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Thoughts on early retirement plan
Old 12-15-2018, 08:44 PM   #1
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Thoughts on early retirement plan

My wife (46) and I (48) are both retired from the military. I was active duty and receive around $3K/month in my pension. She was active/duty and guard, receives $2K/month in disability now and will receive about $1.5K/month when she turns 60. We have a little over $300K in our TSP that we plan on keeping in until we turn 60 and then start modest withdrawals. We have 2 kids, which are both in their 20s and have their own jobs with benefits.

I am currently a federal employee and have been for the past 6 years. However, my wife and I have been seriously thinking about settling down and buying a small farmhouse in the country and enjoy the things we like to do (garden, camp, hunt/fish, etc.,). I anticipate that our total monthly expenditures in full retirement would be about $4.5K/month (including medical, covered by Tricare and VA). At this time, we make about $400-500 more than that without me even working, so I think we would be fine if I resigned/retired early from my current job...especially given that we will have at least another $2K/month coming in when we hit our early 60s (not counting SS, so it would likely be a little more).

So, my question is, do you see any major flaws in the idea to retire in the next year or so? We want to enjoy our years between 50-60 and not continue to grind away at a job each day until I'm 60+.

Thoughts?
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Old 12-15-2018, 11:51 PM   #2
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Do you track expenses? Do so for 2019 in great detail. Then you know if your estimate is solid.
With those numbers you can also simulate life in the country. Some items will go away, some will be new.
The new house and garden will need to be made "nice" and life in the country is not always cheaper than in town.
If you spend now to go out + eat out do not assume that this will go away on the country.
If you + DW are certain that your income will work, congrats! Enjoy your dream!
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Old 12-16-2018, 04:27 AM   #3
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+1 to chris2008's comment about tracking the actual expenses over time.

I had categorized quicken data going back to 1995 when ER became a viable option to me in 2011. Being able to review the data from over the years, seeing its consistency, seeing which items would go away in retirement, and knowing that we were never living on a budget, but rather had values that prioritized saving over spending, I could see that I was ready to go.

In summary, yes, if your income exceeds your expenses, and contains a sufficient margin-of-safety for you to sleep at night, then you may well be ready.

One caveat I would add is that we stayed in our current home after ER. Since you are talking about a very different lifestyle, your projected expenses will not be based on actual past data as much as mine were.

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Old 12-16-2018, 05:50 AM   #4
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I'm a bit confused. Is the $300,000 TSP your total savings or do you have additional funds outside the TSP? Where will the funds to purchase the farm come from? You have a nice pension, with additional funds coming on line in the future, and I assume healthcare is taken care of because of your service(?), but you appear not to have much of a nest egg to cover extras/ home purchase/cushion. If it were me, I'd spend the next few years beefing that up and then retire early.


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Old 12-16-2018, 06:50 AM   #5
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Sorry, I left out that we have around $150k in post tax savings account that we will be using to purchase our farmhouse. We already have a couple we have found in our price range. I wasn't counting that as an income source in the future, just our TSP.
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Old 12-16-2018, 06:59 AM   #6
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May I ask what part of the country are you planning on moving to ?
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Old 12-16-2018, 07:28 AM   #7
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Is $150K enough to buy the new homestead? Will there be any mortgage? You have a nice pension coming in, but it seems you have no other (after tax) savings in case you need some additional money. I think a good idea now would be to maximize some after tax savings until you quit working. Do any 401/403 savings that has company match to get that full benefit, but no more pre-tax. Put any additional into after tax so you can build that up to help bridge the time between quitting work and starting TSP withdrawals or SS. You will certainly be good once SS starts in addition to your pensions.



I agree you need to make sure the budget has high confidence. Did you include taxes in that? My main concern is the apparent lack of any additional savings available between retirement and 59.5.
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Old 12-16-2018, 02:33 PM   #8
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At this time, I will likely continue to work for 1-2 more years and should be able to save another $1K/month in my post-tax savings account, while continuing to contribute 5% to my TSP to take advantage of the matching. The $150K or so will be enough for a significant down payment, leaving us with a small mortgage and money left over to help pay for the move and other misc. costs as we transition. I'm pretty confident about our budget projections, but of course, there is not way of knowing if something unexpected will happen. Worst case, I can get a part-time job to pick up a little more money, if needed.



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Originally Posted by 38Chevy454 View Post
Is $150K enough to buy the new homestead? Will there be any mortgage? You have a nice pension coming in, but it seems you have no other (after tax) savings in case you need some additional money. I think a good idea now would be to maximize some after tax savings until you quit working. Do any 401/403 savings that has company match to get that full benefit, but no more pre-tax. Put any additional into after tax so you can build that up to help bridge the time between quitting work and starting TSP withdrawals or SS. You will certainly be good once SS starts in addition to your pensions.



I agree you need to make sure the budget has high confidence. Did you include taxes in that? My main concern is the apparent lack of any additional savings available between retirement and 59.5.
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Old 12-16-2018, 02:34 PM   #9
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We'll be moving to eastern KY. They don't tax military pensions, so we'll get extra tax breaks along with the lower cost of living.

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May I ask what part of the country are you planning on moving to ?
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