32, Active Duty Army, plan to retire at 48

[tkopel]

Hello all!
I am just starting out on my path to early retirement. I have been active duty for four years now, straight out of veterinary school. I plan on finishing my 20 years to get retirement and medical benefits. My main reason for wanting an early retirement is my husband, who is a Type I diabetic, and has a shortened lifespan because of it (65-70). Since his last 5-10 years will probably include many medical issues, we decided that we would retire early so he gets to enjoy as much of life as possible. I will probably start a second career after he is gone (it is tough to think about, but this is our reality). Along with planning on having my military retirement, we are now starting to invest heavily into my retirement accounts, savings and other investments. It has been a slow start, what with $130,000 in student loan debt (now only $40,000 thanks to the Army loan repayment program, Go Army!), but now I feel us gaining traction. It ia also hard for my spouse to find a job with us moving around so much. We have no children, and don't plan on having any, and we are getting much better at telling our money what to do and not just wondering where it went. Currently we have $10,000 in my Roth IRA, $2000 in my TSP (Army 401K), and $9000 in taxable investments. Luckily we also inherited my husband's grandmother's paid for home which right now is an income property, but we plan on selling before we retire. I am mostly interested in reading other peoples' stories about how they retired early, and that is is possible.
Thanks for letting me share!

 

[MichaelB]

Hi tkopel, welcome to the forum. Planning for your future is an important step and you seem to be taking the proper steps. Don't underestimate the ability of modern medicine to help you and your husband enjoy much more life together - I have already seen that with relatives. Good luck

 

[tkopel]

Thanks,
We are both crossing our fingers for successful pancreas transplants, or growing one in a test tube!

 

[Nords]

Welcome to the board, TKopel.

I understand why you may be reluctant to contribute to the TSP, but let me sidestep that discussion to suggest that you be ready to max your contributions to the Roth TSP. It's expected to start in the next few months, and you can contribute up to $17K split between the TSP and the Roth TSP.
Is the Roth Thrift Savings Plan right for you? | Military Retirement & Financial Independence

This post will also help you put some numbers on your financial independence goal. 20 years of aggressive savings plus a military pension makes it no problem.
How many years does it take to become financially independent? | Military Retirement & Financial Independence

Finally, has your spouse considered a more location-independent career like freelance writing or consulting in his specialty? At least one milspouse on this board has been away from her civilian employer for a number of years but continues consulting for them (and others) part-time. The blogging bar is pretty low, too. You don't have to write like Michael Lewis or even Dave Barry to make a nice side-hustle income.

 

[tkopel]

Thanks for the links Nords, I do plan on contributing as much as possible to the Roth TSP once it is available. My spouse is an auto mechanic by trade, however he is pretty much handy at fixing just about anything. He was able to get quite a bit of side jobs in the states, and does really well selling on Craigs List and Ebay (he literally sold a carved coconut to a woman in Hawaii) however here in Puerto Rico he is having trouble with the language barrier. It's no big deal, I like that he has a flexible schedule and he comes with me on as many work trips as possible. He is happy being an "Army Wife!"

 

[martyb]

I don't really see the point of contributing to the Roth TSP. Why not contribute to the regular TSP, and then to a Roth IRA instead? My reasoning is that for some reason I don't understand, we are limited to the total IRS limits for contributions to the TSP, whether it's all to the regular TSP, or split between Regular and Roth. Why is that? Why shouldn't we be able to contribute the max pre-tax ($17000/$22,500) to the regular TSP, and ALSO the Roth max of $5000/$6000? The IRS limit of $17000/$22,500 is supposed to be a cap on pre-tax contributions. I can max the TSP pre-tax, and also then max a Roth IRA at $5000/$6000 (if I can scrape up the money). Seems to me that there's an error in the contribution limitation concerning the TSP Roth. Somebody please tell me where I'm going wrong....

 

[Nords]

I don't really see the point of contributing to the Roth TSP. Why not contribute to the regular TSP, and then to a Roth IRA instead? My reasoning is that for some reason I don't understand, we are limited to the total IRS limits for contributions to the TSP, whether it's all to the regular TSP, or split between Regular and Roth. Why is that? Why shouldn't we be able to contribute the max pre-tax ($17000/$22,500) to the regular TSP, and ALSO the Roth max of $5000/$6000? The IRS limit of $17000/$22,500 is supposed to be a cap on pre-tax contributions. I can max the TSP pre-tax, and also then max a Roth IRA at $5000/$6000 (if I can scrape up the money). Seems to me that there's an error in the contribution limitation concerning the TSP Roth. Somebody please tell me where I'm going wrong....

