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Can I make it on my military pension?
Old 08-06-2013, 11:04 PM   #1
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Can I make it on my military pension?

I actually am just looking for reassurance. I receive $3000 a month in pension after taxes and will have a monthly budget of ~ $3000 includes $300 a month into roth account and $150 into savings and 11-1200 mortgage. My wife will work and earn ~ $20,000 a year as a dental assistant and I plan to work part time completely on my terms to earn ~ $10,000 ebay seller or something on a golf course

I am sick of working 40 hour weeks and plan to spend more time doing what I want. I currently have $40,000 in roth IRA and will have 85-90,000 in savings when I sell my home.

I am 42 and looking at maybe 3 more years of corporate slavery. How doable do you feel this is considering my budget and income?

Thanks to those who responded to my questions on the introduction thread!! I would like to get further insight or suggestions from others as well.

Thank you in advance!
Devin
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Old 08-06-2013, 11:24 PM   #2
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Devin,
Do the figures include your Survivor's Benefit Plan (SBP) premiums (a couple hundred bucks per month)? Do you intend to get SBP? If not, can your spouse "make it" without your military retirement?

Have you built a budget for the future? Whether your military retirement pay and other income will be enough depends on what you plan to spend. Don't forget to budget an increasing amount for TRICARE co-pays, etc if you depend on that. If your additional free time will be spent traveling, collecting rare cars, etc, then you probably need more dough. If your needs are simple and your hobbies are cheap, then you guys might be set.
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Old 08-07-2013, 02:45 AM   #3
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IMO the key is to know exactly what you spend.
I would recommend to track ALL spending for at least 6 months before giving up a job.
Then you might be able to project this into future with some extra margin as safety belt.

How does your wife feel about it?
Are you planning to increase your tasks at home to make her life easier, too?
Would it be an option to continue working till you both can afford that she retires with you?
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Old 08-07-2013, 05:18 AM   #4
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You may be ready to retire but from reading your post I don't think you have done your homework. $3000 a month net, inflation adjusted pension is significant. As a military retiree you also have healthcare for both of you, correct? That is another big plus.

Track your spending for a year figure out what you need and want you want going into the future. You should be able to make $10K a year working P/T even if it's the local mini-mart.

Have you plugged your numbers into FIRECALC or any other retirement calculators? If not start rounding up that information and plotting the probabilities of your success.
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Old 08-07-2013, 07:18 AM   #5
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Guys, thanks for the feedback! To answer some of your questions, the $3000 does include survivor benefits. And yes, I do plan to increase my workload around the house to take stress off of my wife. She has had tough jobs her whole life and on September 5th, I will be sending her to school to become a dental assistant. This is a dream of hers and quite frankly is something she will want to do probably until she is well into her 50's 60's she is currently 46. I'm probably figuring low as far as her projected income is concerned, but that's a good thing.

We are very simple people and don't have expensive hobbies. I would probably want to play golf maybe three times a month and go to the movies once a week. We do ballroom dancing as well which currently cost us $96 a month. We love doing things around our house (yardwork, projects etc.) We also love to entertain and have a few parties a year. I would want to take one vacation a year (maybe spend 1-2k). Thats about it.

I was curious about firecalc...how do I use that if I don't have a ton of assets? Do I just project the value of my pension? Sorry, im a total newbie when it comes to this.

Thanks again!
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Old 08-07-2013, 07:23 AM   #6
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Originally Posted by mcdevin1970 View Post

I was curious about firecalc...how do I use that if I don't have a ton of assets? Do I just project the value of my pension? Sorry, im a total newbie when it comes to this.

Thanks again!
FireCalc and other retirement calculators out there usually let you add in pension income (or any other type of income) streams. FireCalc, under the "Other Income/Spending" tab, you can enter your annual pension income, when it starts, and whether or not it's adjusted by inflation (I believe military pensions are?).

