Good enough?

[Gumby]

It's all good....I did the FIRECalc but it looked like a bunch of squiggly lines mostly in the positive.

Tinker with the "Investigate" tab and you will discover a wealth of helpful information.

 

[pb4uski]

It's all good....I did the FIRECalc but it looked like a bunch of squiggly lines mostly in the positive. I was lucky to have done a lot of things during my military and working career that most people only dream about doing.

This is just new and uncharted water for me and my wife.

Assessing the squiggly lines is an acquired skill. Each line is your portfolio balance for a 30 year progression of returns, withdrawals and inflation. Any line that end above the red zero line is a success... any that end below the red zero line are failures. So it gives you an idea of the range of possible outcomes of your plan. I'd suggest that you focus on the taxt above the graph.

FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.

FIRECalc looked at the 120 possible 30 year periods in the available data, starting with a portfolio of $750,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 120 cycles. The lowest and highest portfolio balance at the end of your retirement was $-300,739 to $4,259,606, with an average at the end of $1,405,259. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 6 cycles failed, for a success rate of 95.0%.

+1 to using the Investigate tab to look at how much you could spend, how much you need to fund the plan at a give success rate, etc.

 

[deserat]

Welcome to the Board - there are quite a few of us military retirees or Reserve awaiting pay retirees here. I am one of the latter.

Below is a *very rough* back-of-the-envelope analysis of your situation as I see it. I think it might help you with your decision and/or with any anxiety you may have:

Based on your numbers, I think you are just fine - I can't quite determine if the Aerospace retirement is ending in a year or starts in a year. I'll assume it starts in a year. That means you have ~$5600 coming in monthly as a pension. Multiply that by 12 and then by 25 and that gives you a rough idea of what those pensions are worth if they were funded by a stock/bond portfolio (~$1.65M). Add that to your $1.2M in assets, and a very rough back of the thumb estimate of available money to you monthly is $9-9.5K before taxes. You have not mentioned Social Security, however, I assume you will probably get at least $2K/mo at a minimum at your FRA for each of you, so that would jump up your monthly amount to $11K - the military pensions and SS are cost of living protected, so you have a large percentage of your monthly income quasi-inflation protected.

Your house is paid off, you have a fairly low cost for your health insurance and your highest debts are for cars (most on this board have a dislike of debt of most kinds and especially for depreciating assets-kind, hence some of the response). You have done most of your bucket list items in terms of exotic travel.

You, sir, are one lucky SOB in the overall scheme of things. If you are able to keep your lifestyle costs below your guaranteed pension income, you should be fine. You may wish to augment with some long term care insurance or not draw as much from your portfolio and self-insure or if you have children assist them in assisting you.

Biggest hit I could see would be a divorce or the decision to support an adult child....that would cut each of your monthly income costs by half and/or cut into your lifestyle costs adding a large third person ....and may put a crimp in your lifestyle.

So, based on my analysis (as I said above), this is not a case of can you but do you want to.

By the way, NORDS on this board has a website that talks about military specific early retirement and he has more detailed information on what military personnel have and/or can think about in this realm. Bogleheads board gets into the Jack Bogle approach to investing and other related items. You can also do a search on military retiree on here to get info from those of us on this board.

Best of luck to you and thank you for your service.....

 

[srpuywa]

Welcome to the Board - there are quite a few of us military retirees or Reserve awaiting pay retirees here. I am one of the latter.

Below is a *very rough* back-of-the-envelope analysis of your situation as I see it. I think it might help you with your decision and/or with any anxiety you may have:

Based on your numbers, I think you are just fine - I can't quite determine if the Aerospace retirement is ending in a year or starts in a year. I'll assume it starts in a year. That means you have ~$5600 coming in monthly as a pension. Multiply that by 12 and then by 25 and that gives you a rough idea of what those pensions are worth if they were funded by a stock/bond portfolio (~$1.65M). Add that to your $1.2M in assets, and a very rough back of the thumb estimate of available money to you monthly is $9-9.5K before taxes. You have not mentioned Social Security, however, I assume you will probably get at least $2K/mo at a minimum at your FRA for each of you, so that would jump up your monthly amount to $11K - the military pensions and SS are cost of living protected, so you have a large percentage of your monthly income quasi-inflation protected.

