Do I have enough to retire-retire from the military

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eurosceptic
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Do I have enough to retire-retire from the military

Post by eurosceptic » Sun Aug 06, 2017 7:38 am

Hello!

I'm retirement eligible in the military and looking at my options. I had planned on staying in longer but I am now considering retiring in less than a year and not working (at least for income) afterwards. Obviously, this is a big decision and not one I am taking lightly. Here are my particulars:

His/her age: 46/48
Portfolio: >1.5 million (invested 80/20); investments are all in index funds/ TSP. I also have put $125,000 in CDs for the transition and cushion (included in the $1.5 m).
Pension at retirement next year: approx. 57k per year (pre-tax, COLA adjusted)
Expenses: Estimate income of $90k needed (desired) per year.
Debts: None, but don't have a house, either. Spent 99% of my career overseas so never wanted to buy.
Kids: two, aged 9, 13
Spouse is a SAHM
Retirement location: Unknown at the moment since we have few roots in the US. COL will be a significant factor, however. We've always lived well below our means and had a high savings rate. I plan on continuing a disciplined lifestyle.
Other: I won't hit my high year tenure (mandatory retirement) for another 5 years so I could technically stay longer and increase the portfolio and retirement pay.

Anything else I should be thinking about? Thanks!

livesoft
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Re: Do I have enough to retire-retire from the military

Post by livesoft » Sun Aug 06, 2017 8:35 am

I will say probably not.

I think $90K annual expenses is huge for a family of 4 who do not have a paid off home.

You can investigate "Do I have enough?" calculators yourself.

www.cfiresim.com
www.firecalc.com
and
also read https://earlyretirementnow.com/2016/12/ ... t-1-intro/
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Helo80
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Re: Do I have enough to retire-retire from the military

Post by Helo80 » Sun Aug 06, 2017 8:39 am

If you have not lived in the US for sometime, I think it's safe to say that you may not have too many household assets/goods.... not a terrible thing, but an initial expense to think about.

Also, what about vehicles? I assume that you have no cars in the US.

Geronkas
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Re: Do I have enough to retire-retire from the military

Post by Geronkas » Sun Aug 06, 2017 8:40 am

You seem to be very well prepared for retirement now in my opinion. I am also in the military and will be retired by the end of this year. I have close to 1 million in investable assets and a paid of home, and I am confident about retirement. Our daughter starts college in the Fall using the Post 911 GI Bill; without the GI Bill, It would cost us about $35,000 a year. Do you have the Post 911 GI Bill and have you transferred it to your kids. Knowing that my childs university tuition would be covered by this wonderful benefit made our retirement decision easier since we would not have to dip into our own savings and investments. Good luck and Hooah!

TMCD75
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Re: Do I have enough to retire-retire from the military

Post by TMCD75 » Sun Aug 06, 2017 9:03 am

You would need to move to a LCOL area, much like where I reside in Kentucky. You would do just fine in a LCOL area. With your pension being 57k/yr, you're going to have to dial back the 90k expectations a bit. It can still work though.

I live in Western Kentucky on 60k per year. My networth is half of yours, but I don't need 90k a year either. We are a family of 3.

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SpecialK22
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Re: Do I have enough to retire-retire from the military

Post by SpecialK22 » Sun Aug 06, 2017 9:30 am

Just back of the envelope, but I think you're looking good.

$57,000 inflation adjusted pension + $45,000 (3% of 1,500,000) = $102,000

You'll have retiree healthcare immediately upon retirement. Quick search says the cost for a family plan is just $555.84 per year.

If you still have the Post 9/11 GI Bill that'll offset some of the future college costs. Shouldn't be too difficult to cash flow the rest.

Social Security will kick in down the line as well to add to income.

aristotelian
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Re: Do I have enough to retire-retire from the military

Post by aristotelian » Sun Aug 06, 2017 9:33 am

You must have lower expenses than $90k if you have saved $1.5M on a military salary. Still, I think you are set assuming your pension starts on retirement from military (not full retirement age) and you will have access to military health care.

You would be looking for $30k annually initially from your $1.5M, which only comes out to a 2% withdrawal rate. You will need even less once you hit SS age.

What if you pay cash for a $200k house. That would leave you with $1.3M but lower expenses, maybe $75K. Then you would only need a 1% withdrawal rate.

scottinmet
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Re: Do I have enough to retire-retire from the military

Post by scottinmet » Sun Aug 06, 2017 9:38 am

I think you're looking very good and at minimum you have a great opportunity to find where you want to live and what you want to do post-retirement. Your annual expense requirement will depend on where you settle down. I'm in a LCOL area with 2 kids and I spend much less than $90k per year and live very comfortably. My house is paid off but I don't have your excellent health insurance.

