Hello All

[Trueace]

I've been following the forums for a while and decided to throw out my first post. I can't remember if there is standard criteria or what haha but anyways.

29 years old and am about to finish up my active duty military career. I was debating staying in for 20 but landed a decent corporate job in banking recently so figured I'm going to take a stab at it.

Current Assets:
130k personal brokerage all in equities
40k in TSP- think I'm just going to leave it alone and start a new 401k with new employer and contribute at least match amount and hopefully max it every year.
20k Roth IRA
20k Cash
210k Total net worth.


Small 1/1 condo which I owe 49k on. Basically even cash flow and I have 14 years left on the note. I might sell it in 4 years given I'll only owe about 35k and believe I can sell it for 70 or so as the RE continues to recover but we'll see. 3.25% interest rate so that's not bad plus it's a tax shelter to a certain extent but dealing with tenants is a pain vs liquid securities as I've learned over the last few years.

Anyways, I appreciate this forum and all the words of wisdom. My target retirement age is 45 years old.

I am considering continuing to serve in the Army reserves until 45 if I can balance it and private sector job but we'll see.

 

[Senator]

Welcome.

Serve in the reserves. Your bank will like the fact you are in, and will likely pay you when you are away playing Army.

Don't throw away the 10 years you already have in.

 

[WM]

Welcome! It sounds like you're off to a great start, keep up the good work.

My husband is active duty and planning to retire in 2017 with 22 years. Based on the advice I've seen around here, I'd have encouraged him to stay in the reserves if he'd gotten out sooner.


Envoyé de mon iPod touch à l'aide de Early Retirement Forum

 

[nash031]

Don't throw away the 10 years you already have in.

So... these types of comments always touches a nerve with me.

I have a friend who often tells me "I'll (slap you in the face) if you get out at 10 (12, 14) years... you'll have nothing to show for it!"


[rant]

If you don't know what the person has already gotten from his military service, tangible or intangible, you have no business telling someone whether or not they're "throwing away" anything.

I've saved up high six figures, got my bachelor's degree AND 75% of a master's degree paid for, my wife's MBA paid for, I have 60% equity in a condo across the street from the Pacific Ocean, own two cars outright, and have had a wealth of leadership experience, technical training in nuclear power, and multiple visits to three other continents.

As if the pension is the only benefit of service...

[/rant]

(Nothing personal Senator, just always strikes a nerve when people say stuff like that.)

OP-

Congratulations on making a difficult life decision! I've been through that decision point thrice (6, 10, and recently at 14 years when I decided to stay active for the full boat). Best of luck to you!! My advice would be that you're halfway to earning a generous pension. I would definitely stick with the reserves and collect that pension to help secure your retirement!

 

[segfault]

nash031, you raise a good point.

My understanding may be completely wrong, but as a civilian (and very few of my family members have served in the armed forces, so I don't have their knowledge to rely upon), the 20 year pension cutoff point seems unfair. If someone served 10, 15, 19 years, they should earn a reduced military pension, even if they choose not to be in the reserves.

trueace, look into the taxes you may owe in selling the condo. Due to depreciation, you may owe quite a bit, even if the condo's cash value is about the same as it was when you purchased it. It may be cheaper to hang on to it!

 

[Trueace]

Thanks for the replies. I only have 6 years of service at this point coming in after college which is why I'm on the fence. I think I'll be able to swing 14 more in the reserves as long as my employer supports. There are some interesting ways to make it to 20 from my research such as doing some IRR/IMA years as well and not just traditional reserves.

 

[nash031]

Thanks for the replies. I only have 6 years of service at this point coming in after college which is why I'm on the fence. I think I'll be able to swing 14 more in the reserves as long as my employer supports. There are some interesting ways to make it to 20 from my research such as doing some IRR/IMA years as well and not just traditional reserves.

I'm pretty sure that doing your remaining years through IRR doesn't earn the same benefit as being a true, drilling reservist. In fact, if I recall correctly, there is a limit to how much IRR time and how many online hours and such you can do before they force you to choose to drill or not. I believe it's four years, but again, I haven't looked into IRR all that much. It'd be worth checking out.

 

[nash031]

nash031, you raise a good point.

My understanding may be completely wrong, but as a civilian (and very few of my family members have served in the armed forces, so I don't have their knowledge to rely upon), the 20 year pension cutoff point seems unfair. If someone served 10, 15, 19 years, they should earn a reduced military pension, even if they choose not to be in the reserves.

