Welcome to the board, Dream. You're getting good advice from people who've been dealing with just these questions.
I do not think I will make Col.
Well, you've read your OERs more than we have, but it's nice to see a poster with a realistic assessment of the "worst case" who's not depending on the higher rank. But TomCat's right-- as you hit 15-16 years the assignment officer is going to assume that you'll do anything to stay to 20. You will be expected to accept whatever comes your way. With four kids and a bonus obligation it looks like that's exactly what's going to happen.
I have about $200K saved up. Unfortunately I bought a $240K house in 2005 and will struggle to sell it next year without losing my shirt.
Can't help much here. When we PCS'd into a down market we elected to keep our home and rent it out to reduce the hemhorrage-- but it still hurt. I know a lot of Navy aviators who kept their O-1 Florida homes for over 20 years in the expectation that they'd be back, but their situations & family changed so much that they never returned.
If you think there's a ghost of a chance that you'll return to the neighborhood then I'd keep the place and hope that a property manager doesn't bleed you too badly. If you're never coming back then I'd get the best help you could find with selling-- staging, marketing, taking back paper, whatever incentives you can find to get out with the least delay. Spending $10K up front for a fast below-market offer is way better than $20K of mortgage payments over the next 16 months.
As for the TSP and the IRA, keep maxing out the low-cost investments and letting them compound for as long as you can. If you decide to put money into college savings, then with four kids you're pretty assured that you're going to use a 529 for at least one of them. Just make sure you get the lowest-cost 529 you can find, unless your domicile state gives you a huge tax deduction. It'd be great if you could put those bonus checks into the TSP or the 529.
I need some good advice on whether to stay in past twenty to increase the pension and provide money for the kids college.
Have you run your portfolio and your expenses through FIRECalc? In addition to the pension (what's left after SBP) you also have Social Security (use the
advanced calculator and the
military wage credits to come up with a good number). You may find that you only need your savings to last until age 62 (minimal SS) or even 70 (max SS). Both your pension and SS will be raised by a COLA. TRICARE will be the best deal in town for your family.
As for college, how much do you want to spend? This board is pretty mixed on that. One feeling is that kids are more motivated with their own skin in the game, but that having to combine college with a college job of 20-30 hours/week makes it pretty hard to study. One compromise would be to pay their way to Local Community College/State U as Deserat suggested and let them pay anything above that. Or see who's going ROTC/service academy and divide the college-money pool accordingly. Our kid is a high-school sophomore and this month she's pretty sure she's going NROTC. She'll take her first SAT in five-six months and find out how realistic her Stanford/Notre Dame aspirations are.
It's amazing how many military scholarships go begging. When a kid applies for five or six of them (with the same essay and a set of interview clothes) they start adding up pretty quickly. Other Ivy League schools are beginning to realize that they're pricing themselves above reach as their endowments reach truly homongous levels. Many on this board have successfully negotiated down tuitions with a combination of scholarships, aid, and loans.
The conventional wisdom is to not sacrifice your retirement for your kid's education. If you're slogging through a civilian job and a "Gotta do it for my kids" attitude, you may be pretty ticked off if they struggle with college angst-- or even drop out to find out what's right for them.
It will be tempting to stay in a few more years because starting a new career at that age makes me tired just thinking about it.
Then there's the fact that if you're not excited about working to begin with, you're placing a serious mental/physical health risk on your body. Of course you have to match that civilian-career frustration against the possibility of getting your active-duty assets shot off, dealing with training accidents, or being stationed in Korea. Or even worse-- you could end up standing midwatches in the Pentagon. Does the thought of going to 22-24 years fill you with curiousity & interest, or have you had enough?
I don't know if this is any consolation, but after 20 years of hearing that you're barely capable of handling your current job you'll be pleasantly surprised to see how highly you're valued by civilian employers. The headhunters (like Lucas Group) know how to handle the transition if you know what you want to do, and I can attest that the job offers will come whether you're looking or not. Civil-service and contracting jobs are plentiful at your retired rank, although some may require a six-month delay for the ethics rules. If you decide that working is the best choice then you can easily go part-time as suggested in Bob Clyatt's "Work Less, Live More". If you decide that you need "only" $40K/year part time then you'll be astounded how little work that involves.
Your first step is to crunch the money numbers and figure out whether or not you need the paychecks or whether you can do it on the pension check. If you want to go part-time, SamClem is a wellspring of contracting knowledge and should be along shortly.
I want to retire early enough to play around a little while.
Whether the money number-crunching works or it's borderline, in my opinion you should do exactly that. Retire when you're ready, even if that's 20 years of service, and take some time off to clarify your thinking/planning. Frankly it's only when you STOP going to work that you can recover from chronic fatigue, have those important spouse/family discussions, take a look around you, get comfortable with the spending, and decide what you want to do. As you approach your final 30 days, too, the unsolicited job offers will come crawling out of the woodwork and there'll be another round of phone calls/e-mails at the six-months-retired point. The skills that employers want will not perish, and your contacts will not go cold. I'm six years into ER and I'm still getting the "So, are you bored yet?" phone calls.
Another option that you haven't mentioned is retiring from active duty and going into the AF Reserve. (I can't believe that I'm actually jealous of your service for offering this option.) It's the ultimate part-time employment, and TomCat & Deserat can tell you the nitty-gritty details. If you decide to work part-time then this may be the perfect combination of employment & leisure. No Pentagon midwatches, either.
I would also like to hear about whether other retirees took the SBP or not.
Sorry, no help here. Spouse will get her own Reserve pension (bigger than mine, too) and we don't carry any life insurance.
The govt subsidy underlying SBP is far better than any civilian equivalent. If you decide that life insurance is appropriate, then do SBP before you do anything else. Unless spouse is planning to start her own career and get her own pension, then SBP is probably an appropriate plan. Especially if you go AF Reserve...