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Holding out for pension
Old 06-30-2004, 10:57 AM   #1
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Holding out for pension

I was wondering what is best age to retire. I'm going into the military and their retirement pension requires 20 years of service. If I hold out for pension, the earliest I could retire would be 46. For some reason, a part of me wants to retire at 40. Is that too early? Should I hold out for pension?
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Re: Holding out for pension
Old 06-30-2004, 11:41 AM   #2
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Re: Holding out for pension

Hey otako,

You're worring about something (early retirement) that will be affected by many like-events that are in your future and are impossible to factor in. *

If you are 26 now and plan on a military career, I suggest that you plan on staying in for at least 20 years. *The US government pension is one of the best things to base your retirement (be it early or traditional) on. If, along the way, you decide that you want to get out at age 40 and give up your 14 years of active duty you may wish to consider spending 6 years in the reserves and get the retirement pension at age 60.

Out of curosity, why do you want to retire at age 40? At that age you would have another 40-50 years of living to do. *What is your plan on how to spend that 1/2 of your life?
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IMO these are the choices.
Old 06-30-2004, 11:57 AM   #3
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IMO these are the choices.

1. Turn your back on the military. Get out as soon as your active-duty obligation is complete. Join the Reserves if you're obligated to, but go inactive immediately and get out ASAP. Try to fund ER from your civilian career.

2. Stay for a career. Retire at 20, collect a pension at 46, and ER.

3. Stay while you're having fun. Get out anytime before 20, join the Reserves, and collect a pension at 60. Almost certainly ER before 60.

For all three of these options, you should be putting the max into the TSP (world's cheapest index funds) and the max into an IRA. If ER is a major goal then carefully weigh the financial impacts of issues like family size, kid's college funds, and home/car/possessions. (Of course there are better reasons than finances that also affect these issues.)

Discussion:
1. Pro-- you can chase a high-paying civilian career while you're still young. You'll get "some" control back over your life. You can keep (most) medical & all commissary benefits if you join the Reserves. After military deadlines, you'll laugh at workplace stress & discord.
Con-- You'll miss the sense of mission, the camaraderie, and the military ethics/honesty (but you'll probably get over it). You probably won't have a graduate degree yet (although some companies want you to let them pay for it) and you'll be starting out pretty close to the bottom of the ladder. You'll lack critical skills at civilian office politics, deviousness, & backstabbing (unless you've had a Pentagon tour or been a flag aide). You'll lose out on awesome healthcare & grocery benefits unless you join the Reserves.

2. Pro-- Pretty mindless. Do what your assignment officer & your boss tell you to do, don't take too many risks, don't make too many waves. Get a mortgage-paying living-wage pension with a COLA & lifetime medical. ER is a slam-dunk with prudent savings & minimally-frugal lifestyle. If you must, you can also use your graduate degree and your pension to start any new career you want.
Con-- Family will be hostage to career. (This was a big problem for us.) Long working hours & deployments mean that you'll risk the kids growing up without you. After 14-16 years the assignment officers can fu--, I mean, send you anywhere they want 'cause they know you're sticking it out for a pension. (This was a big problem for us.)

3. Pro-- You can do the things you like until you run out. You can pull the plug anytime. You can intimidate your assignment officer by staying current on Reserve vocabulary and asking about Reserve units in your geographic area. You can run your own career for your own purposes instead of for advancement; the pension is going to start at age 46 or at age 60 and "all" you have to do is fund the difference. You'll be more relaxed on the job, you won't be bucking for promotion, and your performance will actually improve. (Worked for me!) You can leisurely search for a civilian job while living off your Reserve drill pay, or you can take Reserve duty for 30-180 days. You can have a career while still getting to hang out with shipmates at drill weekends and bore, I mean entertain them with sea stories.
Con-- I can't think of any. If I'd learned about the Reserves earlier in my own career, then I doubt that I'd've made it past my five-year obligation-- let alone all the way to retirement.

