33yo Air Force Guy wants to RETIRE at 45

[Bizman3000]

Hello from Italy!

My wife and I got serious about three years ago. Seems we spent our 20's seeing how deep two people could get in debt with nothing to show for it, lol. Anyhow, $30k in financed vehicles (sold) and $10k in credit card debt (paid off) later, here we are... I love spreadsheets and running numbers, so bear with me.

Zero consumer debt.

Emergency Fund: $3k (cash)
His ROTH: Vanguard Target Fund 2040 (VFORX, 0.18) $8k
His TSP: Life Cycle 2045 Fund (0.027) $15k
Her 401k: Will input later ~$3k

We own property in NC and our rental income covers mortgage/management fees, not factored into Net Income.

Appraisal: $112k
Owe: $73k (15yr @ 4.25 October 2010)
___________________________________________

My personal goal is to RETIRE from the rat race at 45 in the year 2025. My dilema is how to distribute my investing to achieve that goal. I want to have immediate access to money at 45 on one hand. I do not wish to screw over my future 70 year old self on the other. House will be paid of in 2025 (perfect!). I expect to take home a $2000/mo pension after taxes. I'm thinking budgeting $3k/mo to live comfortably is reasonable as we're doing that already. That leaves a $1000/mo shortage from 45-60 before we can access our IRA/TSP money.

We have $2500 to invest each month ($30k/year) and I am thinking of doing the following annualy:

Vanguard Target Retirement 2050 (His Roth) - $5500
Vanguard Target Retirement 2050 (Her Roth) - $5500
Vanguard Target Retirement 2025 (taxable) - $14k
TSP Lifecycle Fund 2050 - $10k

Running compound interest calculators on the above numbers (12 years @7%) and using FireCalc, I think we'll be good to go at 45 ***IF*** we can stick with it.

Ciao!

 

[braumeister]

Do you know where you will live?
$3K/month may be fine for you now, with the military health care and other benefits, but would be problematical in many parts of this country.

 

[NanoSour]

Welcome Bizman and thanks for your service.

If you're serious, and even if you're not, run your numbers through ESPlanner Basic.

Home | ESPlannerBasic

It takes about 15 minutes and it's not the most user friendly, but it will give you a smoothed living standard. You may have to fudge the dates to get it to retire at 45 in the free version. Just say you're 5 years older and retire at 50. Should work fine for you.

I think you have a plan and as you mentioned you just have to stick with it and don't make it too complicated chasing added return. Your VG funds look good. You can get lower cost than the TR funds by using Total Market Admiral shares.

Might I suggest the VG Lazy 3-fund portfolio. Set it and forget it.

Lazy Portfolios - Bogleheads

Again, thanks for your service and hope you are enjoying Italy. One of my favorite countries.

 

[Bizman3000]

Do you know where you will live?
$3K/month may be fine for you now, with the military health care and other benefits, but would be problematical in many parts of this country.

Idealy near the mountains. Possibly NC, TN, or even Colorado. Far away from any large cities. I love rock climbing and the outdoors. The military offers TriCare to retires and I will have to look into their fee structure. Other than that, I do not plan on living anywhere where $3k/mo would not be enough to live on with a paid off house. I'd be happy with a log cabin, 40 acres and a mule.

 

[Bizman3000]

Welcome Bizman and thanks for your service.

If you're serious, and even if you're not, run your numbers through ESPlanner Basic.

Home | ESPlannerBasic

It takes about 15 minutes and it's not the most user friendly, but it will give you a smoothed living standard. You may have to fudge the dates to get it to retire at 45 in the free version. Just say you're 5 years older and retire at 50. Should work fine for you.

I think you have a plan and as you mentioned you just have to stick with it and don't make it too complicated chasing added return. Your VG funds look good. You can get lower cost than the TR funds by using Total Market Admiral shares.

Might I suggest the VG Lazy 3-fund portfolio. Set it and forget it.

Lazy Portfolios - Bogleheads

Again, thanks for your service and hope you are enjoying Italy. One of my favorite countries.

Thanks you for the ESP link. I'll look into that. Been a BogleHead for a year now as well and will be moving into a 3-fund Admiral Share setup once I reach the purchase minimums.

 

[Surewhitey]

Welcome! We're about to leave for Mexico again in April for a couple years. This is one way to make your $$ stretch. We've lived in LA on an average of $4k, so $3k should not be a problem if it were me and DW.

We'll live quite well in Mexico on $2k / month and plan for 5% inflation down there at the moment. Either way, we usually adjust our "extra-fun money" to stay close to the monthly budget.

The only thing you'll find 12 years from now that may bite you is inflation adjustment. $30k today will be like $39-41k in 2025 with modest inflation. I got this from the last 2-12 yr periods of inflation...

Living in the south shouldn't be a biggie for you too. We lived in Dallas for many years on a modest budget. You definitely will find your expenses drop on !ork-related expenses and the savings you would normally sock away...

btw, we're 42 and 48 for reference...We're living off dividends (15%) and CD interest (85%) in a very conservative portfolio. We will have to make some serious decisions on the CD's in a couple years. Not "normal", but lets us sleep at night.

 

[NanoSour]

Surewhitey,

Spent a 2 week vacation in PDC in 2011. What gorgeous beaches. I'm jealous

 

[obgyn65]

Well I am not in the Air Force but just wanted to you welcome you to the forum anyway.

 

[WM]

Welcome! My husband is USMC and we are planning to early retire when he hits 20 in 2015. I'm jealous, though, we never made it overseas!

One thing you mentioned in your post was the gap between 45 and 60 - do a search for 72t withdrawals. Basically, there is a way to access some of the money early if that ends up making the most sense for you, but there are some rules you have to follow.

 

[Greg V]

Just curious...any children (or plans for children) whose college ed will need funding in addition to your retirement savings? That certainly would affect your plans.

 

[Bizman3000]

Welcome! My husband is USMC and we are planning to early retire when he hits 20 in 2015. I'm jealous, though, we never made it overseas!

One thing you mentioned in your post was the gap between 45 and 60 - do a search for 72t withdrawals. Basically, there is a way to access some of the money early if that ends up making the most sense for you, but there are some rules you have to follow.

We've been lucky to spend half of my career overseas. The trick is to stay OCONUS and volunteer for short tours, at least in my case. I seriously considered punching out at 20 as well. However, the difference in pay is not insignificant factored over a lifetime. And thank you for mentioning 72t withdrawals. I admit I am not familiar with those and will have do some research.

 

[Bizman3000]

Just curious...any children (or plans for children) whose college ed will need funding in addition to your retirement savings? That certainly would affect your plans.

Haha. I guess a left that out, didn't I? We have no plans for children in our future.