Watashi wa Neecy desu

[Neecy]

Long time lurker, first time poster...

Stats: Active duty USAF officer. I have been in for about 11 years, 9 more to go (inshallah). I meet my Lt Col board in 2010. I was prior-service National Guard Army, so I have a total of 17 years of service. I would like to retire around 26-27 years of service.

Somewhat of a late starter, did not start investing until 1999 at age 27. The only thing around was a Roth IRA with a $2k limit. However, I currently have about $88,000 saved between my Roth and TSP. I would like to begin maxing out TSP next year, by then hopefully my house that is on the market will be sold. I have maxed my Roth every year.

I am also about to pay off my student loan in a couple of months ($41k with $6400 left--mainly from an expensive private graduate school). I have a rental that is at 5.85 fixed at 30 years (VA loan--my first house) with about $30k equity.

Single with no dependents. I had made some financial mistakes and would not consider myself frugal by any stretch of the imagination. I figure once I unload my annoying house, it should be a better situation.

My goal is to retire in the historic district of Annapolis with a near paid of craftsman style home. I am thinking about paying off my rental by the end of my service, sell it for a down payment. I also plan on saving aggressively for it in a mutual fund, sometime next year.

Look forward to your comments. Thanks in advance.

[Want2retire]

Welcome to the board, Neecy, and Kon-nichi wa! Watashi wa Want2Retire desu. Sounds to me like you have a good plan. Once you sell your house and start maxing out your TSP, your nestegg will build a lot faster. Maybe someone else will have more detailed comments.

We have quite a few military and former military on the board. Thank you for your service to our country.

[Fireup2025]

Welcome!

[saxquiz]

ٍSo you know some Arabic and some Japanese. Does your job require that or did you just learn for fun? Just curious.

[Want2retire]

Originally Posted by saxquiz

ٍSo you know some Arabic and some Japanese. Does your job require that or did you just learn for fun? Just curious.

I gather that Neecy is stationed in Tokyo (at least that is the location stated in his or her profile). So, picking up a little Japanese is understandable. I'm not sure what Arabic you are referring to - - maybe the "inshallah" but that word has almost seeped into the English language in this modern age.

The title of Neecy's post is Japanese for "I am Neecy". It was rude of me not to translate my answer; my apologies. I answered "Good morning. I am Want2Retire". As for me, I picked up a little Japanese from living in Hawaii and taking Japanese language classes in school (as an elective) way back in the 1960's. It's a very interesting language and I wish I had studied it longer. Don't know the slightest Arabic.

[Neecy]

Originally Posted by saxquiz

ٍSo you know some Arabic and some Japanese. Does your job require that or did you just learn for fun? Just curious.

I lived in Turkey from 2000-01--so picked up a couple of words. Inshallah (gd williing) is my favorite. Yes, I am stationed in Japan since last year. I took a couple of Japanese courses at University of Maryland. It is not required for my job, but it really does help (especially in answering phones). Several officers here know Japanese fluently, some were prior foreign area officers and had DLI training.

Konnichiwa, Want2retire!

[Nords]

Welcome to the board, Neecy. Sounds like you're ahead on points enroute a winning game. This also seems to be a great time to be up for an Air Force promotion. They appear to have cut a little too deep and are scrambling to catch up.

Originally Posted by Neecy

My goal is to retire in the historic district of Annapolis with a near paid of craftsman style home. I am thinking about paying off my rental by the end of my service, sell it for a down payment. I also plan on saving aggressively for it in a mutual fund, sometime next year.

IMO nothing destroys an ER budget faster than that part of the country. We've had at least two posters from the area claiming that nothing below $100K/year will suffice. You know they also haven't fixed those pesky problems with traffic or winter weather or summer heat/humidity, right? Eh, but you're in Tokyo so everything's relative.

Having taken advantage of the government's multi-year all-expenses-paid Annapolis vacation plan, I have to question the foresight of an Air Force officer retiring to a Navy town...

[Neecy]

Originally Posted by Nords

IMO nothing destroys an ER budget faster than that part of the country. We've had at least two posters from the area claiming that nothing below $100K/year will suffice. You know they also haven't fixed those pesky problems with traffic or winter weather or summer heat/humidity, right? Eh, but you're in Tokyo so everything's relative.