Again IMO, retirement age is pretty arbitrary and six years is insignificant compared to four-six decades of ER. I'm 43 but I feel that I have the mind & body of a 25-year-old. My father-in-law says that I'll get away with it for another 20 years before matter overcomes mind. (My spouse says that immaturity knows no age limits.) More important retirement criteria are your family & quality of life, your health, your choice of assignments, and your personal assessment of the whole package. For me it happened 10 years into my career but I didn't know enough about the Reserves to pull the pin. I can't recommend my approach of slogging through the next 10 to get to retirement, although it's certainly cured me of any desire to return to the workforce!

One final word of advice on #2 & #3 from my father-in-law, who's watched his coworker's defined-benefits pensions erode with inflation and his medical benefits nearly wiped out by the company's persistent hacking-- "My gosh, I can't believe you get a pension with a COLA and lifetime medical! Stick it out until you can retire!"
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Re: Holding out for pension
Old 06-30-2004, 12:11 PM   #4
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Re: Holding out for pension

40-50 years of life live after 40?

For some reason, I imagine life after 60 as being not able to do anything - crippled from old age and sick.

I don't have a clue on what I would do if I got out of service at 40. *Probably sipping beer on some beach in South Pacific.

But, I guess it's too early. *Coming from the private secor, I like life as a government worker.

As for the idea of getting into reserves and going civilian, I would only do it as a last resort. *It's taken me a lot effort and pain to get into the service as a officer. *I would have to be in assigment or situation where I really hate my job to abandon it.
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Re: Holding out for pension
Old 06-30-2004, 12:27 PM   #5
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Re: Holding out for pension

Dumb suggestion - save Nord's post and keep it handy.

Oldest nephew - to whom I proudly gave one of my all time best Boglehead lectures and book ten years ago has maxed his TSP ever since - was going to jump ship this year, was interviewing airlines - made TAR - is now staying in for the pension. Age early thirties.

Keep your options open.

I did find out last visit, he'd read Four Pillars - we had a long discussion about that. And he knows the words and can humm most Jimmy Buffet tunes so I'm not worried about his ER.
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Re: Holding out for pension
Old 06-30-2004, 12:59 PM   #6
 
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Re: Holding out for pension

Quote:
For some reason, I imagine life after 60 as being not able to do anything - crippled from old age and sick.
Not true at all! - Probably life after 80 is not that great, but generally from 60-80 is a pretty good life!
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Re: Holding out for pension
Old 06-30-2004, 03:54 PM   #7
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Re: Holding out for pension

otako,

If you have such a negative image of those over 60 you really need to spend some time with folks in that age bracket. You sound like you have a lot on the ball and, as you are a military officer, you are obviously not lacking in many skills.

40/50 years is not an unrealistic concept when it comes to age 40. Current age 65 males have life expectancy of about 18 years.

You say that you have taken a lot of effort and paid to become an officer and that the reserves may not be a fit for you.

Your skills, no matter what branch of service, would possibly be a great asset to the reserves. If you don't like the idea, don't join the reserves and give up the pension.
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Test that imagination on your boss!
Old 06-30-2004, 07:13 PM   #8
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Test that imagination on your boss!

Hey, Otako, go tell your local flag officer your impression of life after 60. Stand well back after doing so, preferably close to an open door.

Financially, we have to plan for 40-50 years of life after 50. I don't want to break a longevity record and then go bankrupt, even if I do have long-term care insurance & Medicaid. As long as I wake up curious, I'm going to keep waking up.

Physically we're capable of being as fit & healthy in our 60s as we are in our 20s, 30s, & 40s. Jack LaLanne is 89 and still doing fingertip pushups. Maybe he's a few standard deviations off the bell curve, but you can develop physical-fitness habits NOW that will carry over to your skeletal & muscular health and determine your fitness after 60. Or you can blow it off and realize your own self-fulfilling prophecy.