Depends on your tax bracket.

One thought is that servicemembers should contribute to the Roth TSP since they already get a minimal tax break for going straight into the TSP. Whether they put $17K into the TSP and 0 into the Roth TSP, or 0 into the TSP and $17K into the Roth TSP, they can still put $5K into any ol' Roth IRA they want.

Then when they leave the service, they can tap their Roth TSP much more easily than the TSP. Meanwhile they'd have to roll the regular TSP to a conventional IRA for a 72(t) or convert that to a Roth and wait five years.

One advantage of maxing the Roth TSP before putting any money into a Roth IRA (or a conventional IRA) is that they'd be getting an expense ratio of 0.025%. It doesn't get any lower than that unless you're buying individual stocks in very large quantities for very long times.

In a combat zone, where a servicemember could contribute up to $49K* per year tax-free to a tax-deferred account, they could instead max their Roth TSP contribution. Tax-free contributions that earn tax-free cap gains and never have to be withdrawn... it doesn't get any better than that. Except for the part about being shot at.

* I might be out of date on that figure. It might be higher in 2012.

 

[Big Game James]

Thanks,
We are both crossing our fingers for successful pancreas transplants, or growing one in a test tube!

I don't know if you've heard of it but there's a few movies - forks over knives, simply raw, beautiful truth, and dying to have known. The last 2 talk about the Gerson method. I say this because I'm diabetic also and was told a couple months ago that I'd be on a dialysis machine by now and that would be on a rough ride. I didn't follow the method to the T but it straightened me right out. Simply raw is a documentary where they take a diabetics from across the nation and narrow them to 6 people representing the largest type 1 and 2 demographics and really did them good. 1 guy was a doctor himself a type 1 gentleman and he totally turned around. It's not the Gerson method but just as powerful.. hopefully that helps.. =)

 

[BigNick]

I am just starting out on my path to early retirement. I have been active duty for four years now, straight out of veterinary school. I plan on finishing my 20 years to get retirement and medical benefits. My main reason for wanting an early retirement is my husband, who is a Type I diabetic, and has a shortened lifespan because of it (65-70). Since his last 5-10 years will probably include many medical issues, we decided that we would retire early so he gets to enjoy as much of life as possible.

You haven't said how old you or our husband are. I'm guessing you may be around 30, with 4 years out of vet school. So unless he's a lot older than you, there is huge uncertainty around all of the numbers in your post (apart from the "20 years to get benefits"). The "reduced lifespan" might well just be the centre of a bell curve which is somewhere to the left of the one for non-diabetics - and that's with today's state of medical knowledge. So while you should definitely plan for the possibility/likelihood of significant medical expenses, you should also plan for DH to stick around for a long time, and to have a great life, and to die suddenly at 84 by being shot by his 26-year-old lover's jealous husband (this was always how my Dad said he wanted to go).

The good news is that if you plan for ER to take care of DH and you don't need to take it, the main downside is having too much money.

 

[MichaelB]

I don't know if you've heard of it but there's a few movies - forks over knives, simply raw, beautiful truth, and dying to have known. The last 2 talk about the Gerson method. I say this because I'm diabetic also and was told a couple months ago that I'd be on a dialysis machine by now and that would be on a rough ride. I didn't follow the method to the T but it straightened me right out. Simply raw is a documentary where they take a diabetics from across the nation and narrow them to 6 people representing the largest type 1 and 2 demographics and really did them good. 1 guy was a doctor himself a type 1 gentleman and he totally turned around. It's not the Gerson method but just as powerful.. hopefully that helps.. =)

Hi James, welcome to the forum. While you're in the "hi, I am" forum why not take a few minutes and tell us a little about yourself.

 

[tkopel]

I am 32, my husband is 36. I am a "plan for the worst, but expect the best" kinda person so if my hubby does live longer than expected we will just have more money to play with!

 

[Big Game James]

Hi James, welcome to the forum. While you're in the "hi, I am" forum why not take a few minutes and tell us a little about yourself.

sounds good.. I'll do it in another thread so I don't take away from this one.. =)

 

[Big Game James]

I am 32, my husband is 36. I am a "plan for the worst, but expect the best" kinda person so if my hubby does live longer than expected we will just have more money to play with!

awesome!!!!! That's definitely the way to look at it..