Help me retire early (a second time) pls

[Vicus]

his post is because I want to maximize my chances of retiring by the age of 45 (sooner if possible). I feel like my current plan is on that path but I am all about ways to improve.

So will try to make this short and right to the numbers to create the least amount of confusion. If you have questions I will try to answer them below.

I am current 37 years old. I am retired from the USMC. I retired after 17 years as a Gunny due to the Temp Early retirement act when they downsized in 2013. I am also at 70% disability via the VA. (go go 5 deployments). Here is what that provides me a month for the rest of my life.

Retirement pay is $1512 a month.
VA is $1542 a month. (basically 3050 combined a month).
Tri-care medical insurance for the rest of my life for me and my spouse (and child till 26 if enrolled in college). Medical insurance is only $500 a year for the entire family. It gets taken out of my pension.

I am currently on year 4 of my second career. I am a police officer and make around 90 grand a year before taxes. What I actually get paid is realistically around 5000$ a month. I also work a good amount of overtime and make an extra $15000 a year. (It's usually more but ill do worst case).

So take home 60,000 + 15000 = 75000 a year.
Va and Military Pension = 36600
Total = 111,600 a year.

I own a home.
Mortgage = 2781 a month (taxes/insurance included). I am paying an extra $1000 on top of that. $3800 a Month.

Now for the state I am with the Police I become "vested" in the state retirement plan after 5 years. I plan to quit at my 10-12 year mark. So that means I will get 20% of my HIGH FIVE YEARS salary (which they include department overtime) once I hit the age of 53. So from 45-53 I will NOT be getting this money. When I turn 53 I will get around $1600 a month (gains 3 % for each year after 53. I spoke with the state police retirement rep and we did a realistic estimate to come up with that number.

So I will have coming in each year when I retire the following:
$36660 = Military and VA
$19200 = Police retirement after 53
Total = 55860
27 years of working.

So additional factors. I bought my house for 475k. Its currently worth around 580-620k Market. I owe around 350k left on it. I plan to have it down to 100k or less by 45.

I get around 4k in taxes back each year. I put that all on the house.

I have a military TSP account with around 27k in it that is in a lifecycle fund. I cannot contribute to it anymore.

I have deferred Comp through the police. I have around 30k in there. They match up to 3000 a year. I usually put in around 4k a year to cover matching. This account should be well past 100k by 45.

My wife and I both have Roth IRA's. Mine has around 15k in it and hers around 10k. We put in 1-2k each year in each account. Mainly like the funds in the Deferred Comp better but I like the diversity of having money in more then just one place.

I have zero debt. Both cars are paid for and Zero balance on credit cards though I do have two credit cards both with 20k+ limits. Credit Scores are both around 770-790.

My wife does not work. I have an 11 year old son. He will be 18 when I turn 45. I have the VA post 9/11 GI bill that was transferred to him and my wife. This means he has his 4 year degree taken care of and will get around 2100 dollars a month for housing as long as he is enrolled full time. They also give 600dollars for books. I do not have to plan to pay for college unless he goes to his Masters/Doctorate. (May make his butt get college loans at that point).

My wife and I both have life insurance policies. Me 500k, her 350k. Both end around 65. My son has a 100k Whole life that he can cash out in the future if he wants.

Lastly I am not tied to ANY area. When I retire I want to move to a cheap/safe place to live. We are currently thinking around the Nashville area but far enough away from the city so that I NEVER have to deal with traffic. I have no intent to drive into a big city for any real reason. My house I bought here on the West coast for 475k would cost around 200k there. Gas/grocers reflect these deductions as well. But we are open to anywhere in the US minus Hurricane States and we don't like the East Coast, maybe Vermont and Maine are an option.

I plan to sell my house. Make 400+k profit (thinking this will be closer to 600 but being low end just in case). Use half that money to buy a new house straight cash (retirement home). Use some of the remaining money to purchase a second home as a rental property for income. Everything else into savings. I would also like to have around 100-200k savings by the age of 45. Then on top of that my investments.