I've been exceeding the Navy's fitness requirements (such as they are, Jarhead!) for over two decades, but when I started tae kwon do earlier this year I thought my body was gonna fall apart. I persevered from sheer stubborness plus the determination to keep up with my 11-year-old kid. After three months I'm much more fit, the pains have stopped, and we have a parent-kid activity to enjoy together. (Plus, for the first time in my life, I'm legally entitled to kick people's asses.)

Great comment about beer on the beach. I'm typing this after a four-hour surf session in gnarly 4-6 feet waves at Barbers Point on Oahu. There was far more corduroy than surfers, and there was even a competition on the west side of the beach. It was the best surf of the year, and luckily my kid is on school break. The kid didn't even have to paddle into one of the waves-- just hang on and stand up. Not having to deconflict work for these family moments (and party waves!) is priceless.

You can't exploit opportunities if you can't recognize them. As an 8-year O-3, I expressed my dissatisfaction with the life of a sea-duty department head to my CO and alluded to having thoughts about leaving the service. He called my bluff and asked "What would you do if you got out?" I had to admit that I had no idea. He said "Anything you want!" and went on to tell me how sought-after we nukes were and how green the grass was on the other side of shore duty. I was more afraid of finding a real job than I was of three-section shipyard duty, and a few years later it seemed easier to stick around to 20.

Part of the reason for staying on active duty was ignorance. Your attitude about Reservists is the same one I had, and I feel that it cost me many missed opportunities. I can pretty much guarantee that in the next coupla decades you're going to have an officer job that you truly hate. For me it was chasing a drug boat with a submarine through a hair-raising archipelago-- after 40 days of continuous surveillance, the crew offered to take up a collection to surface the sub and buy the damn cargo if it would give us a portcall. Life as a govt worker is generally better than a civilian one, except that civilians don't have to kill people or order their own troops to go out and risk getting killed. Other than that...!

The biggest point I missed about the Reserves is that you are your own assignment officer & career manager. It's all the good things about the service with very few of the not-so-good. The money is lower, the medical doesn't stretch to your entire family, and your pension is delayed (in your case) by 14 years. Otherwise you can do just as much active duty as you care to handle. I agree that one bad Reservist is a much more public example than 25 good ones, but go to any major HQ staff (like PACOM or JFCOM) and you'll find that 25-30% of the billets are filled by Reservists-- because the assignment officers can't find enough active-duty bodies.

I know one Reservist who signs up for 179-day assignments in garden spots like Kosovo, Bahrain, Kabul, and Seoul. He makes about $30K and a ton of tax-free allowances. Then he spends a couple months in ER and goes back to his "job" as a Vail ski instructor. When the snow melts he goes back to the ResFor website and picks his jext assignment. There's not a lot of competition.

We didn't REALLY learn about the Reserves until my spouse's assignment officer made her an offer that she couldn't refuse. That's when I was forced to overhaul the finances and make some gnat's-ass budgets & projections, only to discover that we could have ER'd years ago (or I could have left the service at that 8-year point and joined the Reserves). Leaving the service was her last resort, but it's one of the best choices we ever made. I enjoy having the portfolio buffer now, but I wish that I could reclaim several years of my life.

Thanks for letting me get that off my chest. Learn from my mistakes or learn from making your own!

As for life after 80, I recommend "Centenarians: The Story of the 20th Century by the Americans Who Lived It" by Bernard Edelman. There's also a library copy of "Growing Old Is Not For Sissies", Vol I (out of print) or Vol II, by Etta Clark. Vol I is noteworthy for the nude photo of the hottie grandmother, but perhaps that's a personal preference...

