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Military retiree (Am I good?)
Old 07-25-2017, 02:50 PM   #1
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Military retiree (Am I good?)

Hello All,

This site has been a wealth of information!

I am looking to retire to Florida in the summer of 2019. I currently have about 80k in equity in my home and will be selling here in NC and buying in a lower cost of living area in Florida. The homes I have been looking at are $185k - 200k. I figure if I can put the 80k as a down payment I should be around $700-800 per month for a mortgage.

I am retired military and really my only debt would be my mortgage. Of course we have cell phones, internet, cable etc but vehicles are paid off and no credit cards.

My monthly amount would be $1908 (taxable retirement) and $1895 disability not taxable so I'm at about $3800 per month before taxes. I have around 100k in Roth IRA and 40k in savings.

I wanted to get your opinion on if you think it would be realistic for me to live on this income. The following items are deducted from my military retirement automatically (healthcare $50, dental $110, survivor benefits $130) so my actual retirement is just over $2200 before these items are deducted.

I plan to pay off the new home with my Roth when I turn 59 1/2 (13 years from now). Take a look at my budget below. Any suggestions or recommendations on how I can make this work are greatly appreciated!

Also, I started a new job recently which will allow me to transfer to Florida, so I plan to continue working for probably a year so that I can determine if this pension is enough to sustain us.

Monthly budget:

Mortgage $1000
Internet/cable $120
groceries $600
Car insurance $100
life insurance $80
gas for vehicle $150
utilities $250
cell phone $100
entertainment $1000 (could dip into this for any emergencies if necessary) This includes shopping, movies, golf etc.
eating out $200
investments $300
Total = $3250

This would just be for my wife and I.

Thanks again!
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Old 07-25-2017, 03:34 PM   #2
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Well, as an NC military retiree, I hate to see you leave.

But, without crunching a bunch of numbers, I think the job is your "canary in the coal shaft." If you find that things are a bit "stretched" w/o the job $$, you will also know if apart time gig would fill the void.

So, worst case is you keep the one year job for more than a year.
Next worst case, you need a side hustle or PT job to make ends meet (after the one year assessment).
Optimum case, Your plan works and you are FIRE one year after the Florida relo!

Best wishes!
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Old 07-25-2017, 03:56 PM   #3
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A. Unless you're paying for kid's braces or something similar, $110/month on dental is a probably a massive waste of money. I'd drop it without extenuating circumstances (two cleanings/checkups per year will run you ~$300 cash at most dentists.. save the rest of your money).

B. Your budget is missing a bunch of stuff imo. Maybe you're planning on covering it all with "entertainment", especially one time or infrequent costs, though that would severely limit that in some cases. Budget 1-2% of the house cost for repairs per year, there's $2-4k/year not included right off the bat for $165-330/month. Household supplies? Copays? Utilities estimate is probably a bit low if you like to keep the A/C on during the summer. Replacement clothes/shoes etc? Lawn care supplies? Car payment/savings for replacement car? Wife's hair/nails/makeup/clothes?

If you add all that in, I think you'll find that your take home would be cutting it pretty darn close on average. Maybe you could do it, maybe you couldn't. I'd want a bit better cushion if I were you though. It "could" work, if fairly tight, but only time will tell. I'd suggest recording ALL of your spending for a while to determine what your actual spending is once you move so that you can better predict future spending and whether your income will cover it. Don't forget those infrequent/rare items.

Also, keep in mind that SBP only pays out 55% to your wife if you pass, and DIC would only payout ~$1200/month from the VA. So if you passed she'd only get ~$2,265/month between the two. So be sure your life insurance (I saw it in the budget, but not sure how much is there) is adequate to cover the difference for her indefinitely.
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Old 07-25-2017, 04:47 PM   #4
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I will reply more later and I might have some insight you might appreciate seeing how as I am a military retiree who fully retired after the AF.

At first blush, those numbers would be way too close for my thinking. Especially that in a VA disability isn't necessarily guaranteed and that the low cost of Tricare is CERTAINLY not guaranteed. As a matter of fact, there is a very real possibility that the grandfathering of working age retirees that were spared last years premium increases is going away with NDAA 2018.

