AF officer pulling trigger in 2016

[BlueAFMom]

I'm a 47 y/o active duty military officer pulling the trigger next year (at 26+ years of service/Colonel). My plan was always to stay until it wasn't fun and since reaching my professional goals and kind of hitting a dead end, I'm there. I guess it surprised me it came on so hard and so fast...was perfectly happy until this last move/job and going beyond 2016 would mean another move the summer before our only daughter's senior year. DH is a RN but left that career after burnout and has nightmares about going back--full-time SAHD (stay-at-home dad) and part-time fitness trainer (it's more of a hobby than income source).

No interest in a "second career" but have no problem with part-time or seasonal work between 48 and 59.5.

Estimated living expenses: $85,000 (after taxes); we are currently living on $52,800 but military is providing housing and we live in a very low COL area (Mississippi)

Anticipated retirement income: $72,000 before taxes, SBP, health insurance...estimate net: $62,500

Stats...parentheses indicate anticipated savings over next 16 months.
Roths: $67,000 (+3,000)
Traditional IRAs: $50,000
TSP:$101,000 (+10,000)
College (529/Coverdale/mutual fund): $34,000 + transferred post 9/11 GI bill
House fund: $125,000 (+60,000)

Short-term plan is to retire 1 Dec 16, move out of base housing and rent a furnished condo/house for 6 months until DD graduates high school...then move to a semi-permanent location where we will purchase housing (using my house fund). Will probably take that 6 months (plus 3 months of terminal leave) to do nothing/figure out what is next.

Any advice on what I could do now financially to maximize my potential success? I've been an 'ok' saver but didn't worry too much knowing I would have a COLA-adjusted pension and low-cost medical. Reading your posts make me nervous about my modest nest egg....

Also welcome any 'challenges' to my plan from folks who know the ropes. Thanks!

 

[Walt34]

Any advice on what I could do now financially to maximize my potential success? I've been an 'ok' saver but didn't worry too much knowing I would have a COLA-adjusted pension and low-cost medical. Reading your posts make me nervous about my modest nest egg....

Welcome to the forum! Since your time horizon for using the money is so short - six months to a year - for buying a house probably the best thing is FDIC insured CD's or simply a savings account and bite the bullet on the low interest rates.

The COLA'd pension makes your plan work. You will want to still keep setting aside a few hundred a month for things like replacement vehicles, and when you buy a house, for things like a new roof, appliances (who all seem to "know" when the worst possible time to croak is). They often gang up together and croak gangs of three or more so you'll want to have the resources on hand to deal with that.

And I would be remiss to not point out this page:

http://www.early-retirement.org/for...re-asking-can-i-retire-69999.html#post1399715

 

[RetireBy90]

I would take a hard look at how you plan to fund the $13K shortage each year. I'm about 20 months out and have recently taken to develop a plan of what exactly I will sell (which fund) starting day after I retire. Understand that your pension will be taxable so you will need to factor that in, and if you aren't paying state income you will need to factor that in also.

A non financial hurdle for me when I retired from Army was going from a hard charging focused work life to less so. I've been working for 20+ years since and I have learned to adjust, but just be ready. Lots of changes, retired, full time with DH, and an empty house. Just helps to be ready for all that.

Many thanks for your dedicated service and best of times ahead.

 

[ivinsfan]

As an RN your DH could pull in the missing 13K with a little part time work, what is his input about pitching in with the finances after you pull the plug?

Hobbies are fun, but don't usually add much to the bottom line. Otherwise you are probably going to have to look for outside income. Do you have any non IRA type money for a cash reserve?

 

[Slow But Steady]

I would take a hard look at how you plan to fund the $13K shortage each year.

Isn't it a $22K shortfall? The estimated net income is $62.5K, against $85K of expenses.

Without some additional income, this doesn't look sustainable to me. Sorry for being blunt, but it's better now than later.

 

[Nords]

I'm a 47 y/o active duty military officer pulling the trigger next year (at 26+ years of service/Colonel). My plan was always to stay until it wasn't fun and since reaching my professional goals and kind of hitting a dead end, I'm there. I guess it surprised me it came on so hard and so fast...was perfectly happy until this last move/job and going beyond 2016 would mean another move the summer before our only daughter's senior year. DH is a RN but left that career after burnout and has nightmares about going back--full-time SAHD (stay-at-home dad) and part-time fitness trainer (it's more of a hobby than income source).

No interest in a "second career" but have no problem with part-time or seasonal work between 48 and 59.5.

