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Now what do I do
Old 03-28-2010, 04:11 PM   #1
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Now what do I do

I am 43 years old, I have been medically retired from the Army after 23 years. I have my army pension, VA disability, and SSDI. We blew through our savings while I was not working, we were able to replenish most of it. We are now having to use our savings for my wife, who is being medically retired from the Army.

I dont know what is going to happen, we can pay our bills, live our lives, but as time progresses, we will slowely fall behind the rate of inflation. My current stategy to take care of things, is just pay everything down as quickly as possible. I dont know if this is a good plan?

Does anyone have any advice??
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Old 03-28-2010, 04:17 PM   #2
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For me this would be hard to answer. You do not give enough information. i.e. expenses and income. What are the disabilities and do they prevent part time work? Is a move an option to lower expenses? Family commitments? While you may drop behind with inflation, are not both pensions cola'd? Will they last till SS kicks in?
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Old 03-28-2010, 05:28 PM   #3
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While you may drop behind with inflation, are not both pensions cola'd? Will they last till SS kicks in?
Military pensions are COLA'd, so is VA Disability Compensation (and tax-free to boot) and SSDI.
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Old 03-28-2010, 05:35 PM   #4
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Yep, I knew that, I was just wondering why he thought it would not keep up with inflation, or if he knew something we didn't.
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Old 03-28-2010, 06:10 PM   #5
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Like others here, I used FIRECalc: A different kind of retirement calculator to help figure out if we would be able to retire. Plug in your expected income amounts and see if it will fund your expenses, which you probably have an idea of. Maybe that will help you figure out if paying things down is a good idea, too.

I hope you find you are able to fund your retirement after all, and that your disabilities don't hamper your enjoyment too much.
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Old 03-28-2010, 07:41 PM   #6
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Originally Posted by tkiranch View Post
I dont know what is going to happen, we can pay our bills, live our lives, but as time progresses, we will slowely fall behind the rate of inflation. My current stategy to take care of things, is just pay everything down as quickly as possible. I dont know if this is a good plan?
Does anyone have any advice??
Welcome to the board, tkiranch.

If you found this board by searching for the military's medical version of "early retirement", then you may want to look at these these links:
(FAQ archive) Military member who's confronting an early medical retirement?

If you have questions about financial management with the possibility of never working again, then you've come to the right place.

Your assumptions about inflation may be worse than reality, especially if you're getting your inflation info from the media. Their assessment of the CPI doesn't count as much as your budget/spending efforts. Most military retirees have found their pensions to be more than adequate compensation for almost all inflation scenarios. Of course there are exceptions.

If you're paying down debt and not getting back into debt then you're doing fine. Some kinds of debt may be worth holding on to but that's a risk which many are unwilling to accept. You have to make the decision that's right for your degree of risk tolerance.

As another poster said you should track your spending, figure out your expenses, make a budget, and check it in FIRECalc. That'll help you eliminate a bunch of uncertainty and give you specific areas to worry constructively.

The military's medical and retirement systems have a lot of issues, problems, and downright injustices. You might want to keep in mind, though, that this board has many veterans and civilians who have neither affordable medical insurance nor a retirement system, let alone one that's adjusted for inflation.
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Old 03-28-2010, 10:02 PM   #7
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Wow, thats a lot of replys, thanks
My outgoing bills comes up to about 9400 a month and income comes up to 9650 monthly, and the income is static, we will pay down all the credit card debt by July of this year, that will free up another 400 monthly. Our cars will be paid off in 2012. that will free up another 1000 monthly.
We are not going to move to par down, we are in a perfect place for us, the cost of living isnt bad for Illinois. our house was built by my family in 2006, unfortunately we built a 300k house in a 200k area. We are upside down on the mortgage by 40k. The loan is crappy and we cannot get out of it.
While our income will have cola raises, I believe that it will not be able to keep up with the inflation over time. I am not going to be comming into any more money except COLA raises and lottery ( and I dont play the lottery)
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Old 03-28-2010, 10:15 PM   #8
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...income comes up to 9650 monthly, and the income is static..our income will have cola raises...
With a annual combined COLAd income of ~$116,000 and medical bennies, most of us would think we'd died and gone to retirement heaven.

If you cannot increase your income the only alternative is to reduce your expenses. You seem to have a plan to do that, which is good. Once you get those credit cards and car loans paid off you should be in great shape financially, even with a mortgage.
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Old 03-28-2010, 10:39 PM   #9
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Your retirement income looks pretty good, compared to many of us here. So I guess you can try to work on the expense side. There have been many LBYM discussion threads here. It was the only way many of us could retire early without any pension or benefits.
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Old 03-28-2010, 11:31 PM   #10
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While our income will have cola raises, I believe that it will not be able to keep up with the inflation over time.
I'm trying to cheer you up with the reassuring news that inflation isn't as scary as it seems. In your retirements you'll have plenty of time (and motivation) to look at expenses and decide what's bringing you value-- and what's not. Reducing the debt is great, and along the way you'll figure out how to reduce your other expenses as well.