Finally, Unclemick, my congratulations to your TARred nephew. If he's interested in Hawaii duty, I can provide names & phone numbers of a couple slugs at the Reserve Center and PACOM who are begging to be relieved!
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Re: Holding out for pension
Old 07-01-2004, 06:13 AM   #9
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Re: Holding out for pension

Nords

Whidbey to greater San Diego this aug. Middle one already out (San Diego), good contractor job - never said but I'm guessing leading boarding parties looking for smuggled oil and refueling right before the Cole got her subconcious. Silly kid married a Marine(sorry Jar-Head) and is sweating the second go round in Iraq. Single youngest drew Japan (read North Korea) next rotation. So you can see it varies all over the map.

Last ten years, counting the er Marine - eight trips to the Middle East.
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Don't be mislead about a military career.
Old 07-01-2004, 11:07 AM   #10
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Don't be mislead about a military career.

I know how you feel, Unclemick.

Maggie mentioned those ERs who make tons of money and get a pension. It can also be done by the "enforced savings" method of working enough extra hours to compress four workplace decades into two and then not having enough free time to spend any of it. Someday I'd like to get back 1983 and 1991, especially if I can give back 1990 by having my memory wiped.

A cousin's son used to love my tales of submarine life. He visited the Navy recruiter after graduation (having "only" a 3.5 GPA, convinced that he couldn't hack it in college) and asked to enlist for the submarine force. The recruiter (who I will someday track down and "re-educate") looked at his 6'4"/220lb muscular frame and said "Gee, sorry son, you're too big for submarines. But I have this cool ship you could go on!"

My nephew had already been warned about surface line so he left to "pursue other options". He happened to walk by the Army recruiter's office who chased after him calling "My, you're a fine strapping example of today's soldiers!" and paid him a $5000 "bonus" to join the Rangers.

My nephew had a great time for two years doing all the things that used to put him in juvie-- sneaking around in high-speed vehicles or motorcycles, firearms, unlimited ammunition, explosives, wilderness recreation, boobytraps, sabotage, and so on-- and he was getting paid for it! Then he celebrated his 20th birthday on a plane to Afghanistan, came back for four months, did Afghan II for six months, came back for a couple months, and spent Jan-Mar 2003 "softening up" behind the lines in Iraq. I sent tons of mail & care packages but my conscience kept picking on me. Among all the overseas deployments he found time to apply for West Point and he's just completed plebe year. (Funny thing, the upperclass hardly picked on him at all.) Compared to his other assignments, he thinks Uncle Sam's Hudson Homeschool is paradise on earth. He's learned more than I could ever teach him but I feel guilty for letting him form his delusional fantasies of military life.

My kid is eligible for a "free" military-academy appointment but I'm hoping to do a better parenting job than that. (Even Stanford would be cheaper in the long term.) And I sure hope the kid demonstrates more sense than either parent by not marrying a sailor. So to Otako and others embarking upon a military career or just fantasizing about the pension, it's not about the money. I joined for the testosterone-drenched irresistible challenge and I was lucky to survive my own stupidity. If you're not similarly motivated, then find something (or someone!) you love and hope that the money will follow.

I'd like to think that I've gotten over my own military addiction to adventure. But whenever I smell that unique combination of human sweat and atmosphere-cleaning chemicals wafting up from a submarine hatch...

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Re: Holding out for pension
Old 07-01-2004, 11:15 AM   #11
 
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Re: Holding out for pension

Yeah that human sweat and chemicals smell wafting up must be
kind of like "napalm in the morning".

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Re: Holding out for pension
Old 07-02-2004, 04:38 AM   #12
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Re: Holding out for pension

Long time lurker delurking here

Nords has a great post on this - I was active duty for 3 years 9 months and then left to pursue a graduate degeree and civilian career - along the way got hit by the ER bug, but throughout it all have maintained my Reserve status and am just now finishing a 3.5 year active duty stint in Europe - an opportunity I would have had a very low probability to have with my civilian career.

ER can come from several streams of income with different ones streaming at different times of your life---I'm 40 now but am looking to ER in 5-10 years. And the way I look at it, I will be able to use a bit larger SWR if necessary during the 15-10 year range until the Reserve pension kicks in at 60.