Estimated living expenses: $85,000 (after taxes); we are currently living on $52,800 but military is providing housing and we live in a very low COL area (Mississippi)

Anticipated retirement income: $72,000 before taxes, SBP, health insurance...estimate net: $62,500

Stats...parentheses indicate anticipated savings over next 16 months.
Roths: $67,000 (+3,000)
Traditional IRAs: $50,000
TSP:$101,000 (+10,000)
College (529/Coverdale/mutual fund): $34,000 + transferred post 9/11 GI bill
House fund: $125,000 (+60,000)

Short-term plan is to retire 1 Dec 16, move out of base housing and rent a furnished condo/house for 6 months until DD graduates high school...then move to a semi-permanent location where we will purchase housing (using my house fund). Will probably take that 6 months (plus 3 months of terminal leave) to do nothing/figure out what is next.

Any advice on what I could do now financially to maximize my potential success? I've been an 'ok' saver but didn't worry too much knowing I would have a COLA-adjusted pension and low-cost medical. Reading your posts make me nervous about my modest nest egg....

Also welcome any 'challenges' to my plan from folks who know the ropes. Thanks!

Welcome to the forums!

Yeah, transferring before your daughter's senior year is a non-starter. This is what they mean by the aphorism "You will know when it's time to go."

You've listed your income & assets, and the next step is to develop a post-retirement budget. You could start with the $52.8K living expenses now and add in your best estimate of your rent or homeowner costs. It's probably easiest to start with your $72K income without any deductions. Put the taxes, SBP premiums, and Tricare expenses in the budget column with your other living expenses.

Personally, I'd say that your daughter is good to go for college with your GI Bill and your $34K. If she needs more money, it's her problem.

When you estimate your taxes, consider that you might be living in a state that does not tax a military pension.

When you estimate your Tricare, you're paying roughly $555.84 per year for a family plan (plus whatever CPI inflation is added to the premiums this October for 2016). When your daughter launches from your nest then you might even consider going on Tricare Standard for no annual premiums (and risking roughly $300-$3000 of annual expenses) until you reach Tricare For Life (which currently has no enrollment fee). So your healthcare expenses might bounce around a little, although admittedly these should not be budget-breakers.

SBP is problematic. If you start paying premiums at age 48 then your 30-year paid-up status won't happen until you're 78 years old. Women tend to live longer than men, and if you've married an older guy then it's even more likely that you'll outlive him. (Of course this also depends on health and genes as well as gender and age.) In other words, it might be cheaper for you to buy a 20-year level-term policy that would insure your pension income from military retirement through the start of your Social Security, at which point he'd be eligible for his own SS or for survivor benefits on your earnings record. Making the SBP decision could take some more financial analysis, but it's quite possible that he'll want to pass (it's his decision, not yours).

Don't worry about tapping your TSP and your IRAs before age 59.5. There are several penalty-free ways to do that, they're thoroughly documented on this forum and other blogs, and you can plan your own approach after you've handled some bigger-picture decisions.

With the assets you have in your IRAs and TSP account, a 4% SWR would give you about $9K/year. The shortfall would depend on your housing expenses.

If you haven't already done so, you should attend your service's senior transition seminar immediately. Your spouse should attend with you if possible, because you'll each catch things that the other might overlook. Even if you're both on the same page, you'll have many interesting discussions during breaks and after the day is finished. You'll also have a few "Aha!" moments together.

If you haven't already done so, start your VA claim now. Ideally you'd have a completed claim before you retire, so that you don't lose any compensation eligibility. Your disability rating may not only save you some federal/state taxes, but it will also lower the expenses of getting a VA loan on your home. Your state of residence will have a complete list of your military retirement benefits as well as the additional benefits for a military disability rating.

If you decide to pursue a bridge career, then I'd also recommend a Ruehlin seminar or MOAA's "Marketing Yourself For A Second Career" or Carl Savino's "Corporate Gray" seminar. They're all very good and they'll inject a dose of humble realism into your planning.

You might be able to find "The Military Guide to Financial Independence & Retirement" at your base or public library.
You can also start here: http://the-military-guide.com/start-here/

We have plenty of military retirees here with centuries of collective wisdom. Ask us more questions or send me a PM.

 

[ivinsfan]

Nords, your comment about the VA claims is a great point and bears repeating.

My DH and I just returned from a National Reunion of a Quads, Dusters, Searchlight group most of whom served in country in Vietnam...at least 75-80% of them can't hear properly.The hearing damage is basically from neglect, with the Army providing zero hearing protection. A majority of the non-hearing group have a disability rating and hearing aids provided by the VA. Yet every year there are a few guys that don't have hearing aids because they can't afford them and don't realize the VA will provide help with the problem. Helping them contact the VA is one of the most rewarding things about these reunions. If you have been in service over 20 years get everything checked before you leave.

