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An Introduction, savings milestone and some questions (all in one post!)
Old 05-16-2008, 11:22 PM   #1
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An Introduction, savings milestone and some questions (all in one post!)

Hello everyone! My name is James. I've been a long time lurker but have finally decided to take the plunge and post. Since my post will consist of more than an introduction, I decided to use the FIRE and Money forum as my means of initial communication. (Moderators, I hope that's O.K.)

First off, I just wanted to say that I FINALLY hit the $100,000 mark in savings/investments yesterday. It's an amazing feeling looking at my Quicken Homepage and seeing a total that is six figures. I've read numerous threads here that have stated that the first 100 grand is the hardest...well, let's hope that is truly the case I do not or have ever owned a home. My net worth has been accumulated by investing in stocks/mutual funds only.

I am currently 38 years old and in the U.S. Air Force. My "retirement" date (20 years of service) will fall on June 1st of 2009. However, if I happen to get promoted to the next rank (which is a very real possibility), I will have to give the AF 22 years of service if I choose to accept the promotion. This decision is what has caused me to have some sleepless nights lately.

The promotion breakdown is simple...give the AF two more years AFTER my 20 year point and in return, receive approximately $600 more per month for those two years and an additional $300 per month in pension income (for the rest of my life). As I'm sure most of you might have heard, a military pension is not something you can live on for the rest of your life...it will more than likely have to be supplemented by a secondary career afterwards. Another factor to consider is this...my thoughts towards being a miltary member have radically changed in the past 3-4 years and I don't think I like it anymore.

Do any of you think the extra income per month (both during the active duty and retirement) outweigh having to put up with another two years of military service? (This question might make more sense to someone with prior military service). Nonetheless, here's another opinion question for the entire forum:

Is starting a new job search at 39 anymore of an advantage than starting one at 41? I am currently six months away from FINALLY acquiring a Bachelors Degree in Business Administration (Finance).

Well, at any rate, I'm SO glad I found this forum and look forward to picking your collective brains in the future.

Thanks!

James
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Old 05-17-2008, 07:19 AM   #2
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James,

If you need to work anyway, might as well stick it out for 2 more years and get the extra pension $. Pensions are much harder to come by in industry, and this might be your only one.

While 40 is a round number, no employer will care if you are 39 or 41. It is illegal to ask about age or base hiring decisions on age. You do not have to state your age on an application. You will list your military experience, and whether it is 20 or 22 years, employers will peg you in the same age range anyway.

I was never in the military, but private employers have there challenges too. It will be a change at first, but you may dread it eventually. Better to get the extra pension. You still have plenty of years to be employed outside of the military. But with your savings and pension, may be ER will come faster.
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Old 05-17-2008, 07:32 AM   #3
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Quote:
Originally Posted by jimbohoward69 View Post
Hello everyone! My name is James. I've been a long time lurker but have finally decided to take the plunge and post. Since my post will consist of more than an introduction, I decided to use the FIRE and Money forum as my means of initial communication. (Moderators, I hope that's O.K.)

First off, I just wanted to say that I FINALLY hit the $100,000 mark in savings/investments yesterday. It's an amazing feeling looking at my Quicken Homepage and seeing a total that is six figures. I've read numerous threads here that have stated that the first 100 grand is the hardest...well, let's hope that is truly the case I do not or have ever owned a home. My net worth has been accumulated by investing in stocks/mutual funds only.

I am currently 38 years old and in the U.S. Air Force. My "retirement" date (20 years of service) will fall on June 1st of 2009. However, if I happen to get promoted to the next rank (which is a very real possibility), I will have to give the AF 22 years of service if I choose to accept the promotion. This decision is what has caused me to have some sleepless nights lately.

The promotion breakdown is simple...give the AF two more years AFTER my 20 year point and in return, receive approximately $600 more per month for those two years and an additional $300 per month in pension income (for the rest of my life). As I'm sure most of you might have heard, a military pension is not something you can live on for the rest of your life...it will more than likely have to be supplemented by a secondary career afterwards. Another factor to consider is this...my thoughts towards being a miltary member have radically changed in the past 3-4 years and I don't think I like it anymore.

Do any of you think the extra income per month (both during the active duty and retirement) outweigh having to put up with another two years of military service? (This question might make more sense to someone with prior military service). Nonetheless, here's another opinion question for the entire forum:

Is starting a new job search at 39 anymore of an advantage than starting one at 41? I am currently six months away from FINALLY acquiring a Bachelors Degree in Business Administration (Finance).

Well, at any rate, I'm SO glad I found this forum and look forward to picking your collective brains in the future.

Thanks!

James
Congrats on the financial milestone and welcome to the board! I wonder what percentage of folks have a Net worth of 100k? My guess less than we think. The next 100K will come a lot easier. Then its $250K, $500K, etc

17 yrs 10 Mo AD AF here with 4 yrs of that enlisted time and I know exactly what you are going through. The "just one more year syndrome." I have tossed and turned several nights on this issue. Under the high three pay system there is certainly more reward to stay long especially if you pick up that promotion. Averaging out the the lower grade month pay and averaging in the new rank. For me it was just wanting to know if I was picked up or not so I could plan and get on with my life. Ironically for a while there was more questions than answers. I think I have a much better handle on them now. You can go back and search some of my post on this subject and you can probably tell I was pulling Gs all over the place with my thoughts.

