Military Retiree on a Second Career in Colorado

[CharlieZulu]

Hello everybody! Excited to join the blog.

54 year old military retiree who retired from the USAF in 2016, after about 27 years of service. Started my own business, then decided to run for county-level public office in 2018 and won! About three years into my first four-year term, and will be term limited after 2 terms, if I decide to run again.

Thinking about retirement, have “toyed around” with doing so in about 18 months. Here is my breakdown:

$1,100,000 in my portfolio. 50% stocks, 45% bonds, 5% cash. This portfolio includes about $200,000 in a joint (with DW) taxable account, so that we can access that to keep us funded until access to qualified money at 59.5. We are investing $110,000 yearly, with $36,000 going to the taxable account, $30,000 to cash savings. Balance goes to qualified investments.

House is worth about $1M, and not part of the portfolio, above.

Only debt is our mortgage at 2.25%...about $260,000 left with payments less than $2,000 a month, including taxes and insurance. So, not in any hurry to pay it off. Cheaper than rent!

Military Retirement is about $86,000 before taxes. I have a VA disability rating that adds another $44,400 annually...and tax free. After taxes, we realize about $105,000 annually. Of course, Tricare for both me and DW. We live in an area with several military bases nearby...good access to commissary and exchanges.

Right now, we spend about $115,000 annually, not including investments and saving, but including travel and other fun things.

My job with the county pays $93,000 annually, before taxes. DW earns another $85,000.

We have one adult child who is a college grad with own career, a good salary, and no college debt.

DW’s job is 60 miles away...120 miles round trip...daily. She is in a professional position. I estimate that we would avoid $10,000 to $12,000 annually in expenses related to her job after we retire. Yep...been tracking that for 2 years.

I ran FireCalc and we are solidly above the line with no failures. I beefed our spending way up...well beyond what I can imagine we would ever spend. Still no failure.

Our CFP/CFA financial guy agrees. We are good to go...anytime we want.

So what is holding me up? 2 things:

1. I made a commitment to my constituents and supporters to finish my term. It would be disingenuous to do anything else. I am “expected” to run for a second term, and I expect that I would win.

2. I am terrified of inflation. Following the current news, I think my concerns are well founded.

So, I am pretty much resolved to run for a second term in 2022...and ride out the inflation, and continue to invest at this high level. Sort of disappointed that this is the case, but it will give me peace of mind. The old “Sleep Well at Night” rule. Will still be in my late 50s when it is all done.

Would love to know your thoughts. I consistently note that many early retirees have seen great performance on their investments in the last couple years, but we are also on a 11-12 year bull market, with negligible inflation. Are any of you out there worried about both of those conditions changing?

 

[njhowie]

Congrats and welcome aboard! Honestly that all sounds very exciting.

Do you enjoy your public office? Could you go another 4 years?

I think whenever you are ready to check out you're ready financially. That military pension is a strong backstop.

 

[CharlieZulu]

Thanks @njhowie for the kind words. I enjoy the job, and know I am making a difference, and am well liked in the community (as much as any politician is, LOL). The position is not my “calling”...that was in the USAF. I have ZERO intention of pursuing any other office after this. Time to play. So in short, the job is fine...I don’t hate it.

 

[Bigdawg]

C Z, your military retirement and VA dis are both COLA. No inflation to worry about for you my friend.

 

[ivinsfan]

You say oh I love that 2.25 interest for my house but I worry about inflation.


You realize you have to take the good with the bad, right? IOW it can't all be perfect all the time. This reminds of when we were talking to a farming neighbor. Milk prices were high, grain prices were high, input costs were decent. Operating loans were a tad pricey but not too bad. And the crop growing season was excellent. After a second we all joked that if anything else good happened we might need to just drink the Koolaid as we'd never be satisfied again. And that's usually the way it goes.


Your pension and VA is COLA and your house will rise in tandem with inflation, take a deep breath.



As far as being expected to run for a second term if you died or ran away to join the circus the world would keep spinning.

 

[CharlieZulu]

Great points made by both @Bigdawg and @ivinsfan. Had to laugh about joining a circus...even local politics feels like a circus sometimes. The COLA is there, but it will not keep up with inflation, and is usually a portion of the inflation. Still better than a stick in the eye....I get it. Good points made by all. Thank you.

 

[World Traveler]

I’m in a similar position and have been FIRED for 5 yrs. I think you could pull the trigger anytime. Looks like you have the same problem I do to bridge the gap to 59.5. The 200k seems to be the limfac. 200/6yrs 33k less 10k to get you to 115k in expenses so 23k for fun less taxes gets you into the bonus round of SWR for your retirement accounts.

 

[CharlieZulu]

Thank you, @World Traveler for the insight. I initially didn’t see the $200k as a limfac, but you make a great case. My math had me doing the SWR against the total value of the portfolio, but just talking it from the JWROS account. So....if the portfolio is $1.1M...and going with a 4% WR (just as an example...I know the arguments on WRs)...I get $44k. Take taxes out, I am about 35k. Still...the math shows the limfac of my JWROS amount. THANK YOU!!!

 

[2177V]

My thoughts: do a lot of overseas vacations overseas. Ask yourself what would retirement life be like if I moved here. Airbnb is the way to go. I hear your concerns about inflation. Have a backup plan to move to another country if inflation occurs in the USA. My concerns were medical cost because I believe the health industry is ripping off the American public when you compare health cost overseas.

Example: a friend recently had a stroke and was paralyzed so she cannot go to the bathroom by herself. Nursing home with this care cost $8K a month while a live in nurse in California cost $6K a month. Your state may be cheaper. She discovered China’s health cost is about 1/3 of these amounts if you stay away from the big cities such as Shanghai or Beijing. Mexico is also inexpensive but there is high crime in Mexico versus low crime in China.

Having another country to retire to….may protect you from inflation.

 

[Nick Striker]

I think you are there, actually way past ready. You are really smart about money so that more then makes up for inflation worries. Never thinking you have enough can be a trap unto itself. With your pension you are really golden. Only run for a second term if you want it more than anything else. The older we get money has less value than time.