute earliest FIRE date moved from 05/01/10 to 07/01/07. YeeeeHaw.
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Re: New member - advice welcome
Old 02-05-2007, 04:10 PM   #4
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Re: New member - advice welcome

Quote:
Originally Posted by USK Coastie
On the MOAA website last Friday I found that a REP from NJ has submitted a bill to allow retirement at 55 for Reserves with no offset below 60. Should be interesting to see if it goes anywhere. Last Congress any retirement change for reserves ran into Rummy's objection and the Repubs wouldn't buck him of the WH.
Yeah, my spouse has been waiting around for the last five years to see what happens. Since the pay tables are being extended over 30 YOS beginning in April, I'm not sure that there's gonna be much progress on that hangar queen of a bill.
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Re: New member - advice welcome
Old 02-05-2007, 04:35 PM   #5
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Re: New member - advice welcome

Hello Jen

Sounds like you have quite a handle on things! Congratulations on being so forward looking!

A few questions:

1) Buying an existing home always carries the risk of an appliance shooting craps, a roof leak, etc., etc.. In addition to having the customary 3-6 months living expenses in an emergency fund, make sure to add a few grand to send the inevitable appliance to the scrapyard.

2) Someone with your foresight probably already knows...but when you do shop around for your house, make sure you look for any and all veterans/active military/first time homebuyers incentives, credits, gifts and whatnot that can vary by location. Also, don't be afraid to look around w/o an agent, to try and factor in no buying agent commission in your price offer.

While I don't care for the current way SS is managed/taxed, even though I'm only 30, I still believe 100% that some form of SS will be there when I reach 65 67 whatever the retirement age will be. Sure, I don't factor it into my calculations, but that's only to create some natural wiggle room. Even at the current setup, you'll still get 75% of what is currently forecasted...so, worst-case scenario is, you'll get just 75% of your benefit (which will be reduced if you stop working before 62).

Quote:
Originally Posted by JeninNJ
My parents tell me I will be fine (they retired "early" also) but any advice is welcome. Thanks!
How young were your parents when they FIREd themselves? Always interesting to hear about members of the forum who have parents who also FIREd. Unfortunately, my (dad, who calls all the financial shots)parents decided to go for some nice luxuries in their retirement, so ER never really seemed like a necessary concept. That, and my dad's side pretty much were always active in the family business somehow. I am to fix that a little bit in all respects. Did your parents include some military service in their ER setup?
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Re: New member - advice welcome
Old 02-06-2007, 06:47 AM   #6
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Re: New member - advice welcome

Thank you all for the warm welcome! I'll try to answer most of your questions in one reply post.

Parents have NO military service (was quite the blow when I joined the USN instead of heading straight to college) Dad used to work at Aerojet, then moved on to county employee later - as did Mom - after a 10 year stint as the local elementary school secretary) Mom was 54 and Dad was 59 when they retired - not really "early" - but a bit ahead of schedule. They ran the numbers, and decided to ditch the real jobs. Now they play! (Mom works p/t at the state fairgrounds police dept with a girfriend she used to share office space with...she likes the social aspect and the dirt from the cops' stories) Dad was not thrilled with this, since they were "retired" and did not HAVE to work - he got over it

I am partnering in a couple real estate deals right now...goal is to have that bump up my available savings and for my downpayment on a home. Due to the stability in my occupations, I must admit that at this time, I have no available savings (gasp!)

Also, please note that I got stuck with about 20K in unsecured debt and a foreclosure on my credit report due to a divorce in 2000 (PAID OFF - and the foreclosure rolls off my credit report this April!!) Hindsight is 20/20 and we did not refi in his name only - relied on the court papers to cover me. Lessons learned - those topics are in the past, not for hashing out on this board - and moving forward now And to brag a bit, currently my lowest score from the credit bureaus is 703!!!! (from a 541 in Jan 2000)

No matching with the state or fed when it comes to pre-tax savings I was reading the Business Tax book last night, and it looks like my "business partner" will be able to open a SIMPLE IRA for me - with her matching being deductible! More tax savings! I'll be her one and only "employee" and she will W2 me....I do the research/work, and she pays me - beautiful! We'll see how that works out when 2007 comes to an end.

As a vet "rep" - I am up to snuff on my laws & policies regarding military bennies - will not have to deal with a tax offset for my disability & pension, because by age 60, I am sure I will be over the 50% mark (you veterans should know what I am talking about)

I'll admit complete ignorance regarding FireCalc...I don't know how to estimate $$$ value for my pensions. (Ignorance is not always bliss)

Thanks again! It has been a pleasure stumbling across this site
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Re: New member - advice welcome
Old 02-06-2007, 07:01 AM   #7
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Re: New member - advice welcome

To account for the pension in FIREcalc, in the advanced version at the bottom of the first page it allows you to reduce withdrawals for the pension amount and to indicate whether the pension is adjusted for inflation.
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Re: New member - advice welcome
Old 02-06-2007, 08:31 AM   #8
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Re: New member - advice welcome

Quote:
Originally Posted by MooreBonds
While I don't care for the current way SS is managed/taxed, even though I'm only 30, I still believe 100% that some form of SS will be there when I reach 65 67 whatever the retirement age will be. Sure, I don't factor it into my calculations, but that's only to create some natural wiggle room. Even at the current setup, you'll still get 75% of what is currently forecasted...so, worst-case scenario is, you'll get just 75% of your benefit (which will be reduced if you stop working before 62).
Just because the system will be able to pay 75% of all of our benefits does not mean that it will pay each of us 75%. If there is means testing, some may keep 100% of their benefits while others (the ones who have generated other means of survival) may get less than 75%.
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Re: New member - advice welcome
Old 02-06-2007, 09:17 AM   #9
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Re: New member - advice welcome

FireCalc is still kicking my derriere I was busy calculating my pensions, etc:

USNR: (in 2030 est #'s) $24,000 per year - will start drawing in 2030

NJ: (2006 #'s) $33,500 per year - will start drawing in 2025

VA: (2025 est #'s) $10,000 per year - will be drawing this all along

Thrift Savings Program - (no further contrib. allowed after 2008): $30,000

Def. Comp goal 10K/yr for 17 years = $170,000

Should I pare down the Def. Comp estimate for future real life? (family) These are just my contributions for the TSP and Def Comp - no gains included

Odds are that there will probably be some windfall $$ (grandmother, parents eventually passing on - skeeves me out to think about it, but, it will happen)



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Re: New member - advice welcome
Old 02-06-2007, 10:23 AM   #10
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Re: New member - advice welcome

Quote:
Originally Posted by Gumby
Just because the system will be able to pay 75% of all of our benefits does not mean that it will pay each of us 75%. If there is means testing, some may keep 100% of their benefits while others (the ones who have generated other means of survival) may get less than 75%.
Actually with the "fix" provision already built into SS it is more likely to have "reduced" benefits across the board. Check this out - http://early-retirement.org/forums/i...1553#msg221553
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