Your house is paid off, you have a fairly low cost for your health insurance and your highest debts are for cars (most on this board have a dislike of debt of most kinds and especially for depreciating assets-kind, hence some of the response). You have done most of your bucket list items in terms of exotic travel.

You, sir, are one lucky SOB in the overall scheme of things. If you are able to keep your lifestyle costs below your guaranteed pension income, you should be fine. You may wish to augment with some long term care insurance or not draw as much from your portfolio and self-insure or if you have children assist them in assisting you.

Biggest hit I could see would be a divorce or the decision to support an adult child....that would cut each of your monthly income costs by half and/or cut into your lifestyle costs adding a large third person ....and may put a crimp in your lifestyle.

So, based on my analysis (as I said above), this is not a case of can you but do you want to.

By the way, NORDS on this board has a website that talks about military specific early retirement and he has more detailed information on what military personnel have and/or can think about in this realm. Bogleheads board gets into the Jack Bogle approach to investing and other related items. You can also do a search on military retiree on here to get info from those of us on this board.

Best of luck to you and thank you for your service.....

My wife was active duty and a reservist and had to wait until 60 to start collecting her retirement. We both were E-4's when we got married, she retired as a Capt and me a MSgt (way back in 97). Most of our assets are in employer 401Ks and 403Bs, never really dabbbled in the stock market or mutual funds. My Aerospace retirement was an accelerated payout option when I left the company, started when I was 55 and will end when I'm 62 and a couple months. My estimate of SS and mil retirements are roughly $3500-4000 a month each, so that's not too bad $7-8K a month for just breathing. Our daughter moved back home to change college careers so we're paying her tuition as she goes along, but at some point she might need to get some loans or scholarships. The new subaru we bought for her was a christmas/birthday present for doing well in school.

I will look around at the users you mentions to gain any more info about this retirement life

 

[SmallCityDave]

I just refinance the 2019 crosstrek and 2020 tundra at 2.5% that saved a little.

My other vehicles are paid for wife's 2017 RDX, my commuter car 2017 Subaru Forester and motorcycle 2016 BMW K1600 GT.

probably going to sell the Subaru in the near future



With near perfect credit it's almost like free money

With thinking like that it makes you buy a more expensive vehicle.


If you can't afford it you shouldn't buy it. The cars we have now with 100k miles are as reliable as new and we paid $7k or less for each of them not that we couldn't pay cash for $40k cars but it just doesn't make sense to us.

 

[ivinsfan]

With thinking like that it makes you buy a more expensive vehicle.


If you can't afford it you shouldn't buy it. The cars we have now with 100k miles are as reliable as new and we paid $7k or less for each of them not that we couldn't pay cash for $40k cars but it just doesn't make sense to us.

I think we are heading to a should we pay off our mortgage type debate...I'm glad you like your older cars but everyone isn't you.

Show me where the OP can't afford this car which by the way was a gift to their DD..

 

[SmallCityDave]

The main thing is to know your outgo as well as your income and the value of your time together.


If your wife loves her job and wants to keep working that's great, I'd rather spend that time together. Having a vehicle that depreciates as quickly as the stock market has isn't that appealing to us I'd much rather have something that appreciates and or produces income but that's not for everyone.

 

[ivinsfan]

My wife was active duty and a reservist and had to wait until 60 to start collecting her retirement. We both were E-4's when we got married, she retired as a Capt and me a MSgt (way back in 97). Most of our assets are in employer 401Ks and 403Bs, never really dabbbled in the stock market or mutual funds. My Aerospace retirement was an accelerated payout option when I left the company, started when I was 55 and will end when I'm 62 and a couple months. My estimate of SS and mil retirements are roughly $3500-4000 a month each, so that's not too bad $7-8K a month for just breathing. Our daughter moved back home to change college careers so we're paying her tuition as she goes along, but at some point she might need to get some loans or scholarships. The new subaru we bought for her was a christmas/birthday present for doing well in school.