Right now I see people around me who have had at times a very busy 20 years, but will be leaving with a COLA'd pension and close to free medical care and if they'd been prudent in their fiscal habits could have a very nice lifestyle - explaining that to them is sometimes difficult :-)

Smartest people I know are the ones who came in at 17/18 enlisted, got their degrees then became officers and are retiring at 38-40 with an officer's pension----and then the world is their oyster--plus they tend to be better adjusted people having worked their way up understanding all the roles in the organization.

Enough rambling - I think the Reserves is great and am so glad I didn't opt out - good luckwith your decision and welcome to the ER wannabe and are crowd - it's great to see all these examples out here and they are more than willing to let you know how to do it ;-) their way, of course.......I just take that which works for me.

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Re: Holding out for pension
Old 07-02-2004, 04:43 AM   #13
 
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Re: Holding out for pension

HI Deserat! Sounds like you have it all worked out.
That's good. I always thought the military option had
lots of excellent options for ER. Alas, I was not cut out
for it. I did serve in the sexual revolution though.

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Re: Holding out for pension
Old 07-02-2004, 07:15 AM   #14
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Re: Holding out for pension

Quote:
Long time lurker delurking here

Nords has a great post on this *- I was active duty for 3 years 9 months and then left to pursue a graduate degeree and civilian career - along the way got hit by the ER bug, but throughout it all have maintained my Reserve status and am just now finishing a 3.5 year active duty stint in Europe - an opportunity I would have had a very low probability to have with my civilian career.

ER can come from several streams of income with different ones streaming at different times of your life---I'm 40 now but am looking to ER in 5-10 years. *And the way I look at it, I will be able to use a bit larger SWR if necessary during the 15-10 year range until the Reserve pension kicks in at 60.

Right now I see people around me who have had at times a very busy 20 years, but will be leaving with a COLA'd pension and close to free medical care and if they'd been prudent in their fiscal habits could have a very nice lifestyle - explaining that to them is sometimes difficult :-)

Smartest people I know are the ones who came in at 17/18 enlisted, got their degrees then became officers and are retiring at 38-40 with an officer's pension----and then the world is their oyster--plus they tend to be better adjusted people having worked their way up understanding all the roles in the organization.

Enough rambling - I think the Reserves is great and am so glad I didn't opt out - good luckwith your decision and welcome to the ER wannabe and are crowd - it's great to see all these examples out here and they are more than willing to let you know how to do it ;-) *their way, of course.......I just take that which works for me.

Deserat
Yeah, if only I could go back in time and do it all over again. However, time travel not option for me.

I could leave the service at 14 years and try retiring on my own money. However, It seems like I would end losing a lot money by not toughing it out 6 more years.
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Re: Holding out for pension
Old 07-02-2004, 11:53 AM   #15
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Re: Holding out for pension

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Yeah, if only I could go back in time and do it all over again. However, time travel not option for me.
Come on, they do it on "star trek" all the time. Although every time they go forward or backward the first time its an accident. It always takes the smart science guy 30 seconds to figure out how to infallibly go back to their own time.

What I always wondered is why when faced with 40 klingon battlesnoofers, the captain never turned to the smart science guy and asked "Hey...you remember that thing you did with flipping around the sun while bathing the ship with tetrion waves? Think you can do that again? 3035 looks pretty good right now."
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Re: Holding out for pension
Old 07-02-2004, 05:18 PM   #16
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Re: Holding out for pension

No, I'm very excited about joining the Air Force. *It's one of my life dreams. *"Tough it out" was probably the wrong use of words. *

I don't where my desire to retire at 40 comes from. *It's probably a passing thought that I'll let go once I get into the force.

I'm taking some summer courses right now in my MBA program. *It's almost finals week for me and I have several projects due. *The stress from all this stuff always makes me day dream of abandoning it all for life as a english teacher some south pacific country. * I guess that's where the desire to retire early comes from.
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