 

[haloFIRE]

Welcome BlueAFMom!!!


We have much in common: I'm an active duty O6 with 26.75 years of active duty service. Work wise, I was were you are now last year. Tough work environment. Often wouldn't get home before 9pm, very low quality of life, high stress, unrealistic expectations, etc., etc.. I was planning on getting out, unless I could get a much lower stress job serving in a much more relaxed command at my installation of choice. I was able to maneuver myself into the job and location I wanted, and both my physical and mental stress dropped drastically. So much so, that I decided to stay until my mandatory retirement date....unless the stress ratchets back up that is!!


I've been saving aggressively for retirement since I joined, so I am already fortunate to be FI as soon as I retire. As my wife and I worked through our non-work, fog-of-work (Great post Nords!) free future life, we realized we had more options than we thought we did. I wanted to share one of our potential courses of actions with you; I think you could do it to if it sounds like your cup of tea.


My wife and I both want to travel quite often. We planned for a trip once a quarter. Some quarters will be expensive (river cruise), others less so as we traded inexpensive trips (state and national park camping) to fund expensive ones. even with the trading, we realized we wouldn't be able to travel as much as we desired unless we could really cut our expenses.


Then it hit us...what if we put all our furniture, etc in storage, cut all our utilities, rental insurance, rental or mortgage payment, and rolled it into our travel budget? As we started exploring this, we realized we could use Space-A flights, and month+ long off peak rentals worldwide (surprisingly inexpensive), and still come in under budget! With this calculus in mind we started to lay out plans for the first 5 years post-retirement. We plan on traveling 10+ months each year, and spending the rest of the time bouncing between family...the folks we love that we've neglected due to my poor leave taking ability. When we get tired, we'll settle down, and either rent or buy a place for our more traditional retirement. Added benefit for us is we'll travel on my pension, and not have to touch our investments, or housing fund...giving both time to grow without any draws against them.


With your DD in college, you and DH have a golden opportunity to explore the globe while still very young. This option isn't for everyone - many of our friends (and some of our family) think we're crazy! However, if this sounds like something you may enjoy, you still have plenty of time to research it prior to 1 Dec 16.


I highly recommend Nords book - I've read it twice, and will reread it again this year; lots of good info.


I also recommend really digging deep into your expenses so you know what you will need in retirement. When you really cut into them (as we did above) you may find your retirement check will go much farter than you anticipated.


I wish you and your family all the very best as you rapidly approach retirement!!!!!


HaloFIRE

 

[BlueAFMom]

Thanks everyone for the quick advice and encouragement!


First on my list now is to get my house fund into a CD (which was on my list but not done yet!) and get ahold of Nords' book (thanks for all of that military-specific advice).


Next will be the transition seminar and VA claims...in the Fall when I'm ready to announce my exit. I attended the executive TAPS about 2 years ago which is where I figured out I didn't want a high-power second career and that sticking it out to Colonel would be my best bet--since I was still having some fun. Now I need to go back for all of the practical/procedural stuff--what a different mindset that will be!


In the meantime, I'm tracking expenses. I think I've estimated high but I am still willing to work part-time to make up the difference...which may be even smaller if I opt for 4% SRW (will look into that!).


HaloFIRE...you will need to write your own book on how to travel full-time off of your retirement! What an adventure! Unfortunately, I spent so much time TDY, the thought of air travel and baggage make me cringe. I've also been fortunate enough to be stationed overseas twice--met my husband in Germany--and visited/deployed to a few countries. I am hoping my urge to travel on my own terms returns, but it may be a while!


So glad I found this forum--you all are such an inspiration!


BlueAFMom

 

[ExFlyBoy5]

One other note on your daughter and her senior year...the AF will defer an assignment for a year for a kid entering their senior year. That is unless they got rid of it over the last 6 months, which I doubt. Just wasn't sure if you've taken that into consideration our if it's a feasible option for you.

Sent from my mobile device so please excuse grammatical errors.

 

[Nords]

Then it hit us...what if we put all our furniture, etc in storage, cut all our utilities, rental insurance, rental or mortgage payment, and rolled it into our travel budget? As we started exploring this, we realized we could use Space-A flights, and month+ long off peak rentals worldwide (surprisingly inexpensive), and still come in under budget! With this calculus in mind we started to lay out plans for the first 5 years post-retirement. We plan on traveling 10+ months each year, and spending the rest of the time bouncing between family...the folks we love that we've neglected due to my poor leave taking ability. When we get tired, we'll settle down, and either rent or buy a place for our more traditional retirement.