Is the dental you are talking about the retiree dental through Uncle Sam? If so, dump it. It's one of the worst dental plans that are out there...better plans can be had for much less and as Navy Nuke mentioned, paying out of pocket is usually a better deal.

I will add more later this evening or tomorrow AM...
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Old 07-26-2017, 05:44 AM   #5
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my dental insurance in florida is less than $200 per year.

retired navy here. Fla is a big state with different living cost per area. My opinion...If you relocated to Jacksonville where I live you would have access to military health care from 3 bases including kings bay sub base on the fla ga line. you would also be in a location that hires military vets with plenty of govt jobs and contractor support for the military. There are also very good buys in our housing market.

I prepared for my retirement by paying EVERYTHING by credit card for 5 years. I could see exactly what I was spending on necessities and fun. I still pay by cc but that is a different story.
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Old 07-26-2017, 06:14 AM   #6
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$1000 a month for entertainment plus $200 a month eating out when you are on a tight budget and still have a mortgage? Get real.
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Old 07-26-2017, 06:52 AM   #7
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Well that is a bit of tough love...

HGTVFan and others make great points though. How are you going to cover emergencies such as a new roof, or buys like a new (used hopefully) car? Possible to do if you get more specific on your entertainment needs....you might find flex here.

Bottom line: Doable, but recommend refining your numbers to be more precise. Also, add lines for emergencies and life-cycle

Thanks for your service!!!!!
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Old 07-26-2017, 07:05 AM   #8
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Saw this on another site. May be of help

Housing
Mortgage payments (I own my home but you may have monthly payments)
Real Estate Taxes and HOA fees
Home Owners Insurance
Utilities: electric, gas, water, sewer/trash pickup
Home maintenance and repairs, pest control

Domestic
Food and household supplies
Internet, cable or satellite TV
Telephone
Decorations & furnishings
Yard service
house cleaning service

Personal
Clothing purchases
Dry Cleaning/Laundry
Entertainment
Dining Out
Auto: payments, gas, repairs, insurance, registration
Health insurance: premiums, uncovered expenses, co-pays
Health supplies: over-the-counter vitamins & medicines
Dental care: checkups, fillings, crowns, dentures, etc
Eyeglasses & hearing aids
haircuts & beauty salon

Miscellaneous
Gifts
Computer purchase, repair, software
Subscriptions, postage stamps
Charity donations
Vacations
Tax prep and accountant costs
Life insurance
Pet care
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Old 07-26-2017, 07:07 AM   #9
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Quote:
Originally Posted by HGTVfan View Post
$1000 a month for entertainment plus $200 a month eating out when you are on a tight budget and still have a mortgage? Get real.
Well that was helpful.

Welcome and good luck with your retirement. +1 on the dental. Dump that. A couple of good things in your corner re: going to Florida. Plenty of military and military friendly company's there. The short time gig might turn into a long term gig. For some ER can be a bit boring. Your DW is used to you at least going to work if not being deployed. Good chance she might not want you around 24/7. Post 9/11 GI bill? I am guessing that you have it. That can be used by you are DW and will pay the E-5 rate BAH while you are in school. That is a good back up. Don't let that go unused. One of our regular posters (Nord's) is a retired Sailor and wrote a good book called "The Military Guide to Financial Independence and Retirement". Suggest you pick up a copy. Get an accurate read on your current expenses down to the dollar. Most people don't have that. They ball park it. You will surprise yourself.

Once again, good luck.
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Old 07-26-2017, 08:44 AM   #10
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Oh, if you want, here's a blank version of the budget spreadsheet I use (allows tracking planned vs actual spending which is pretty helpful) you can download if you'd like http://www.gceenterprises.com/jlcnuke/blank_budget.xls.
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Old 07-26-2017, 12:43 PM   #11
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I did and do just fine with two people in Florida.