This isn't going to be popular here (or anywhere in the military) but I've long advocated for a generously-matched 403(b) with far more options than TSP provides for military folks. There should be a baseline contribution (such as 12% or so) from the government, then an option to match up to 3 or 4% more, up to the annual limit for personal contributions. That should start the day you enlist/commission, IMO, so you get some retirement benefit. As it stands, TSP is optional for service members, so everyone can have something regardless of when they get out should they so choose.

That said, it's also my opinion that they should do away with pensions for civil servants before they touch military pensions. But that's another rant! It's going to be awfully tough to change the military's pension system. Case in point: the backlash that happened when they tried to change the COLA calculation earlier this year, and that was only going to cost an O-5 retiree about $128,000 over the course of 18 years...

 

[Nords]

Anyways, I appreciate this forum and all the words of wisdom. My target retirement age is 45 years old.
I am considering continuing to serve in the Army reserves until 45 if I can balance it and private sector job but we'll see.

Thanks for the replies. I only have 6 years of service at this point coming in after college which is why I'm on the fence. I think I'll be able to swing 14 more in the reserves as long as my employer supports. There are some interesting ways to make it to 20 from my research such as doing some IRR/IMA years as well and not just traditional reserves.

I get a lot of comments about military retirement from my readers, and lately I get the same comment face-to-face from people who learn that I'm a veteran: "Damn I wish I'd finished out my 20 good years."

However serving in the Reserves/National Guard requires a balance of your commitments among your family, your employer, and your unit. I've also heard from many of my readers that you'll know you're doing it right when all three are equally pissed off at you.

You might want to cast your net wider than just the Army Reserve. There tend to be more National Guard units in a state than Reserve units, and it's possible that an armory may be closer to you than a Reserve unit. But that depends on your MOS and the quality of the nearby units. If you have to travel for drills then the Reserves can be a money-losing hobby until you reach O-4 or even O-5.

IRR is the best way to reach 20 good years if you can't drill (for whatever reason), but it's also a sign that you're on the warning track. Frankly, it's easier to be forcibly entertained by your unit during a drill weekend than it is to muster the personal discipline and time to finish correspondence courses. However your 45-year-old self will appreciate it.

Many servicemembers are reluctant to rely on their employer's support for their Reserve/Guard career, even though that's the law. Linkedin has a perpetual debate about whether you should even mention it during hiring interviews. However veterans are hot these days and a lot of corporations want to jump on the bandwagon. I also think that if a corporation is faking it in their support for the Reserve/Guard then they'll find many other creative ways to screw over their employees, so corporate support for the Reserve/Guard is a great way to figure out how you'll be treated as a "valued headcount".

This post is by far the most popular post on the blog, and when I check the stats I can see a significant bump on Sunday nights:
http://The-Military-Guide.com/2012/02/27/calculating-a-reserve-retirement/
I think it's Reserve/Guard members who've just finished a drill weekend and are trying to decide whether it's worth showing up for the next drill weekend, or maybe they're wondering whether they should still show up for their civilian job on Monday.

Anyway, if that corporate bank job isn't working out on this employer then you could always try to wangle an interview with USAA.

This isn't going to be popular here (or anywhere in the military) but I've long advocated for a generously-matched 403(b) with far more options than TSP provides for military folks. There should be a baseline contribution (such as 12% or so) from the government, then an option to match up to 3 or 4% more, up to the annual limit for personal contributions. That should start the day you enlist/commission, IMO, so you get some retirement benefit. As it stands, TSP is optional for service members, so everyone can have something regardless of when they get out should they so choose.

That said, it's also my opinion that they should do away with pensions for civil servants before they touch military pensions. But that's another rant! It's going to be awfully tough to change the military's pension system. Case in point: the backlash that happened when they tried to change the COLA calculation earlier this year, and that was only going to cost an O-5 retiree about $128,000 over the course of 18 years...

Fewer than half of the military's servicemembers even bother to sign up for the TSP, let alone contribute to their accounts. I think the military should have mandatory enrollment for the TSP just as they do for civil service, mainly because some of the junior servicemembers (both officer and enlisted) are breathtakingly financially ignorant.

However a minority of the servicemembers are convinced that TSP matching will be the first step in getting rid of the pension. We all saw how successful REDUX was for career retention, and as Leonidas says you're only going to get the quality of the military (and the police and firefighters) that you're willing to pay for. As it is, only 17% of the military's servicemembers are willing to even stick around for the current pension.