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Once high 3, wanting to go to SEA
Old 09-10-2015, 09:02 PM   #1
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Once high 3, wanting to go to SEA

Hey all -thank you for your activity here-great & helpful posts. Me: 45 y/o active duty officer whose been eyeing ER for a few years. Ive been continued to my MRD in late 2018 for 20 year retirement. I saw the writing on the wall years ago so Ive been an avid reader of this awesome site, MMM, and am a big fan of Nords. Im ready to put my plan out there for input.

I want to Expat close to where I have extended family in SEA, where my folks are planning to move, & where Im also eligible for a second citizenship/passport after mil retirement. Single, no kids, no alimony. Id like to burn through the last couple of years of my GI Bill there either learning a new language or whatever. The cost of living is at least 30-40% (60%-70% by some accounts) lower than the US for the basics. I may do some slow travel or PT till Im tired of it.

If the plan is unsound, then Im currently in a fair position for a federal jb (maybe $70,000/year) or other civilian wrk ($35,000-$50,000/year). Or I'll consider another field with some VA training too but thinking of that while Im engulfed in the fog of work is a challenge.

Data in annual figures:
<$18k-current living expenses for everything; tracked through the USAA Track money tool. (Includes monthly mortgage at $860. Everything else-car, food, entertainment, etc is minimal). I don't know how it's possible but I don't feel deprived at all.

Debt:
$137K-House/Mortgage ($50K equity, est. house value $211K-will sell to avoid state residency in retirement; buying was maybe not the best decision but Ill have lived in it for 5 years by 2018)
$4k-TSP loan (to be paid off in a couple of months)

I'm projecting estimated overseas living expenses to be the same as now for the first few years just to be safe. (Marriage/dating-been there, done that, but you never know so Id adjust fire). I've trained myself to be frugal, so even the below budget seems high.

Expected annual expenses:
$4.5K-income tax (kind of fuzzy on this & estimate on taxable investments are not included)
$150.00-FY16 healthcare enrollment (catastrophic cap $3k)
$5k-housing rental/utilities (more than what I need)
$2.4k-food; research & family info says most local food/restaurants are cheaper than the US by at least 50%
$1.2k-alcohol, tobacco, caffeine
$1.2k-entertainment
$1k-out of pocket health care
$1k-misc
$1.5k-travel

Other expenses:
will need a vehicle up front, which can run high due to import taxes
-assistance to parents as they age
-slight chance of property purchase once citizen is obtained

Income:
$44K colad retirement pay pretax; begins late 2018
(not included is 2 years of GI Bill income which will far outweigh tuition & expenses for all universities in country)

Nest Egg:
$105K-Taxable Brokerage Acct
$152K-TSP Traditional
$19.5K-Roth TSP
$17.5K-Roth IRA
$9850-Trad IRA
Current Allocation: 13% Cash, 56% US Bonds, 27% US Stocks: Im fairly active investing but now exposure is lower due to market conditions. I mostly track with the TSP Seasonal & use a subscription guide for investing.

Savings plan is to continue to max out TSP & Roth Accounts & add no less than $30K annually to the Taxable Acct until retirement (the goal is $450k in all combined accounts). Post retirement-keep expenses low & keep adding to the Taxable Brokerage Acct before applying a SWR plan when I think I've enough.

Every other day & especially when the jb kicks me in the gut, I run FIRECalc or other calcs which give 100% success. What Im missing? How I might do it better? Do I need to start preparing for a bridge career? Thanks.
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Old 09-11-2015, 07:52 AM   #2
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Hi Island; First of all thank you for your service to our country. You seem to have very thoroughly outlined your situation and one can see that you are a committed LBYM type. My guess is that you will be good to go. For the sake of playing devil's advocate it seems as though your anticipated expenses once you have left the military are very low. If I've added correctly you anticipate spending $20K per year and will have ample resources to cover that amount so you will continue to put away over 50% of your income. My thought is that the low expenses may not include all categories and or that the categories that you are estimating are low or not sustainable over time. For example what about auto expenses, insurance, maintenance, cell phone. Food at $6.50 per day seems very constraining over the long term even in a foreign country. I guess I'm thinking that your budget puts you in a straight jacket that you may grow tired of. Having said that though you have quite a bit of room to increase spending by say 50% and still put away 25% of your income. Have you thought about how you will spend your time if you don't work again. Traveling eventually gets pretty old. And a $1,500 budget for travel is very low if you intend to travel extensively. Just thoughts for you to ponder
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Old 09-11-2015, 09:37 AM   #3
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We lived on Bainbridge Island for 15 years so have some knowledge of the relative COL for communities in SEA metro. To some extent your choice will be impacted by where in SEA metro your extended family will be living.

You should look at Bremerton or Poulsbo, lower COL yet convenient to downtown Seattle by ferry. What I like is the fact that medical professionals who served submariners out of Bangor stick around after retiring.