Rent: $1,100 ($100 less if I wanted to skip a garage and keep the bike on the street)
Utilities: $100 water (if you get septic it'll be about half that), average $105 for electric between cooler and hot halves of the year.
Insurance (renters, car, motorcycle): $120
Phone: $136
Internet: $59
Health insurance: $120
Copays: $80
Dental: $26
Groceries: $800 max, typically closer to $500-600, including household goods.
Gas: $120
Vehicle registration: $10ish a month, maybe.

Those are pretty much the fixed expenses. Almost $2,800 a month.

If you're on disability, you may be able to be exempt from property taxes here in Florida. You may also be able to get severely reduced vehicle registration costs.

There are a ton of developers throwing up houses as fast and hastily as they can in HOA communities, from shoddy builders to ones supposedly higher end. It's happening all over the state. Good luck finding a good house.

Depending on where in Florida you wind up, there is a lot to do for cheap/free.

I've found base commissaries still cheapest for food around here, but avoid the exchange like the plague. There's a great chain of grocery stores here called Publix, their BOGO sales match or beat the warehouse stores, but anything else is at a premium.
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Old 07-26-2017, 02:28 PM   #12
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I would get a va home loan, since you are disabled you will qualify to get one with out the funding fee. This will free up the 80k which you could invest. The mortgage would go up by about the 300 you were gonna invest. I think the 1000 bucks a month for entertainment is probably ok if you are including travel. 600 for food is pretty much what DW and I spend including eating out (8-10x a month). Get a quote on what your car insurance is gonna be, you might be in shock. Also, USAA likely won't provide home insurance, unless you are buying a new construction home in a non coastal area. In many areas you will get a property tax break with your va disability. Home owners insurance likely will be on the high side as well.
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Old 07-26-2017, 05:07 PM   #13
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Quote:
Originally Posted by DevinM View Post
The homes I have been looking at are $185k - 200k. I figure if I can put the 80k as a down payment I should be around $700-800 per month for a mortgage.

My monthly amount would be $1908 (taxable retirement) and $1895 disability not taxable so I'm at about $3800 per month before taxes. I have around 100k in Roth IRA and 40k in savings.

Also, I started a new job recently which will allow me to transfer to Florida, so I plan to continue working for probably a year so that I can determine if this pension is enough to sustain us.

Monthly budget:

Mortgage $1000
Internet/cable $120
groceries $600
Car insurance $100
life insurance $80
gas for vehicle $150
utilities $250
cell phone $100
entertainment $1000 (could dip into this for any emergencies if necessary) This includes shopping, movies, golf etc.
eating out $200
investments $300
Total = $3250
First off, welcome! I'm a future military retiree myself, so always good to see others around.

$3800/month retirement before taxes but after deductions, roughly half of which is not taxable. Federal Income taxes would be at the 15% rate for roughly $24,000. Not including local and property taxes (for your home), you should (conservatively) shave about $300/month off of your expected retirement income, which makes it $3500/month.

Your budget numbers don't add up. Before including investments, I calculated your costs, including the mortgage, at $3600/month, $3900/month if you plan to continue saving.

Remove the mortgage, and you're down to $2900/month if you're going to keep saving, $2600/month if not. This does not include property taxes. Median rate in Florida is ~1% of value of the property. That adds another $170/month to your budget. And then you need to add Homeowner's Insurance. Those two expenses, currently rolled into your escrow payment as part of your mortgage, do not go away when your mortgage payment goes away. HI can if you're willing to risk it, but property tax and any HOA you may pay will not.

Others have harped on things your budget is missing, most notably expenses to replace cars which will eventually die, repair and maintain your home, which will inevitably need it, among other things.

Prior to mortgage payoff, I don't think your budget is feasible without additional income.

Following mortgage payoff, I think your budget could work, but it'd be very close - too close for my comfort - and a single major unplanned expense could disrupt your entire picture. You couple that with the fact that your savings after liquidating your Roth IRA would be minimal, you've got no safety net, at least not until you can collect Social Security.