You can also use that tab to count on any other income above/beyond what you're spending, and therefore might be adding to your portfolio.
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Old 08-07-2013, 07:44 AM   #7
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Thanks for the info on firecalc. I forgot to address another question in regards to our healthcare, our healthcare is through Tricare and cost $148 per month. This was figured into my projection of $3000 a month budget.
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Old 08-07-2013, 10:03 AM   #8
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I wanted to clarify my pension total. My pension is $1900 a month plus I get VA disability $1200 a month. I believe disability also gets cola adjustments, but not sure.
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Old 08-07-2013, 10:49 AM   #9
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Is your wife planning on working full time? If so, won't she make more than 20K a year as a dental assistant?

Will either of you get Social Security benefits? Have you calculated what they will be if you stop working full time per your plan?
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Old 08-07-2013, 10:51 AM   #10
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Originally Posted by mcdevin1970 View Post
I wanted to clarify my pension total. My pension is $1900 a month plus I get VA disability $1200 a month. I believe disability also gets cola adjustments, but not sure.
Don't take this as a chastisement, just friendly advice. You have to have a good estimate of what you have going out (or what you want going out,(that $148 a month premium for health care is part of your annual expenses)) and what is coming in (including SS for both your and your wife and what year). It is critical to know if the disability payment has an annual COLA or not.

Continue to gather your information needed for FIRECALC and start modeling your scenarios for early retirement.
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Old 08-07-2013, 01:08 PM   #11
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Try these calculators for comparisons.

Planner Launch Page | The Flexible Retirement Planner
Home | ESPlannerBasic
Retirement Calculator - Parameter Form
FIRECalc: A different kind of retirement calculator

You have some work to do both on the spending visibility and assets available side.

Have fun.
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Old 08-07-2013, 04:57 PM   #12
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As far as SS I will be taking that early at 62 as will my wife if its even available. I did find out that my disability has the same cola as SS.

That being said, I don't see why I couldn't make it working 20 hours a week bringing home say $10,000 annually and wife making $20-25k full time. With a $3000 inflation proof pension, that's $66k a year and I estimated monthly budget of 3k. I'm willing to do this until age 62. It's more important for me to work less and on my own terms than to completely retire.

Thoughts? Thank you to all who have responded thus far!
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Old 08-07-2013, 05:18 PM   #13
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A

That being said, I don't see why I couldn't make it working 20 hours a week bringing home say $10,000 annually and wife making $20-25k full time. With a $3000 inflation proof pension, that's $66k a year and I estimated monthly budget of 3k. I'm willing to do this until age 62. It's more important for me to work less and on my own terms than to completely retire.
I wholeheartedly agree with that last statement. I ER'd with SS planned in to the numbers at 62. If it's not there, I'll just learn to live on less just like everyone else will have to.
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Eroding military benefits
Old 08-07-2013, 08:17 PM   #14
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Eroding military benefits

Thanks for your service!

Nothing in concrete, but I'd keep your eye on what is going on in DOD.

Talk of cutting benefits are an every day occurrence.

I'd anticipate increased tricare costs, and possibly not being able to use it until you are 65.

It is sad to me that we can ask so much of our military, especially over the past 12 years, and then cut benefits as many forget the cost they have paid.
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Old 08-07-2013, 10:36 PM   #15
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Yeah I'm with you! It certainly is cause for concern. However, i think military retired pay / disability will be the last benefits touched by the government. This would cause riots in the streets especially after the past 11-12 years of constant deployments and wars. I anticipate future retirement benefits being changed for those entering active duty, as I don't think it's sustainable for our government to keep paying future pensions, but I seriously doubt that they will fool around with the entitlements that were promised to those that so bravely served this nation in the past.

The Tricare, I expect to go up. So not sure what to think about that.
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Old 08-07-2013, 11:00 PM   #16
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Yeah I'm with you! It certainly is cause for concern. However, i think military retired pay / disability will be the last benefits touched by the government. This would cause riots in the streets especially after the past 11-12 years of constant deployments and wars. I anticipate future retirement benefits being changed for those entering active duty, as I don't think it's sustainable for our government to keep paying future pensions, but I seriously doubt that they will fool around with the entitlements that were promised to those that so bravely served this nation in the past.

The Tricare, I expect to go up. So not sure what to think about that.
I think the increase in Tricare fees for retirees is coming and soon.