With your DD in college, you and DH have a golden opportunity to explore the globe while still very young. This option isn't for everyone - many of our friends (and some of our family) think we're crazy! However, if this sounds like something you may enjoy, you still have plenty of time to research it prior to 1 Dec 16.

Have you reached out to Billy & Akaisha Kaderli yet? They're happy to help with questions or getting together for a meetup:
Retire Early Lifestyle

I highly recommend Nords book - I've read it twice, and will reread it again this year; lots of good info.

Thanks!

We're collecting advice & stories for the second edition, so let me know your feedback.

 

[BlueAFMom]

One other note on your daughter and her senior year...the AF will defer an assignment for a year for a kid entering their senior year. That is unless they got rid of it over the last 6 months, which I doubt. Just wasn't sure if you've taken that into consideration our if it's a feasible option for you.

Air Force removes this "privilege" when you make O-6 and are turned over to the "Colonel's Group" to control you future.

 

[38Chevy454]

BlueAFMom, I agree with the rest about likely need for some small income to meet your projected expenses vs pension. The good thing is you have a small differential to cover. You might even be able to make it without work if you can cut expenses to your pension amount plus a withdrawal rate from savings. What rate you are comfortable with is your decision. There are many years between your current age and end of life (hopefully!) so the rate may need to be conservative.

I work/have worked with several AF officers, so I can sympathize with your situation and wanting to get out. Just look at that light at end of the tunnel and use it for motivation to survive the next 1+ years.

 

[Rustic23]

The AF moved us right before our daughters senior year. Guess what, she survived just fine! It how you handle it that counts. We just said we were moving, and we did. Then we retired one year later and we moved again, first move was Hawaii to Florida, and second from Florida to Texas. There were no ill effects. One thing about military kids, they are use to moving, and make new friends faster than the average bear.


Sent from my iPad using Early Retirement Forum

 

[ExFlyBoy5]

One other note on your daughter and her senior year...the AF will defer an assignment for a year for a kid entering their senior year. That is unless they got rid of it over the last 6 months, which I doubt. Just wasn't sure if you've taken that into consideration our if it's a feasible option for you.

Air Force removes this "privilege" when you make O-6 and are turned over to the "Colonel's Group" to control you future.

Ah...how nice of them.

When I applied for retirement, (through vMPF, of course) I had to laugh when I saw the rule where 0-6s and up have to send a HAND WRITTEN letter requesting retirement. How goofy is that? And they say life at the top is so much better. I have a good friend of mine that retired as the chief assignments dude (DPA for you AF folks) and to hear the stories that go on behind that 'green door' are mind boggling.

 

[stephenson]

I was out of Navy at 40 with 20 years. Still had kids to educate so entered the world of defense aerospace - has been very interesting, educational and enjoyable. At 60 still not ready

IF I were in your circumstances, presuming you and spouse are healthy, I would completely rebaseline my life and that of my spouse (assuming she approved). Review what was in my head, experiment as a volunteer in those things that might be fun and provide a few bucks - once decided on what would really be fun and interesting, I would completely re-educate myself by obtaining formal education - use the government bucks to subsidize it ... basically just start over, but do it with foreknowledge you didn't have the first time Wife of friend of mine retired a few years ago at 45 and went to med school ... kinda wow. Not representative of what I was thinking of since it is really hard to do that sort of thing - but now have an opportunity to do anything!!

 

[BlueAFMom]

Update...

Had a few weak moments where I contemplated negotiating for OMY but they were quickly dashed by a 2-hour meeting where nothing was accomplished.

Since my original post, I've put half my house $$ in a 1-year CD (in PenFed) with plans to stagger the other half and do the same.

I loaded Nords' book on my Kindle and read the applicable chapters. Very informative and encouraging.

Now working on my expenses...trying to get the grocery bill down. My husband does the shopping and we've been in "it doesn't matter how much is costs, we're eating healthy" mode so there are some simple things we can and will do there. I even clipped some coupons which I haven't done in years!

Also, began tracking my expenses on Mint. I budgeted and tracked already on a spreadsheet but afraid some things may have been missed.

Now I'm researching temporary housing options for Dec 16-May 17. I'm going to jump over to the landlord thread soon and bounce some questions off of you real estate buffs on how to best approach some landlords.

Planning to make my intentions known to my boss ~1 Oct so I can attend TAP and begin my VA claim.

15 months and counting to FIRE!

BlueAFMom

 

[Nords]

I loaded Nords' book on my Kindle and read the applicable chapters. Very informative and encouraging.

Thanks! I appreciate it.