If your extended family settles in the suburb of Monroe you may not want to locate in Kitsap County because it can take ages to get there (been there, done that).
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Old 09-11-2015, 10:30 AM   #4
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Does SEA stand for Southeast Asia?
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Old 09-11-2015, 10:42 AM   #5
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Does SEA stand for Southeast Asia?
It could mean living on a sailboat, sleepless in Seattle, or South East Asia!
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Old 09-11-2015, 10:49 AM   #6
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Based on the costs he quotes and the lifestyle he describes, it has to be Southeast Asia.


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Old 09-11-2015, 10:49 AM   #7
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Quote:
Originally Posted by islandcyclone View Post

Every other day & especially when the jb kicks me in the gut, I run FIRECalc or other calcs which give 100% success. What Im missing? How I might do it better? Do I need to start preparing for a bridge career? Thanks.
Welcome aboard, islandcyclone. Here are some questions you migh find helpful. Some Important Questions to Answer Before Asking - Can I Retire?

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Does SEA stand for Southeast Asia?
That's my guess. We know how members of our armed forces love acronyms.
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Old 09-11-2015, 10:58 AM   #8
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Seattle and points thereabouts are on our travel to-do list (and will be asking Brat for suggestions when we go), we have been to SEA on a cruiseship, a few times, and Southeast Asia is intriguing. Perhaps all three are on the OP's radar .
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Old 09-11-2015, 11:34 AM   #9
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Thank you for your service, islandcyclone! Welcome to the forum!
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Old 09-11-2015, 11:57 AM   #10
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If you are retiring outside of the US you need to consider taxes and health insurance carefully. I'd start by understanding your tax obligations in the country where you intend to live and the relevant tax treaty with the US. You'll obviously have to keep paying US tax and probably claim foreign tax credits for tax you pay where you live.
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Old 09-11-2015, 12:49 PM   #11
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Oops. Yes that is South East Asia. I need to look at the tax treaty, thanks. These are helpful responses. Regarding the strictures of the budget--good point. I need to add some more line items and consider the pyschological aspects of such a too tight a budget.

I've thought some about how to spend my time and there are few specific volunteer assignments for a few months that I could do but I would probably need more structure throughout the year in order not to go crazy.
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Old 09-12-2015, 09:08 AM   #12
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Originally Posted by islandcyclone View Post
[COLOR=black][FONT=&quot]I’ve been continued to my MRD in late 2018 for 20 year retirement. I saw the writing on the wall years ago so I’ve been an avid reader of this awesome site, MMM, and am a big fan of Nords. I’m ready to put my plan out there for input.
Thanks!

$44K in pension and ~$20K in expenses? You have plenty of room for mistakes! I think you're good to go.

It sounds as though you're contemplating the GI Bill overseas. I'm not familiar with whether that would work online or whether they'd pay your BAH. And if you're overseas, they might want a U.S. certified university. But of course you'd do fine just about anywhere in America. I know several happy retirees using their GI Bill.

As for SEA, I'd enjoy your family time and take it a few months or a year before making any big decisions. If you haven't already looked at Billy & Akaisha Kaderli's travels, they're at RetireEarlyLifestyle.com.
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Old 09-12-2015, 10:21 AM   #13
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I am living in the Philippines. Reading between the lines of the OP, I am guessing the destination country is Vietnam.

Several of my friends are retired military and have taken classes locally here in the Philippines and have been reimbursed generously. One buddy is pocketing over $1000/month after tuition and expenses and is in his fourth year. As far as I can tell, they had a wide selection of schools to choose from, the process is not very selective, these are just ordinary local schools including even some trade school classes. Classes here are mostly taught in English.

Regarding spending $20K per year, that would be really thin for living here in the Philippines (which is probably more expensive than most other SEA destinations). I have lived in both Thailand and the Philippines, and I would say I spend as much over here as in the USA although I probably do a lot more activities here in SEA. I definitely spend a lot more than $20K. One of my friends has been living on exactly that much (and he initially had plenty of money to set himself up) but he literally cannot wait until his social security starts (soon) and his income goes up. He has been talking about it for years, so I can't say he has been very happy living on $20K.
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Old 09-14-2015, 09:58 PM   #14
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Kramers points are spot on. Like Kramer I've lived all over the place and believe it or not the Midwest USA is about as inexpensive now days as several ( Thailand, Philippines, Indonesia, Malaysia) destinations in SE Asia . Cost of living in those places especially housing has risen rapidly in the last decade.

Anyway, it's Hard to imagine all but the most "local" of lifestyles running less than 3k per month including healthcare. Housing. Food. Utilities. Auto transport and some basic entertainment.

Then add on regional and international travel budget for when you get island fever and need to go back to USA to visit relatives etc,

Also some what- ifs around cost of obtaining a girlfriend ( most do) should be factored in too

All That said, I think at a 35k/year spending rate, the pension net of taxes is adequate and you can probably save some of that / put some more toward retirement. Definitely don't touch what u have saved for a long while and defer SS when that time comes.