I disagree that retirement pay will be the last to change. You and I may not be affected (I have almost 14 years in), but those following us will almost certainly not be entitled to a pension. Defined contribution is coming, I believe. Implementation of TSP for military folks was the first step 12 or so years ago. When it happens is anyone's guess.

You really need to determine what you plan on spending. I know *I* wouldn't be able to make it on my pension alone at 42, but my wife and I live in an expensive area and will want to spend more than it sounds like you will.

Take the time to study FIRECalc. It's a great tool, IMO. I'm still six years from military retirement (and FIRE??!!??), but I am using it to evaluate options.

Good luck!
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Old 08-08-2013, 12:03 AM   #17
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Originally Posted by mcdevin1970 View Post
As far as SS I will be taking that early at 62 as will my wife if its even available. I did find out that my disability has the same cola as SS.

That being said, I don't see why I couldn't make it working 20 hours a week bringing home say $10,000 annually and wife making $20-25k full time. With a $3000 inflation proof pension, that's $66k a year and I estimated monthly budget of 3k. I'm willing to do this until age 62. It's more important for me to work less and on my own terms than to completely retire.

Thoughts? Thank you to all who have responded thus far!
Overall, your plan sounds pretty reasonable. The median income in the U.S. is ~50K, and you have more income than that under your plan. What are you spending now? Is 66K is enough to maintain your current lifestyle? What will you do for housing if you sell your house?

I think you'd sleep better, or at least I would if it were me, if you had a detailed annual budget for now and in retirement, had everything laid out in spreadsheet and had run the numbers through a few retirement planners. Plus, you need to plan for the worst case scenarios - SS not being fully inflation adjusted in the future, benefits being cut, divorce, death or serious illness (and maxing out your health insurance out of pocket max every year), DW not liking the dental classes, etc.
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Mil/ret
Old 08-08-2013, 03:36 AM   #18
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Mil/ret

McD: I'm ret mil, 20 years @ $2,200/mo after tax - 30% is VA offset.

FWIW, early 40's, lost my civ job, pulled the rip cord & moved to SE Asia. Making it work on just the pension w/o touching remaining nest egg of around $680k. That's my issue now actually, need to do something with it rather than watching it melt away in the bank.

As to your point about freedom vs work ~ roger that.

I was really apprehensive going from a great package down to pension figures only, but seems to be working out ok. We don't want for anything but did make obvious adjustments in lifestyle like eco vs. biz class travel, no new toys on impulse, etc. It's fine, still able to travel around modestly and keep things simple. Took up golf, although mostly at the range still, once or twice a week.

8 months in this mode, afraid I'm starting to get used to it. I do feel a bit out of place as most expats have full/nearly full heads of gray hair.

Good luck on crunching the numbers and if you make the leap, best of luck to you guys.
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Old 12-12-2013, 06:58 PM   #19
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I wish I was wrong

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Thanks for your service!

Nothing in concrete, but I'd keep your eye on what is going on in DOD.

Talk of cutting benefits are an every day occurrence.

I'd anticipate increased tricare costs, and possibly not being able to use it until you are 65.

It is sad to me that we can ask so much of our military, especially over the past 12 years, and then cut benefits as many forget the cost they have paid.
Ok...I was close...

Am amazed that it appears the Bipartisan Budget Act could get through the house so fast. Am sadly confident the Senate will approve and the Pres sign. All in less than a week or so.

I'm shocked that the Military retirement system could be altered so quickly.

COLA minus one percent for 20+ years in some cases is a significant erosion.

I'm not sure who I lost the most trust in, our elected officials, or the Generals/Admirals that are reported to have asked for this

The new budget has 80B for the war in Afghanistan for the coming year...seems to me we could cut 6B here and not have to start going down the very slippery slope of cutting very hard earned pension COLAs.
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Old 12-12-2013, 08:25 PM   #20
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I'm shocked that the Military retirement system could be altered so quickly.
I'm not. Compare the number of military retirees + active duty lifers to the number of people who won't be able to take the kids to Disney World this year or who will have to settle for a 3 series BMW instead of the 5 series because they have to pay the taxes to support those pensions. I think you can guess how that will always turn out.

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