Having taken advantage of the government's multi-year all-expenses-paid Annapolis vacation plan, I have to question the foresight of an Air Force officer retiring to a Navy town...

Thanks for replying. I haven't been to Maryland in 10 years, but Annapolis reminded me of home. I like to live near water without dealing with any tropical bugs and close enough to New York for a Broadway show. I'm heading there in a couple days for a month TDY at Ft Meade. So, I will see if it is still enchanting to me. Also, my last job will most likely be at the Pentagon. This is the plan barring any significant life-changing events.

If everything works out well, my retirement pay (with NG prior service time) should start out at $81, 123 before taxes, according to the OSD retirement calculator. I may take a year sabbatical and/or work part-time. I was even considering working a full-time job for 5-7 years and retire in my early 50's. Especially since half of the jobs in Annapolis are government jobs.

[virginia]

Neecy - your situation is very similar to mine.
I might think twice about where to save for the remainder of the home. Saving aggressively in a mutual fund starting next year will leave 8 years remaining for you - that's only 3 years away from the normal advice - "don't save inside a mutual fund if your savings goal is less than 5 years away."
Not sure that I have any solution as to where you would save it. I'm in a similar situation and save in mutual funds myself!

[Neecy]

Originally Posted by virginia

Neecy - your situation is very similar to mine.
I might think twice about where to save for the remainder of the home. Saving aggressively in a mutual fund starting next year will leave 8 years remaining for you - that's only 3 years away from the normal advice - "don't save inside a mutual fund if your savings goal is less than 5 years away."
Not sure that I have any solution as to where you would save it. I'm in a similar situation and save in mutual funds myself!

Scary, I think we were separated at birth. Only you are more frugal, enjoyed great luck with real estate and I've never been deployed. This market is a complete bear. I will have to pay at least 10k out-of-pocket to get rid of my house. Thankfully, living on base reduced the amount of angst I would be experiencing. I don't think I can ever pay for cable again if I move back to the states. I drive a beater and recently switched to a pre-paid phone. So, maybe I am on my way to living below my means.

Yes, I will have to save more aggressively for my dream house. After my house is sold and SL paid off my priorities are:

1. Max my TSP--currently put in 1088.70 per month
2. Continue to max Roth IRA
3. Pay $800 a month on my rental
4. Fund home downpayment account

Hopefully, once the rental is paid off, it should be worth at least $200k conservatively. If I can save at least $150,000-$200,000 in the next 8-10 (may stay on a couple more years or work)--then I should be OK.

[virginia]

We probably were separated at birth - that would explain where the nice side of me went

I think that you will easily be able to save that much in the next 8-10 years, and might be surprised that it won't be as hard as you expect. It really starts growing exponentially once you start saving.

You know, you could always use your Roth money too for the house (I think??) I'm always concerned about oversaving for retirement, and if you could live on your pension (especially with a potentially paid for house), you might want to think about that (pulling from the Roth to finish paying for the house) as well. I was just going around with my advisor yesterday about the TSP. He was saying that I should Immediately start funding the TSP at 10% to reduce taxes, and I was like - Why Aren't my taxes going to be higher in retirement anyway?

That's a nice area where you want to retire. I wonder if 400k would be enough to pay for a house?

[Neecy]

Originally Posted by virginia

We probably were separated at birth - that would explain where the nice side of me went

I think that you will easily be able to save that much in the next 8-10 years, and might be surprised that it won't be as hard as you expect. It really starts growing exponentially once you start saving.

You know, you could always use your Roth money too for the house (I think??) I'm always concerned about oversaving for retirement, and if you could live on your pension (especially with a potentially paid for house), you might want to think about that (pulling from the Roth to finish paying for the house) as well. I was just going around with my advisor yesterday about the TSP. He was saying that I should Immediately start funding the TSP at 10% to reduce taxes, and I was like - Why Aren't my taxes going to be higher in retirement anyway?

That's a nice area where you want to retire. I wonder if 400k would be enough to pay for a house?