You won't pay state tax if expatriated. You will pay federal tax on the pension income. You will also owe tax on any investment gains not in tax deferred accounts. Depending where you are, local country may tax your pension income ( most do not, some do).

You'll pay an obamacare penalty for being uninsured or on a non compliant plan unless you meet physical presence test of being abroad

Presume you don't opt for Obamacare insurance as it won't cover you abroad so some other health coverage is a must. Maybe your current job comes with some form of retiree medical ...

It can be done !
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Old 09-15-2015, 07:33 AM   #15
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Hey man,

I'm on the same timeline (almost) to 2019/2020.

My concerns follow, and I don't mean anything here in a mean spirit... I'm just a blunt instrument!

You say you have $18k annual expenses. While you don't list your pay grade, I'm guessing to be eligible for retirement even as a prior enlisted officer, you must be O3E or O4 or O5. Guessing based on your pension estimate you're an O4. My concern then would be nest egg size relative to income. I can see two scenarios here:

1) you've just recently recognized your desire and gotten serious about saving, which is fine!

2) you don't have as solid a grasp on your expenses as it seems. Allotments? Draws outside of USAA? Income taxes (mentioned)?

I'll allow a third:

3) I'm all screwed up.

I hope it's 1 or 3, but I'd take a look at 2 and make sure you've really accounted for all your expenses. With $860/month mortgage and a small loan being paid down, that accounts for ~$10k. You mentioned you didn't account for income taxes and acknowledged that. That means you're eating, fueling, etc. on less than $8k per year. To which I say: wow! Good for you if true! It just seems at first glance that you've got money going someplace that's not accounted for.

While those expenses may account for a lot of things, there can be major one time expenses that throw spending way off. You mentioned aging parents. I'm in this boat, and tickets from San Diego on short notice are pricey. From SEA, even more so. A single flight probably accounts for 10% of your estimated spending.

Now, you look to have a good buffer based in your pension. I just encourage caution and double checking those expenses. I know a few folks who have been surprised when their pension doesn't do what they thought it would once retirement came around (though many of those weren't considering taxes and/or SBP).

Welcome! Good luck!
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Old 09-15-2015, 06:30 PM   #16
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My concern about living OUS would be "stability." Not so much political, but financial. Many of the once "cheap" places to live OUS are not so cheap anymore. Expats on the forum can probably tell you horror stories about this phenomenon. The secret is out about Expating. Moving to a cheap place and then seeing prices go up 40% in one year could devastate your plan. Just suggesting you do your homework and due diligence before you Expat. More importantly, have a good backup plan or two in waiting. Good luck and I also thank you for your service.
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Old 09-15-2015, 08:01 PM   #17
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Hey man,

I'm on the same timeline (almost) to 2019/2020.

My concerns follow, and I don't mean anything here in a mean spirit... I'm just a blunt instrument!

You say you have $18k annual expenses. While you don't list your pay grade, I'm guessing to be eligible for retirement even as a prior enlisted officer, you must be O3E or O4 or O5. Guessing based on your pension estimate you're an O4. My concern then would be nest egg size relative to income. I can see two scenarios here:

1) you've just recently recognized your desire and gotten serious about saving, which is fine!

2) you don't have as solid a grasp on your expenses as it seems. Allotments? Draws outside of USAA? Income taxes (mentioned)?

I'll allow a third:

3) I'm all screwed up.
Blunt is good, as are your observations. So. .
1) Yes, sort of. Lot's of money went into real estate pre-2009 with rentals and a really, really bad condo deal in an unfinished building. There is another thing too. The ex. Now I'll take full responsibility for my own actions but she was and still is a big spender. Although it wasn't why I left her, my finances began improving immediately afterwards along with my savings rate. She's retired AD, outranks me and is still several G's in debt. I'd bring up retirement planning occasionally only not to be taken too seriously. Then there is the war thing, there were a few times I figured I had a 50/50 chance of making it out alive, so it was like "what the hell, let's take those kick-ass vacations." Okay, well enough blame-shifting--it takes two to tango.

2) I don't think so, but I'm going to keep monitoring.

3) Yes, but I'm a recovering screw up.

Regarding the flights home, it's the elderly parents who are planning to move there to before I am.

The fast pace of inflation is a concern but a lot of it seems segmented to certain popular cities. But if my pension is still be beating middle class wages by 2-3 times and I keep lifestyle creep at bay, I should be good. Anyway this is why I've a wide margin of projected budgetary error and am looking to go to school as a test run to see how things really are. If it is not sustainable, I'll have to regroup.

All of these are helpful warnings-thanks.
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Old 09-15-2015, 08:27 PM   #18
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Island,

I would stop that TSP right now. No match for active duty. What you have in there now will grow to like 300-400K by the time you can touch it. Put everything into taxable. Spend taxable from from 48 (your retirement age) to 59.5. Spend tsp until SS at 62-70 (do the math). Any expected VA dis $? Make sure all of your medical is up to date.
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Old 04-18-2016, 04:52 PM   #19
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I believe that if you change your citizenship, that you will lose your military pension.


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