I work in the fed government and many of my co-workers are ex-military, both civil servants and contractors. I also have relatives who retired and went back to school (full time) to pursue completely different occupations. You can also find a place to settle down and see how your finances work out in your new location before doing anything. You have many choices with good backup plans, a very nice place to be.

If your savings are primarily in the TSP, I would start looking at how to take TSP funds out prior to 59 1/2 without penalties via a Roth conversion ladder. Here are a couple articles explaining the ladder:

http://the-military-guide.com/early-wit ... -military/
http://rootofgood.com/roth-ira-conversi ... etirement/

Thanks for your service!

btenny
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Re: Do I have enough to retire-retire from the military

Post by btenny » Sun Aug 06, 2017 9:56 am

I think you are probably fine IF your $90K expense estimate includes your rent and taxes. The key is you will not have a lot of margin to purchase big items like cars or homes. So you will have to buy/rent and live in a LCOL area to keep your housing costs within your budget. Likewise you will not be able to buy expensive new cars or have a lot of money tied up in transportation things.

But the biggest thing I see limiting you is what to do all day. You need to live in one spot so your kids can go to school and yet you will be home all day with no job. So what is you "plan" for keeping busy each day? Your wife does most of the home chores as a SAHM but what are you going to do? Please advise.

Good Luck.

Goal33
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Re: Do I have enough to retire-retire from the military

Post by Goal33 » Sun Aug 06, 2017 10:13 am

livesoft wrote:I will say probably not.

I think $90K annual expenses is huge for a family of 4 who do not have a paid off home.

You can investigate "Do I have enough?" calculators yourself.

http://www.cfiresim.com
http://www.firecalc.com
and
also read https://earlyretirementnow.com/2016/12/ ... t-1-intro/
Agreed. I think you're fine but I'm not sure. Would be better to see you put in another year or two so you'll have a bit more money, higher pension, and be a year or two closer to expiration.
A man with one watch always knows what time it is; a man with two watches is never sure.

chevca
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Re: Do I have enough to retire-retire from the military

Post by chevca » Sun Aug 06, 2017 11:02 am

I'd say you're more than fine with the pension, medical, and that portfolio.

If you have no roots or need to be any certain place, find a nice LCOL area and you should be on easy street.

I'm questioning how say you live below your means, save a lot, and plan to stay disciplined... yet, have a $90/yr desired expense budget. That's a pretty expensive lifestyle to me. It may not be to others. But, that's nearly $8k/month. One can live very nicely on much less than that.

A lot of it will depend on where you want to live and what you will do for housing, IMO. That's kind of needed info in deciding if you have enough.

GmanJeff
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Re: Do I have enough to retire-retire from the military

Post by GmanJeff » Sun Aug 06, 2017 11:03 am

I would say you're cutting it close, even assuming a low cost of living. If you stop working, your chances for later re-employment drop, getting worse over time, so you will be locked in to the asset and potential income level you have, even if your needs change going forward. You'll need to be comfortable with a relatively low income in perpetuity, with the attendant lifestyle that implies. If you're not working, and you have a low income level, your recreational/travel/educational/philanthropic opportunities will be limited to whatever you can afford, which won't be much.

I also notice you make no reference to resources dedicated to your children's education, which is fine as long as you are comfortable that they will have to fend for themselves in that regard, likely limiting their own potential for early financial independence if they assume significant education loan liabilities out the gate.

If it were me, I'd work longer or would plan for a second career to provide more of a cushion and future flexibility. In the end, it does all turn on how much is "enough" in your own mind to allow you the lifestyle you want, and the financial security level you want for a future which is necessarily inherently uncertain and unpredictable.

scottinmet
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Re: Do I have enough to retire-retire from the military

Post by scottinmet » Sun Aug 06, 2017 11:18 am

btenny wrote:I think you are probably fine IF your $90K expense estimate includes your rent and taxes. The key is you will not have a lot of margin to purchase big items like cars or homes. So you will have to buy/rent and live in a LCOL area to keep your housing costs within your budget. Likewise you will not be able to buy expensive new cars or have a lot of money tied up in transportation things.

But the biggest thing I see limiting you is what to do all day. You need to live in one spot so your kids can go to school and yet you will be home all day with no job. So what is you "plan" for keeping busy each day? Your wife does most of the home chores as a SAHM but what are you going to do? Please advise.