But obviously the main perk to all this is the two pensions and the VA and basically free healthcare for life for me and my wife. I can also include Social Security as I have around 19 years of paid in SS. (they don't take out SS for my police job).

So that is it. I know there are hidden cost. I don't want to work past 45. I hate work lol. I love my job but still hate work by default. I want to be young and enjoy retirement. I don't want to retire and not get to go out and have fun.

What else can I do to speed this up? I can work more overtime as my salary increases (which is does by 3 percent each year not counting cost of living increase). I plan to bust my butt over the next 6 years make it like I worked 9 cash flow wise. What else am I missing as hidden cost of retirement or big things that could increase my after employment cash flow.

Thanks in advance! I really want to make this work.

 

[2017ish]

I don't see any estimate of spending in retirement (or spending now). Many people in this forum would hardly even know how to spend the amount you'll be getting in pensions (assuming you will have no mortgage on house in retirement). Others would find that amount to be either wholly insufficient or "a decent start."

Assuming that the pensions are COLA'd (and your police pension is solid, and not in Illinois!), you are in great shape already--if your police-career plans are met. Cheap healthcare (I'm SWAGging 2-3K per month) and a pension income in excess of the median american household income, with a paid-for house. It all comes down to spending desires.

IF you intend to join some forum members in traveling first class to the Solomon Islands or treating family members to expensive European trips, you need more. If you are homebodies in retirement, or choose to camp in the Smokies for vacations, you are golden. If you are in the middle, it all depends--but you appear to be in good shape.

 

[Bigdawg]

Welcome Gunny. Thank you for your service. DW and I are both USMC retired. 2017ish is right re: spending. It all depends on your expenses. Start tracking now. In a few years you will have a pretty good idea of your needs. Some good websites for that. I use Pers capital. I didn't post the actual website because we don't promote products/websites on this site. That site/tool is free BTW. Since you just joined this team I suggest you read a few threads. Lots of fantastic information and knowledgeable folks on here. Many been there done that's on here. Use the search function to find any topic of interest. Once again welcome and good luck.

 

[l8_apex]

As said above, the answer to your question is wrapped up in the lifestyle that you'd like when retired. So track expenses now so that in say 2 years you'll have a good idea of how much money you spend now. Then simply compare that to your income streams and you'll have your answer. (Obviously adjusting things for your future lifestyle hopes/expectations.)

 

[Vicus]

Welcome Gunny. Thank you for your service. DW and I are both USMC retired. 2017ish is right re: spending. It all depends on your expenses. Start tracking now. In a few years you will have a pretty good idea of your needs. Some good websites for that. I use Pers capital. I didn't post the actual website because we don't promote products/websites on this site. That site/tool is free BTW. Since you just joined this team I suggest you read a few threads. Lots of fantastic information and knowledgeable folks on here. Many been there done that's on here. Use the search function to find any topic of interest. Once again welcome and good luck.

I will check the tracker out when I get home. Thanks for the input!

 

[exnavynuke]

Current income you say is $111.6k/year.
Current savings rate you say is ~$8k/year. ($4k work, $2k each IRA contributions).

That's putting your "expenses" outside of savings somewhere around $100k/year (including tax expenses). Remove the extra mortgage payments and that drops to $88k/year

Pensions etc at 45 should be $36.6k
$600k @ 45 ($200k savings/investments + $400k from house) will produce ~$24k/year at 4%.
Combined, that would only produce ~$70k/year in total income, about $18k short of what I'm estimating your spending/expenses at right now based on your post. At 53, you'll add in the police pension, but that would still leave you just barely pulling off a 4% withdrawal rate.

Putting in a $88k spend rate, for 40 years, with a $600k investable, your military/va comp at $36.6k/year immediately and the police pension of $19.2k 8 years later Firecalc predicts a 50% chance of success. When I do an investigate for a 95% success rate, it tells me ~$82k/year is the withdrawal rate you can do on those numbers.

Of course, that's assuming all the money was going into the market, but you mention wanting to buy a rental property so what the returns on that are relative to the market returns predicted by Firecalc are completely unknown, so it could be much better financially or it could be much worse.

