It feels a little taboo to talk about money in detail, but I guess that's what this place is for. I'm a 40 year old set to retire from the Army in Spring 2024. I'm married (also 40) with 4 kids (9, 7, 4, and a newborn - actually he'll be born next week ) and a geriatric German Shepherd with farts that can only be described as chemical warfare.
Financially, we're in a good place, but entering post-Army life has me a bit nervous and I'd really appreciate feedback from this community. The plan is to:
Current Income:
$150,000 - Army W2
$5,000 - Wife's side hustle
$10,500 - Rental Property Income
$165,500 - Total
Income Age 42-52:
$50,000 - Army Pension
$10,000 - VA Disability (estimate)
$100,000 - New job (estimate - nothing more because I want a better work/life balance)
$40,000 - Rental Property Income (estimate to reach $200K/year)
$200,000 - Total
Considering the tax savings associated with military pay (housing allowances, language pays, etc are not taxed), I estimated that to maintain our current lifestyle and savings rates, we'll need a gross annual income of $200,000. We anticipate retiring in Texas, so no state income tax (not looking forward to that property tax though).
Expenses Age 42-52
($100,000) - Living expense
($10,000) - Medical (is this a realistic estimate with Tricare?)
($40,000) - Savings (Retirement, 529, emergency, rental prop, etc)
($150,000) - Total
Assets
$400,000 - Roth IRAs (mine and wifey's)
$500,000 - TSP (like a Traditional 401K)
$365,000 - Taxable Brokerage (has funds from a recently sold house [Rental Property #3] and will be used to buy new rentals)
$40,000 - Cash Savings
$120,000 - 529 (9 y/o) - no more contributions
$110,000 - 529 (7 y/o) - no more contributions
$65,000 - 529 (4 y/o) - contributions will be complete in Dec 2022
$300,000 - Rental Property #1 equity (will likely sell in 1031 exchange to purchase cash flow optimized properties)
$450,000 - Rental Property #2 equity (will likely sell to finance primary residence)
$2,350,000 - Total
$2,055,000 - Total for Retirement (removed 529 quantities)
As I leave the Army, I plan to only really need to continue to contribute to Kid #4's 529 and focus the rest on maximizing net worth. My goal is $3.5M in retirement assets to fund $140,000 ($200,000 minus $60,000 in pension/VA) annual income. There are a couple of margins of safety built in there - I don't account for social security, $200,000 income needs will decrease as kiddos head out to college/life and I'm no longer saving for retirement, food bill decreasing, etc.
Like I said, leaving the Army is a significant transition so I'm a little nervous that I'm overlooking something significant. Any advice or feedback - particularly from other military retirees - would be greatly appreciated.
Cheers!
Financially, we're in a good place, but entering post-Army life has me a bit nervous and I'd really appreciate feedback from this community. The plan is to:
- retire from the Army at age 42
- have each kid's college expenses 80% financed thru 529s (the rest to be covered by my GI Bill distributed between the 4 of them, scholarships, grants, or loans)
- work my next job/career to full retirement no later than age 52 (earlier would be better )
Current Income:
$150,000 - Army W2
$5,000 - Wife's side hustle
$10,500 - Rental Property Income
$165,500 - Total
Income Age 42-52:
$50,000 - Army Pension
$10,000 - VA Disability (estimate)
$100,000 - New job (estimate - nothing more because I want a better work/life balance)
$40,000 - Rental Property Income (estimate to reach $200K/year)
$200,000 - Total
Considering the tax savings associated with military pay (housing allowances, language pays, etc are not taxed), I estimated that to maintain our current lifestyle and savings rates, we'll need a gross annual income of $200,000. We anticipate retiring in Texas, so no state income tax (not looking forward to that property tax though).
Expenses Age 42-52
($100,000) - Living expense
($10,000) - Medical (is this a realistic estimate with Tricare?)
($40,000) - Savings (Retirement, 529, emergency, rental prop, etc)
($150,000) - Total
Assets
$400,000 - Roth IRAs (mine and wifey's)
$500,000 - TSP (like a Traditional 401K)
$365,000 - Taxable Brokerage (has funds from a recently sold house [Rental Property #3] and will be used to buy new rentals)
$40,000 - Cash Savings
$120,000 - 529 (9 y/o) - no more contributions
$110,000 - 529 (7 y/o) - no more contributions
$65,000 - 529 (4 y/o) - contributions will be complete in Dec 2022
$300,000 - Rental Property #1 equity (will likely sell in 1031 exchange to purchase cash flow optimized properties)
$450,000 - Rental Property #2 equity (will likely sell to finance primary residence)
$2,350,000 - Total
$2,055,000 - Total for Retirement (removed 529 quantities)
As I leave the Army, I plan to only really need to continue to contribute to Kid #4's 529 and focus the rest on maximizing net worth. My goal is $3.5M in retirement assets to fund $140,000 ($200,000 minus $60,000 in pension/VA) annual income. There are a couple of margins of safety built in there - I don't account for social security, $200,000 income needs will decrease as kiddos head out to college/life and I'm no longer saving for retirement, food bill decreasing, etc.
Like I said, leaving the Army is a significant transition so I'm a little nervous that I'm overlooking something significant. Any advice or feedback - particularly from other military retirees - would be greatly appreciated.
Cheers!