It is a pretty pricey area. I will definitely be more patient in looking for a house when it comes time to move. I am not opposed to working for another 5-7 years, if need be. I want to do something, at the very minimum, part-time. That amount should at least cover 50% downpayment, if I go ritzy. I saw some very nice houses online for about $600,000-$700,000 that had a lot of square footage about 4,000-5000 sq ft. I only need about 2,500 sq ft--and that is a lot for one person. I may tour some houses while in Maryland to get a better idea.

Actually, my favorite part of the TSP is that it does reduce taxes. Especially since, as a single person, we pay a lot more in taxes--which was part of my decision-making when I purchased my second-house.

[Nords]

Originally Posted by virginia

That's a nice area where you want to retire. I wonder if 400k would be enough to pay for a house?

Parents-in-law bought a nice Annapolis 4BR 2.5BA single-family home on 3/4 acre in 1983 for $125K. Then they saved aggressively and paid off the mortgage.

17 years later they sold it for $250K, put it into a five-year 7% CD, and moved to Hawaii. For five years we had to listen to occasional concern that NFCU would go belly-up with their money, despite all the reassurances of the NCUA. Meanwhile they lived in our 4BR 2BA single-family rental at what started as "market rent" but quickly became subsidized living. 2nd-worst tenants we ever had, too!

In 2005 they moved the CD to Treasuries so that it would be "absolutely safe".

In 2007 when they decided to move back to Annapolis, their old home was on the market again-- for $500K. They ended up buying a 2BR 1200 sq ft condo at an elder-living complex in a nearby (cheaper) community... for $325K.

They're in their mid-70s and they're carrying another mortgage. And if I know my PILs, they're saving aggressively (crossing the line from frugality to deprivation) to pay off the mortgage early.

But considering the growth of government along the DC-Baltimore-Annapolis triangle, that area's housing should be nearly immune to declining prices.

[Neecy]

Originally Posted by Nords

Parents-in-law bought a nice Annapolis 4BR 2.5BA single-family home on 3/4 acre in 1983 for $125K. Then they saved aggressively and paid off the mortgage.

17 years later they sold it for $250K, put it into a five-year 7% CD, and moved to Hawaii. For five years we had to listen to occasional concern that NFCU would go belly-up with their money, despite all the reassurances of the NCUA. Meanwhile they lived in our 4BR 2BA single-family rental at what started as "market rent" but quickly became subsidized living. 2nd-worst tenants we ever had, too!

In 2005 they moved the CD to Treasuries so that it would be "absolutely safe".

In 2007 when they decided to move back to Annapolis, their old home was on the market again-- for $500K. They ended up buying a 2BR 1200 sq ft condo at an elder-living complex in a nearby (cheaper) community... for $325K.

They're in their mid-70s and they're carrying another mortgage. And if I know my PILs, they're saving aggressively (crossing the line from frugality to deprivation) to pay off the mortgage early.

But considering the growth of government along the DC-Baltimore-Annapolis triangle, that area's housing should be nearly immune to declining prices.

Interesting...shouldn't a 5 year CD at 7% annually yield $350k (Certificate of deposit calculator)?

I can't imagine how the market will be in 10 years, hopefully a not too dramatic upswing.

[Nords]

Originally Posted by Neecy

Interesting...shouldn't a 5 year CD at 7% annually yield $350k (Certificate of deposit calculator)?
I can't imagine how the market will be in 10 years, hopefully a not too dramatic upswing.

They'd decided that they were done being homeowners and were living off the dividends (along with other assets).

Their biggest issue (aside from the parts where they sold at what turned out to be the bottom and bought at what turned out to be the top) was deciding that they were going to be living somewhere they'd only visited once in a while. They'd also made what almost turned out to be an irrevocable decision. When they decided to move back to Annapolis then the change (in rents as well as in prices) was an unpleasant surprise. But if you're TDY and wrapping up a career there then you'll have plenty of time to study the market and choose your location.

I hadn't visited Annapolis since the 1980s and was really surprised by how bad the traffic and congestion had become. But that's probably true for any area after 20-some years.