I will look around at the users you mentions to gain any more info about this retirement life

Drill down a little on your SS numbers to figure out what option would be best for you as couple, This might make you feel more secure. I think preserving the recurring monthly income for the surviving spouse would help you under your options going forward..

 

[SmallCityDave]

I think we are heading to a should we pay off our mortgage type debate...I'm glad you like your older cars but everyone isn't you.
Show me where the OP can't afford this car which by the way was a gift to their DD..

It's in his original post, he couldn't afford his truck or his daughters car so he borrowed the money. It's not that complicated.


I'd like to find a cd that's paying 2.5%

 

[ivinsfan]

It's in his original post, he couldn't afford his truck or his daughters car so he borrowed the money. It's not that complicated.


I'd like to find a cd that's paying 2.5%

They have over a million in funds, a paid off house, two military pensions, low cost HC..and SS coming online shortly..I'm guessing a lot of people would like to be in that rough of shape...

 

[Aerides]

It's in his original post, he couldn't afford his truck or his daughters car so he borrowed the money. It's not that complicated.

Not everyone opts to finance because they "can't afford" otherwise, and OP didn't say that was the reason. Yes, I'm sure we'd all agree paying it off sooner than later is a good idea.

Benefit of the doubt isn't complicated either.

 

[pb4uski]

It's in his original post, he couldn't afford his truck or his daughters car so he borrowed the money. It's not that complicated.


I'd like to find a cd that's paying 2.5%

The OP doesn't say that at all... it just mentions the car payments... no mention of affordability in the OP. From their income and assets I don't think affordability of their vehicles is an issue... you seem to have a hair across your you-know-what about them having car loans. Give it up.

On the second part, if you qualify Navy Federal is running a CD special for 37-month IRA CD at 3% APY. https://www.navyfederal.org/products-services/checking-savings/certificates-rates.php

 

[SmallCityDave]

They have over a million in funds, a paid off house, two military pensions, low cost HC..and SS coming online shortly..I'm guessing a lot of people would like to be in that rough of shape...

They are in good shape, they'd be in better shape if they didn't borrow that money and bought less expensive vehicles but they borrowed that money because they felt they needed to.


I'm not condemning them but I don't think that's the right thing to do and he asked our opinion.


Furthermore I'd sell the home and move to Arizona asap

 

[SmallCityDave]

Not everyone opts to finance because they "can't afford" otherwise, and OP didn't say that was the reason. Yes, I'm sure we'd all agree paying it off sooner than later is a good idea.

Benefit of the doubt isn't complicated either.

In that case lets give him the benefit of the doubt that he's doing everything right so we don't need to give him our opinion about anything.


This should be a great place of diversity of thought

 

[pb4uski]

I just refinance the 2019 crosstrek and 2020 tundra at 2.5% that saved a little.

My other vehicles are paid for wife's 2017 RDX, my commuter car 2017 Subaru Forester and motorcycle 2016 BMW K1600 GT.

probably going to sell the Subaru in the near future ...

They are in good shape, they'd be in better shape if they didn't borrow that money and bought less expensive vehicles but they borrowed that money because they felt they needed to. ...

Since when are a Subaru Crosstrek and a Toyota Tundra expensive vehicles? Especially if you can borrow at 2.5%. Given the OP's income and savings these vehicles don't seem outrageous.

Are you sure that you aren't Dave Ramsey?

 

[Gumby]

They are in good shape, they'd be in better shape if they didn't borrow that money and bought less expensive vehicles but they borrowed that money because they felt they needed to.


I'm not condemning them but I don't think that's the right thing to do and he asked our opinion.