I was on the last 0-5 board and what a difference the promotion will make to my retirement income along with the additional 18 mo or so I need to stay to average out the 0-4 pay, and not being capped on the pay scale as I am as an 0-4. I have a great spreadsheet that models, graphs, etc this if you want it to modify for your situation.

So if you make the rank you may have the golden hand cuffs when you think about how much more you need to save at 4% SWR to produce the additional income staying 2 yrs makes. Having said that as you know there are times when the AF knows they own you. Everyone told me it was near 20 and for the most part I experienced it at the 16 yr point. I don't like getting into a situation where I owe them and they can then do as they please (not that they dont anyway) For the last 2 yrs I have been commuting over 1000 miles every weekend back to my family. But soon I will be PCSing again back to my home area to a great job where I plan on staying til the BS level gets to high then I am out. I am getting the financial house in order for the day of reckoning when I know its time to go.

Although we can live nice on the military retirement I plan on working part time at least while the kids are still in school once I retire since they have the school committment and we will not be able to travel during these times. I do plan on taking the summers off and all the breaks with the kids. At this point I think time is far more valuable that money.

Welcome again!

Tomcat98
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Old 05-17-2008, 07:47 AM   #4
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Quote:
Originally Posted by jimbohoward69 View Post
The promotion breakdown is simple...give the AF two more years AFTER my 20 year point and in return, receive approximately $600 more per month for those two years and an additional $300 per month in pension income (for the rest of my life). As I'm sure most of you might have heard, a military pension is not something you can live on for the rest of your life...it will more than likely have to be supplemented by a secondary career afterwards. Another factor to consider is this...my thoughts towards being a miltary member have radically changed in the past 3-4 years and I don't think I like it anymore.

Well, at any rate, I'm SO glad I found this forum and look forward to picking your collective brains in the future.
Welcome to the forum. I do not think the age difference should be a problem. I retired from the military at 38 years of age, and my son-in-law just retired from the AF at the age of 43 and he found another job making as much as his AF AD pay, and my son will be retiring at the age of 48 next year and doubts he will have a hard time finding something. As far as the military "pension" (technically it is not a "pension" but retired pay and some definitions are that it is "retainer pay" since you are subject to recall to AD), the VA pays out "pensions" in some cases; in fact I found I did live within my retired pay and still do. BTW that $300 a month is worth a considerable amount of money when you consider you may be drawing that (with full COLA for about 40 years) $144,000 in today's dollars (i.e., $300 a month X 12 X 40 = $144,000). IMHO the additional 2 years in your case is a simple decision. Additionally, you may find out that "work on the outside" is more frustrating than what you are doing now. Personally, I would stick out the additional 2 years (I had to do the same thing and have not regretted it at all (but that is just me)).

Again welcome to the board, and I am sure you will be hearing from the other "retired" military types that "live" here soon.
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Old 05-17-2008, 08:01 AM   #5
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I agree with previous poster2, 300/mo if linked to inflation would be like banking 90k according to the 4% guideline, so there's your second hundred grand right there... Seriously it'll be hard to bank 90k your first 2 years in industry. I see no real difference between searching for a job at 39 vs. 41. Stick with it if you can bear it.

Welcome to the forum!
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Old 05-17-2008, 08:22 AM   #6
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My FIL retired as a brigadier general and, despite an otherwise horrible personal finance situation, he and his recently deceased wife had a pretty good lifestyle. He and his wife were living successfully on the combined military pension and SS with almost nothing else. They certainly lived the reasonably affluent lifestyle you would expect from a retired BG and VP of a private company. When DW took over their finances we saw how close to the edge they were. The COLA factor is amazing.

I'm looking at some pathetic private pensions that are becoming even more pathetic as inflation eats them away.

An extra couple years to get a higher rank is probably a good move financially but there are two things to consider. The first is how bad is military life for you? The second is what alternatives can you find outside the military? You seem to believe you need a significant amount of income above the pension. You will not be able to float too long without one. Your savings won't provide much of a cushion.

Welcome to the land of the posters. I lurked for several years before I finally had an unbearable question that I hadn't seen anyone else post.
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Old 05-17-2008, 03:03 PM   #7
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I would stick it out 2 more years. I would also say that finance/acctg jobs are plentiful in most parts of the country. Start doing some research on jobs in your major and see what is available. I work in higher education and we have a pension that vests in 10 years. Granted, you'll get less if you work ten years versus 20, but if you have an AF pension and a higher ed pension with ss to come, you could be set at 51 or so.
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Old 05-17-2008, 05:07 PM   #8
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Sticking around for 2 more years for higher rank and pension is definitely worth it financially. The difference in age (39 0r 41) is insignificant in terms of finding a job.
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