If you can get your savings rate up more, then it could work. If you can get your expenses below $78k/year, it could work. Removing the mortgage costs from your expenses *may* do that for you though, so you don't look to be in a bad position as it is. I'd try to see if you have any expenses that could be reduced without adversely affecting your quality of life though.

Personally, I'd try and increase the savings rate as much as practical (you're at less than 8% it seems like right now which isn't "bad", but it's not "great" either). Unless you had a rental property going for a while with a known track-record of net profit from it, I'd be very hesitant to have a "just adequate" portfolio and buy a property to use as a rental with no known rate of return/occupancy rate/etc with a significant portion of that portfolio. That's just a personal opinion based on my risk tolerance though. I'm much more comfortable having less than 15% of my net worth tied up in one asset class (real estate) in a specific geographic location.

 

[Vicus]

Current income you say is $111.6k/year.
Current savings rate you say is ~$8k/year. ($4k work, $2k each IRA contributions).

That's putting your "expenses" outside of savings somewhere around $100k/year (including tax expenses). Remove the extra mortgage payments and that drops to $88k/year

Pensions etc at 45 should be $36.6k
$600k @ 45 ($200k savings/investments + $400k from house) will produce ~$24k/year at 4%.
Combined, that would only produce ~$70k/year in total income, about $18k short of what I'm estimating your spending/expenses at right now based on your post. At 53, you'll add in the police pension, but that would still leave you just barely pulling off a 4% withdrawal rate.

Putting in a $88k spend rate, for 40 years, with a $600k investable, your military/va comp at $36.6k/year immediately and the police pension of $19.2k 8 years later Firecalc predicts a 50% chance of success. When I do an investigate for a 95% success rate, it tells me ~$82k/year is the withdrawal rate you can do on those numbers.

Of course, that's assuming all the money was going into the market, but you mention wanting to buy a rental property so what the returns on that are relative to the market returns predicted by Firecalc are completely unknown, so it could be much better financially or it could be much worse.

If you can get your savings rate up more, then it could work. If you can get your expenses below $78k/year, it could work. Removing the mortgage costs from your expenses *may* do that for you though, so you don't look to be in a bad position as it is. I'd try to see if you have any expenses that could be reduced without adversely affecting your quality of life though.

Personally, I'd try and increase the savings rate as much as practical (you're at less than 8% it seems like right now which isn't "bad", but it's not "great" either). Unless you had a rental property going for a while with a known track-record of net profit from it, I'd be very hesitant to have a "just adequate" portfolio and buy a property to use as a rental with no known rate of return/occupancy rate/etc with a significant portion of that portfolio. That's just a personal opinion based on my risk tolerance though. I'm much more comfortable having less than 15% of my net worth tied up in one asset class (real estate) in a specific geographic location.

Yeah so I didn't really know how to explain that part because it is not a good representation of what I WILL be going. So quick back story, This is the first year I will be making that type of money. Ive been an officer 4 years. First year you get half that because you are in the academy and training. Second year I made like 70% of that. Last year I was injured fighting with a suspect and required surgery on my shoulder. It took me out the year and I got L&I pay (80 of your base pay) and had zero overtime. Now I am back and making what I am suppose to with lots of overtime.

Also the reason I didn't save as much the last few years was because we bought the house. I spent 12 grand on a bathroom redesign (added 15k to our home value) and a backyard remodel putting in a patio and covering (10 grand). That money would of went to savings or the house payment instead but I wanted to actually enjoy the house while we lived in it (bathroom had a major design flaw that would of ruined other parts of the house if not fixed) and our backyard wasnt use-able. So now that my house is "complete". That money will be put toward the house payment or more investments. I didn't save as much over the last 2 years because I was a bit worried if I was going to recover correctly from surgery and be able to continue my job. I am fine thou. I also have around 20k saved up in available cash because I was hording it just in case I had to find another job. That will be put into some more mutual funds here soon as I get more time to research on a decent fund.

So with that information, know that I hear ya...I will be putting away 20+% into retirement on top of getting my house down FAST. But I plan to put the house down over retirement funds because I personally know myself..I wont retire until I dont have a mortgage to worry about. I like to keep things simple.