Also, began tracking my expenses on Mint. I budgeted and tracked already on a spreadsheet but afraid some things may have been missed.

You'll encounter surprises, but it's more important to track your expenses than it is to put yourself on a strict budget. The key is just figuring out where you feel that you're wasting money. It's an iterative process, and you'll see changes as your priorities shift, but you'll also align your spending with your values.

Planning to make my intentions known to my boss ~1 Oct so I can attend TAP and begin my VA claim.

Ideally you'd finish TAP with everything you need to know to start a "fully developed claim", and then finish the exams and paperwork during the consultations and referrals that come out of your retirement physical. When you start terminal leave you'd have the whole package ready to turn over to a VSO who can shepherd it through the VA.

That's the theory, anyway. Personally, about all I can attest is that doing it during the retirement process is a lot better than waiting 12 years.

 

[EpicRider]

I'm a 47 y/o active duty military officer pulling the trigger next year (at 26+ years of service/Colonel). My plan was always to stay until it wasn't fun and since reaching my professional goals and kind of hitting a dead end, I'm there. I guess it surprised me it came on so hard and so fast...was perfectly happy until this last move/job and going beyond 2016 would mean another move the summer before our only daughter's senior year. DH is a RN but left that career after burnout and has nightmares about going back--full-time SAHD (stay-at-home dad) and part-time fitness trainer (it's more of a hobby than income source).

No interest in a "second career" but have no problem with part-time or seasonal work between 48 and 59.5.

Estimated living expenses: $85,000 (after taxes); we are currently living on $52,800 but military is providing housing and we live in a very low COL area (Mississippi)

Anticipated retirement income: $72,000 before taxes, SBP, health insurance...estimate net: $62,500

Stats...parentheses indicate anticipated savings over next 16 months.
Roths: $67,000 (+3,000)
Traditional IRAs: $50,000
TSP:$101,000 (+10,000)
College (529/Coverdale/mutual fund): $34,000 + transferred post 9/11 GI bill
House fund: $125,000 (+60,000)

Short-term plan is to retire 1 Dec 16, move out of base housing and rent a furnished condo/house for 6 months until DD graduates high school...then move to a semi-permanent location where we will purchase housing (using my house fund). Will probably take that 6 months (plus 3 months of terminal leave) to do nothing/figure out what is next.

Any advice on what I could do now financially to maximize my potential success? I've been an 'ok' saver but didn't worry too much knowing I would have a COLA-adjusted pension and low-cost medical. Reading your posts make me nervous about my modest nest egg....

Also welcome any 'challenges' to my plan from folks who know the ropes. Thanks!

Hello BlueAFMom,

I am a little late responding to your original post, but we also have a lot in common....I am also planning a 2016 retirement from the Marine Corps....and planning to retire at 26.1 years (1 Nov 2016) as a Colonel. I almost executed a final set of orders this summer, but the 06 slate is a strange process and I ended up being offered another year at my current duty station. Based on the unexpected OMY at my current duty station I have decided 2016 is the right time to transition. My wife and family are super excited and I am getting more used to the plan....

I only have a couple comments for you to consider:

1) The E5/BAH allowance provided with your GI bill is an incredible benefit. Assuming the current GI Bill reg's do not change and depending on the GEO location, your DD will accrue a very good monthly payment, at least during the school year. The BAH can really build up after a couple years and can provide a very good start for either additional formal schooling or other family related savings plans. You will be provided an opportunity to designate the account to receive the BAH payment and it will be distributed by direct deposit.

2) Future house purchase mortgage rates and loan qualification. I am not sure if you plan on a mortgage or not based on your projected house fund, but a few transitioning friends have experienced some roadblocks processing a home loan after their military retirement is in the system. Obviously a lot depends on the amount you want to borrow, but if you know where you want to live after the military, you might consider home purchase options before you retire. Some risk in this process, but just be aware of the potential loan qualification issues you could encounter and it might be worth your time to evaluate this during your transition.

Best of luck to you and your family!

 

[alistair]

2) Future house purchase mortgage rates and loan qualification. I am not sure if you plan on a mortgage or not based on your projected house fund, but a few transitioning friends have experienced some roadblocks processing a home loan after their military retirement is in the system. Obviously a lot depends on the amount you want to borrow, but if you know where you want to live after the military, you might consider home purchase options before you retire. Some risk in this process, but just be aware of the potential loan qualification issues you could encounter and it might be worth your time to evaluate this during your transition.

Good to know on possible roadblocks w/ borrowing (makes some sense though... they want to know you have steady income).
I may also be pulling the trigger in '16 (O5 - 22 years USAF). We are planning on moving out of a rental into a purchase.