Furthermore I'd sell the home and move to Arizona asap

Way earlier in this thread, I mentioned that I bought a new vehicle (Subaru Forester) in December 2017. I could easily have paid cash, but they were offering 0% financing for 63 months, so I took it and kept my cash. I am still paying on that loan, but I easily have the cash flow to do it and have absolutely no financial incentive to pay it off. In June 2019, I bought another vehicle (Mini Cooper). They were only offering 3.5% financing, so I paid cash. As a general rule, if you can earn more on your money (risk adjusted) than the cost of financing, then why not finance? For me, 0% was an easy yes and 3.5% an easy no. I don't recall where I thought the break point was last summer.


The lesson is that if you have control over your spending and plenty of cash in hand, you may decide that it is better to finance than pay the cash. It's just calculating the present value of money under two different conditions. There is nothing in the OP's original or subsequent posts to suggest that he could not pay cash for his vehicles. He may have made the same calculation I did.

 

[SpinDoctorTX]

Welcome to the forums... It sounds to me like you are good to go, so you have indeed won the race!

That said, many in here are very debt averse and believe in maintaining quite a lot of liquidity (myself included) in their kitty. My parents experienced the great depression, and it had a pretty big influence my financial life. While never a super high earner, I am a heck of a saver and can stretch a dime quite far.

I'm finding a weird dichotomy of increased snarkiness and increased kindness all around the web these days (and not just since C19). Just look at the comments sections on any news sites that allow them. There is a lot of tension & anxiety around the world.

Good luck with whatever you decide to do!

 

[srpuywa]

It's in his original post, he couldn't afford his truck or his daughters car so he borrowed the money. It's not that complicated.

I'd like to find a cd that's paying 2.5%

No I said "Our house is paid for and the only bills we have are living, taxes, utilities and a couple car payments of around $900 a month. Plan on paying off one of the cars (daughters 2019 crosstrek) in June and will only have my truck payment of $600"

They are financed through a credit union - never said I couldn't afford them

 

[ivinsfan]

No I said "Our house is paid for and the only bills we have are living, taxes, utilities and a couple car payments of around $900 a month. Plan on paying off one of the cars (daughters 2019 crosstrek) in June and will only have my truck payment of $600"

They are financed through a credit union - never said I couldn't afford them

That's OK most of us get the drift...

 

[SmallCityDave]

Since when are a Subaru Crosstrek and a Toyota Tundra expensive vehicles? Especially if you can borrow at 2.5%. Given the OP's income and savings these vehicles don't seem outrageous.

Are you sure that you aren't Dave Ramsey?

Expensive is a matter of perspective, when I was 25 and had a net worth of 0 I didn't think that the $20k price of my truck was expensive.


Thanks for the compliment

 

[SmallCityDave]

No I said "Our house is paid for and the only bills we have are living, taxes, utilities and a couple car payments of around $900 a month. Plan on paying off one of the cars (daughters 2019 crosstrek) in June and will only have my truck payment of $600"

They are financed through a credit union - never said I couldn't afford them

Yeah I understand what you said but if you don't have the cash ready to buy the car outright in it's simplest form you can't afford it.


I work with people everyday that can't afford a home so they get loans, they may earn a lot of money but the cash isn't there.... If I have a 100k in the bank and I want to buy a $50k Tundra but with whats going on in the world I feel a lot better having the cash in the bank and I get a loan the end result is the same I can't afford it.


I understand we may all not agree and some may think my opinion is "controversial" and that's okay, I don't think you are a bad guy but I think it's a poor decision.

 

[braumeister]

but I think it's a poor decision.

And you've made your point enough times that I think we've all got it now.

 

[ivinsfan]

And you've made your point enough times that I think we've all got it now.

Yes even after 7 posts some of us don't agree with his comments. I don't think post number 8 will be the tipping point..

 

[SmallCityDave]

And you've made your point enough times that I think we've all got it now.

I wasn't trying to make a point I was simply addressing people the people that directly quoted me.

 

[ivinsfan]

I wasn't trying to make a point I was simply addressing people the people that directly quoted me.

You're messing with us now, right?