In nearly eight years since I've been retired from the military (and spouse since 2008) we've been able to reduce our non-discretionary spending every year. There's a wealth of information on this board about reducing expenses, as well as books like "The Tightwad Gazette" and "Your Money or Your Life". You don't have to believe anything-- you can read up on what others have done and see how their techniques could apply to your situation.

But whether you believe you can or you believe you can't... you're absolutely right.
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Old 03-29-2010, 08:17 AM   #11
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...we will pay down all the credit card debt by July of this year, that will free up another 400 monthly. Our cars will be paid off in 2012. that will free up another 1000 monthly.
Since you have a plan in place to free up $1,400/month in discretionary income you should be in good shape. The mortgage is, well, there, and there's not much you can do about that but hang in there, and after the cars are paid off perhaps paying extra on the principal to get out from under that.

A lot of people would be ecstatic to be in that position.
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Old 03-29-2010, 11:48 AM   #12
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Thanks for all the comments. We were doing pretty good for ourselves before my last deployment. I just got caught with my pants down by disability. now, it is playing catch up. I just dont like being on fixed income. We are going to make a go of the farm. Part of my disability is distrust, paranoia, and I forgot the rest, oh yeah forgettfulness. We have our daughter helping with the finance management, our lawyer helps, as he is a fellow vet that I served with. Life is just more difficult now, Ive never been dependant on someone as an adult. scarry.

Thanks for all your help and support.
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Old 03-29-2010, 12:12 PM   #13
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tkiranch,
IMHO, you are not on a fixed income. Your income will increase over time. In fact based on my time in civilian work force, cost of living increases did not come annually. Sometimes there was as many as four years before a 'cost of living' increase was applied and then it never seemed to cover what most of us thought was the inflation rate. I have found the annual inflation rate applied to my military pension has kept it abreast of my spending habits. Maybe not my desired spending habits, but my actual spending.

If you think about it, most sallaried employees are on a 'fixed income'. I hope this did not come across as argumentative, but you are in much better shape than you think you are. To get your retirement benefits you would need $2,925,000 in savings. You also only need to go 19 years before SS kicks in. However, your income is so high, you may be means tested out of a chunk of this.

My advice, get healthy, take a vacation, smell the roses and enjoy the rest of your life, your glass is 3/4 full, not empty.
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Old 03-29-2010, 01:49 PM   #14
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tkiranch,
IMHO, you are not on a fixed income. Your income will increase over time. In fact based on my time in civilian work force, cost of living increases did not come annually. Sometimes there was as many as four years before a 'cost of living' increase was applied and then it never seemed to cover what most of us thought was the inflation rate. I have found the annual inflation rate applied to my military pension has kept it abreast of my spending habits. Maybe not my desired spending habits, but my actual spending.

If you think about it, most sallaried employees are on a 'fixed income'. I hope this did not come across as argumentative, but you are in much better shape than you think you are. To get your retirement benefits you would need $2,925,000 in savings. You also only need to go 19 years before SS kicks in. However, your income is so high, you may be means tested out of a chunk of this.

My advice, get healthy, take a vacation, smell the roses and enjoy the rest of your life, your glass is 3/4 full, not empty.
My concern is because I already have SSDI. I just am worried because I took such a drop in income over the last 3 years. Thanks for your help and we are going in June across Route 66 with my wifes Convertible Mini cooper. I dont drive any more, so I got her a fun car to take me places.

thanks again
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Old 03-29-2010, 03:27 PM   #15
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Since you don't drive, can you sell one of your cars? That will reduce your monthly expenses. Your expenses seem very high to me.
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Old 03-29-2010, 04:22 PM   #16
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Our expenses are high, but only for the next 2 - 3 years. My wifes Mini is her Summer car, We have a Saturn for family driving, winter driving, and grocery getting. We also have a Farm truck, that is paid for, but we still owe on our tractor. We do get along fine, I just worry about everything now a days.

Thank you all for your help and support
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Old 03-29-2010, 05:30 PM   #17
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tkiranch, thanks to you and DW for your service!

I'm sure you will make it. I think it must always be more scary when you find yourself "retired" rather than retiring when you had planned. All the best as you find your way through this new phase of life.
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Old 03-29-2010, 06:32 PM   #18
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Thanks for your help and we are going in June across Route 66 with my wifes Convertible Mini cooper. I dont drive any more, so I got her a fun car to take me places.
Just be careful not to run into these guys!

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