Good Luck.
I agree with finding something to do post-retirement and he has set himself up nicely to do just that. If I had those assets I would have no monetary fears about retiring. Heck, even at a 2% withdrawal rate he is over $80k, a job at walmart would send him over $100k. Saving $1.5 million at his age shows he hasn't wasted away his money and so he should easily find ways to get through any lean years. I think he has reached the point where life decisions are based on what he wants to do with his life and not on his financial assets.

Now if he chooses to live in San Francisco with a butler and a chauffeur, I take back everything I said. :happy

stan1
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Re: Do I have enough to retire-retire from the military

Post by stan1 » Sun Aug 06, 2017 11:21 am

You can choose to retire to a state that has favorable tax treatment for military pensions. The elephant in the room is any service connected disability which could be a big consideration for taxation, education costs for kids, etc.

mckaydw
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Re: Do I have enough to retire-retire from the military

Post by mckaydw » Sun Aug 06, 2017 2:21 pm

I'm surprised by the amount of posts saying you can't afford it or that you're right on the line. I'm guessing they don't understand how military retirement works.

You'll receive $57k/ year, starting immediately, adjusted to inflation. You'll take $33k/ year out of investments to cover the rest. $33k is only 2.2% of your 1.5M portfolio, WELL below safe perpetual withdraw rates. Also, you'll get Tricare health insurance for a very low premium. You don't need social security, but it will further add icing on the cake.

As long as you have enough of your nest egg in non-retirement account to safely reach age 59.5, I don't see any problems.

Congratulations on what must have been a wonderful military career. Best of luck to you in retirement.

123
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Re: Do I have enough to retire-retire from the military

Post by 123 » Sun Aug 06, 2017 2:53 pm

Thank you for your service.
The closest helping hand is at the end of your own arm.

eurosceptic
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Re: Do I have enough to retire-retire from the military

Post by eurosceptic » Sun Aug 06, 2017 4:59 pm

aristotelian wrote:You must have lower expenses than $90k if you have saved $1.5M on a military salary. Still, I think you are set assuming your pension starts on retirement from military (not full retirement age) and you will have access to military health care.

You would be looking for $30k annually initially from your $1.5M, which only comes out to a 2% withdrawal rate. You will need even less once you hit SS age.

What if you pay cash for a $200k house. That would leave you with $1.3M but lower expenses, maybe $75K. Then you would only need a 1% withdrawal rate.
I am probably overestimating my expenses. I've been bouncing between Europe, Asia and deployments for the last two decades so it is hard to estimate my US expenses so I would rather be conservative. I've also lived in some high COL areas in Europe such as Scandinavia, Belgium (Brussels), etc so it may be influencing my estimate.

eurosceptic
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Re: Do I have enough to retire-retire from the military

Post by eurosceptic » Sun Aug 06, 2017 5:03 pm

Geronkas wrote:You seem to be very well prepared for retirement now in my opinion. I am also in the military and will be retired by the end of this year. I have close to 1 million in investable assets and a paid of home, and I am confident about retirement. Our daughter starts college in the Fall using the Post 911 GI Bill; without the GI Bill, It would cost us about $35,000 a year. Do you have the Post 911 GI Bill and have you transferred it to your kids. Knowing that my childs university tuition would be covered by this wonderful benefit made our retirement decision easier since we would not have to dip into our own savings and investments. Good luck and Hooah!

Thanks for the reminder. I should have added that I have transferred my GI bill to both kids (18 months each). Also, I have ~90K in a 529 that I didn't include in the portfolio (I consider that money spent for portfolio purposes).

eurosceptic
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Re: Do I have enough to retire-retire from the military

Post by eurosceptic » Sun Aug 06, 2017 5:19 pm

Helo80 wrote:If you have not lived in the US for sometime, I think it's safe to say that you may not have too many household assets/goods.... not a terrible thing, but an initial expense to think about.

Also, what about vehicles? I assume that you have no cars in the US.

Good point. I do have an older Honda Civic which I plan to keep for as long as serviceable but I don't have any major appliances, etc. There will definitely be a lot of start-up expenses.

eurosceptic
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Re: Do I have enough to retire-retire from the military

Post by eurosceptic » Sun Aug 06, 2017 5:33 pm

Thanks all for the comments and suggestions. They are truly appreciated and have given me some things to think about.

Helo80
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Re: Do I have enough to retire-retire from the military

Post by Helo80 » Sun Aug 06, 2017 5:55 pm

eurosceptic wrote:Good point. I do have an older Honda Civic which I plan to keep for as long as serviceable but I don't have any major appliances, etc. There will definitely be a lot of start-up expenses.
Ok, that works for me.

