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...thinking about ER, pretty sure I'm FI
Old 09-01-2008, 08:46 PM   #1
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...thinking about ER, pretty sure I'm FI

I'm a bit tardy in posting my intro here on the forum. I've kicked this can down the road quite a bit for a number of reasons. But now I'm going to tackle this.

I'm 45 yrs old, retired Air Force (April of this year) and an airline pilot. The airline career is going into the toilet with the economy and high fuel prices, and I'm probably going to be laid off (furloughed, in the parlance of the industry) by the end of this year (very early '09 at the latest). It'll probably be years before a recall will happen so I'm probably done with it good. I've also been having some back problems so that's also putting this career in jeopardy.

When all this started to become apparent back in May, I wrestled with what the heck I was going to do. I didn't really look forward to having to remake myself at this point of life and am not real enamored of the idea of moving and taking a job in the DOD as a civilian,, which would be the most likely way to go at this point in life.

So I started to really assess my financial situation and think about ER. I'd been piling up cash over the last year or so due to the uncertainty that comes with being in the airline biz (and my ongoing back problems), so as I looked at my assets & allocation I realized I was sitting at a good starting retirement position. I slowly started to think that it was feasible and am now convinced that it is and am looking forward to it.

Setting up a Buckets of $ strategy, but still haven't decided on the number of years to cover with B1 & B2. I plan to lean to the aggressive side since I feel able to stomach the risk and can afford to, due to a COLA'd pension underpinning me.

I have a 41+K (gross) military pension and health care coverage that comes with. By the time I get the heave ho from the airline I'll have about a 400K portfolio (not including the house). No debt other than 88K on the mortgage.

We live a modest life in rural Missouri, which brings with it a low cost of living, low property taxes (about 1K) and suits us just fine. We're pretty much homebodies so we don't need to travel, go out to eat, or other high cost pursuits.

My prospective basic budget almost fits within the pension so I don't expect to have withdraw more than about 2-3% or so. Occasionally more for purchases such as a car, roof replacement, etc.

I'm still considering finding something (or things) to make a bit of money (10-15K/yr) to augment things and give us some cushion, but I'll feel that out over the next year or so. The nice thing will be that there won't be pressure to do so and I can pick and choose as I see fit. I guess that's semi-ER though, eh? Time will tell.

Looking forward to learning lot's more here.
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Old 09-01-2008, 09:32 PM   #2
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I am no a great expert on this, but I think quite a few couples on this forum have retired with an income in the range you are talking about, and without the health coverage. So you should be fine.

Ha
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Old 09-02-2008, 04:41 AM   #3
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You did not mention if you have have children at home or if it is just you and your DW. That would cause expenses to be a bit higher.

If you are considering ER, I would recommend that you perform a thorough study of your expenses over time (looking forward).
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Old 09-02-2008, 06:50 AM   #4
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Maybe you'll get lucky at work.... A friend (also Pilot) explained that he is taking retirement this year from being a pilot. He explained how their system for retirement works. Once eligible, he can, at the beginning of the fiscal year, put in for retirement and then go out anytime that year or just stay. If you DO go that year then the retirement is based on the market that existed at the time you "put in for " retirement. So what happens is once eligible you ALWAYS put in for retirement every year and gauge the market. If it is doing well as compared to the beginning of year when you put in then you stay another year. But if the market tanks during the year since you applied for retirement then you have a good opportunity to get out at the level it was before it tanked.

So he was getting out this year because the level he locked at was much higher than it is now and he figured he would have to work several years or more to get back to where he could be by getting out on this go.

That said I would imagine there may be an uptick in pilot retirements. ? Maybe you'll survive the furloughs.... :P

Good luck!
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Old 09-02-2008, 10:22 AM   #5
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Quote:
Originally Posted by Gardnr View Post

I'm 45 yrs old, retired Air Force (April of this year) and an airline pilot. The airline career is going into the toilet with the economy and high fuel prices, and I'm probably going to be laid off (furloughed, in the parlance of the industry) by the end of this year (very early '09 at the latest). It'll probably be years before a recall will happen so I'm probably done with it good. I've also been having some back problems so that's also putting this career in jeopardy.
I'm retired Navy but I heard a few guys at the Legion talking about how Air Force pilots, even though they're retired, can join the Reserves. I guess that's so the AF can leverage the inventory of pilots without having to keep them all on active duty all the time. Is there any possibility you could augment your income with 90 days of active duty from time to time, get paid for it and still keep your pension?
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Old 09-02-2008, 12:24 PM   #6
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Originally Posted by militaryman View Post
Maybe you'll get lucky at work.... A friend (also Pilot) explained that he is taking retirement this year from being a pilot. He explained how their system for retirement works. Once eligible, he can, at the beginning of the fiscal year, put in for retirement and then go out anytime that year or just stay. If you DO go that year then the retirement is based on the market that existed at the time you "put in for " retirement. So what happens is once eligible you ALWAYS put in for retirement every year and gauge the market. If it is doing well as compared to the beginning of year when you put in then you stay another year. But if the market tanks during the year since you applied for retirement then you have a good opportunity to get out at the level it was before it tanked.

So he was getting out this year because the level he locked at was much higher than it is now and he figured he would have to work several years or more to get back to where he could be by getting out on this go.

That said I would imagine there may be an uptick in pilot retirements. ? Maybe you'll survive the furloughs.... :P

Good luck!
Sounds like he's probably at American, about the only airline that still has a DB plan (I think the only others are UPS & FEDEX, but I'm not sure). I've heard a little about the situation you describe.

Only deferred comp for us and there's more to the story as well. I was originally hired in 2000, got furloughed post-9/11 in '01, was on active duty as a reservist for about 6 yrs before retiring. So I just went back and am still very junior at the airline, even after all that time.

In terms of retirements, the change from age 60 to age 65 mandatory retirment that went into effect last December, combined with no growth (actually shrinkage) in the airline, is going to create a real stagnation for another 4 years at least.

It's a miserable place to work these days anyway so I'm not really going to miss it The career isn't what it used to be. Who knows though, maybe I'll go back to it down the road.

Thanks anyway.
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Old 09-02-2008, 12:25 PM   #7
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Originally Posted by chinaco View Post
You did not mention if you have have children at home or if it is just you and your DW. That would cause expenses to be a bit higher.

If you are considering ER, I would recommend that you perform a thorough study of your expenses over time (looking forward).
Sorry, I left that out. I've got two boys, one's a college senior (on almost full scholarship) and the other's in high school. That does bump up the expenses some (food!) but I've taken that into account. Also college savings are aside from the portfolio amount mentioned, and I'm optimistic that the youngest will also be able to get substantial scholarship money as he's pretty sharp.

Thanks
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Old 09-02-2008, 12:30 PM   #8
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Originally Posted by friar1610 View Post
I'm retired Navy but I heard a few guys at the Legion talking about how Air Force pilots, even though they're retired, can join the Reserves. I guess that's so the AF can leverage the inventory of pilots without having to keep them all on active duty all the time. Is there any possibility you could augment your income with 90 days of active duty from time to time, get paid for it and still keep your pension?
Interesting. It just may be an option. I haven't actively flown in many years, having spent all of the last six years working in a non-flying staff position (actually as a reservist, but retired with an AD retirement). So I'm not sure if I could take advantage of that. But I'll look into it.


Thanks!
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