Bottom line: I would not retire fully on the budget and income you've proposed. I would be seeking full-time employment for several years following my active duty time, or considering extending my active duty time by a few years to increase my pension and savings. I would not sleep well at night on your plan. Either way, I would be focusing on building up savings outside of traditional retirement vehicles to help cover gaps between retirement and access to your Roth IRA, if indeed you plan to retire well before 59.5. If not, I'd be building a 401K/403B/TSP and my IRA like a madman right now.

Perhaps I am really missing something, but I don't think you're "there" yet. You're looking to retire very young, at age 46, and depending on health and many other factors, you could/should be planning for a 40+ year retirement. A lot of things can happen and a lot can change which would have you back working (if you're lucky) in no time.
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Old 07-28-2017, 11:15 PM   #14
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Quote:
Originally Posted by Bigdawg View Post
One of our regular posters (Nord's) is a retired Sailor and wrote a good book called "The Military Guide to Financial Independence and Retirement". Suggest you pick up a copy. Get an accurate read on your current expenses down to the dollar. Most people don't have that. They ball park it. You will surprise yourself.
Thanks, Bigdawg!

Welcome to the forum, Devin. You might be able to find the book at your local military base or public library, or you can read the first six months of posts at The-Military-Guide.com for the book's excerpts.

Quote:
Originally Posted by DevinM View Post
I am looking to retire to Florida in the summer of 2019. I currently have about 80k in equity in my home and will be selling here in NC and buying in a lower cost of living area in Florida. The homes I have been looking at are $185k - 200k. I figure if I can put the 80k as a down payment I should be around $700-800 per month for a mortgage.

I am retired military and really my only debt would be my mortgage. Of course we have cell phones, internet, cable etc but vehicles are paid off and no credit cards.

My monthly amount would be $1908 (taxable retirement) and $1895 disability not taxable so I'm at about $3800 per month before taxes. I have around 100k in Roth IRA and 40k in savings.

I wanted to get your opinion on if you think it would be realistic for me to live on this income. The following items are deducted from my military retirement automatically (healthcare $50, dental $110, survivor benefits $130) so my actual retirement is just over $2200 before these items are deducted.

Also, I started a new job recently which will allow me to transfer to Florida, so I plan to continue working for probably a year so that I can determine if this pension is enough to sustain us.
I think you'll be fine, but you have plenty of time to test-drive your budget while you're working your new job.

While you're earning that salary, see whether you can live on your planned retirement income (pension & VA benefits) and your retirement budget. At the end of the year you'll know whether you need to make adjustments, and you'll have an entire years' income added to your portfolio.

Here's a couple of other ideas:

As another poster mentioned, you are eligible to waive the funding fee of the VA loan:
Loan Fees - Home Loans
The VA loan might have a slightly lower interest rate and more relaxed qualifying criteria, yet the appraisal and the inspection have the added criteria of "safety & habitability". Depending on the home you choose, you may have more troubles with the appraisal & inspection than if you were pursuing a conventional conforming loan. Let's not get into how I know this.

If you have good dental genes (and good dental hygiene) then you may be able to dump the dental insurance:
Do You Really Need Retired Military Dental Insurance - Military Guide
During 15 years of retirement I've rigorously flossed & brushed, and I only go to the dentist every 2-3 years for cavity X-rays and a cleaning. Of course some of those years are in Bangkok, which is a very different type of savings.
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Military retiree (Am I good?)
Old 07-30-2017, 02:51 PM   #15
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Military retiree (Am I good?)

I find that building a budget from ground up is very difficult and will likely result in you missing something.

I'd suggest going top down, instead of bottom up. You say you are not carrying credit card debt, so you are able to live off your current income.

I suggest starting with your current gross income, reduce it by all your pre-tax expenses, then subtract taxes, then remove any expenses that would go away in ER.

That is your retirement income need; indexed it for inflation annually and then see if your retirement income can meet your needs. Be sure to factor in your taxes in retirement which might be very different than while you are working. also be sure to add back in any of the pretax deductions mentioned above if you will have any of them in ER.
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