I honestly think you can probably get by with military pension and slow withdrawal, but you'll probably have to get picky on where to live to maximize the home and schools for children.

IMO
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Re: Do I have enough to retire-retire from the military

Post by IMO » Sun Aug 06, 2017 8:06 pm

I'm in the camp that says you're in good shape.
Some feedback on things you're likely thinking about:

1. You have a very realistic budget set. Many on this site live in HCOL/very HCOL areas or have very high salaries and very high associated expenses (such as very expensive homes / kids in private school, etc) and probably can't imagine raising 2 kids on 90K/yr. A realistic budget means you have room to potentially continue to save and can "tighten the belt" should that be necessary. You'll also qualify for SS in the future which adds an additional safety net. I think you need to really drill down on what things costs in the budget since you've been out of CONUS for some time. In theory, inflation is pretty flat, but personally I find many things like car repairs, property taxes, etc. increase well beyond the CPI.

2. An issue that may come up is your desired use of your TSP funds before age 59.5 with the 10% early withdrawal concerns. You should check out the threads on backdoor roths and see if that's something you can work out. It's important to look into TSP rules on withdrawals as there may be limits on the logistics allowed for number of withdrawals, early or not (I don't know the answer, but worth looking into). This is important, because your TSP is making up your non-pension income requirements. There are things like 72t withdrawals, but you'd have to check online how to set that up and then see how much you can get annually via that method.

3. Schools for middle school/high school. This is an important consideration as 90K probably won't work well with many private schools. You may want to even consider renting in a good public school district (vs. buying if too expensive) and then buying later someone less expensive, if needed. At your time frame of 1 yr, time to start seriously looking at where to live.

4. Housing costs. Since you've never owned before, if you choose to own a home, be sure you're not underestimating costs such as taxes, insurance, utilities and maintenance. If you choose to rent and never buy, how comfortable are you with rent increases that could exceed the COLA?

5. Family proximity. Keep in mind this issue. It can be a budget buster if you need to buy airline tickets for a family of four. I mention this, even though you've lived outside CONUS for your career, but as parents/in-laws age, the desire/need to travel more to visit/assist in their care can become a real issue. Even if you have time on your hands, multiple flights (unexpected flights especially for parent health issues) can be a real budget busting item. Ideally, living within driving distance to family can be helpful for many reasons.

5. College. You have a transferrable GI bill and that would cover 1/2 of your two kids college costs. And you've got the 90K 529 covered. Sure expenses could go higher, but you've done great on this aspect.

5. Health Care. You'll have Tricare, but be sure to budget or set in an "emergency" fund enough to cover catastrophic amounts and not just the premiums. Dental insurance is just a discount plan, so plan for that also. You personally may have some VA care coverage, but that won't eliminate needing Tricare. But overall, you've got this covered.

6. Survivorship issues. Be sure you are paying the survivor benefit on your pension for maximum coverage for your spouse/children. Even if you did die, many expenses won't reduce (such as housing costs), so make sure you've got life insurance to cover any deficits for your spouse/kids. Social Security should help some with this also.

7. Long term care. This is a difficult one. It seems it's getting too expensive and there are too many restrictions to make long term care insurance an option for many. Keep this in mind, have you put some thought in how you'd pay for you/spouse should this be necessary in the future?

8. Other life unknowns. We have no issue telling people to prepare for possible life events like the need for life insurance. No one mentions things like divorce. What if that were to happen (I know, it can't happen to you), how would that affect the finances/retirement picture? I think there are reasons to consider staying in the workforce, at least part time, when retiring very young should you have any need to reenter the workforce due to some unforeseen issues as for many there seems to be a real age discrimination factor on some employment.

rob65
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Re: Do I have enough to retire-retire from the military

Post by rob65 » Sun Aug 06, 2017 8:29 pm

On item 7 in IMO's very good post, you might check to see if your VA benefits include long term care benefits.

Thank you for your service.

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BTDT
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Re: Do I have enough to retire-retire from the military

Post by BTDT » Sun Aug 06, 2017 8:34 pm

No way! Two children 9 and 13 plus no home equity, I suggest you keep working for a few more years....and yes I'm a retired military officer with Tricare-for-Life and have been there and done that (BTDT)

Thank you for your service, and if it were me I would suggest you keep working for a few more years, but than again I only charge two-cents for my opinions and have yet to be paid :oops:
If past history was all that is needed to play the game of money, the richest people would be librarians.

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friar1610
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Re: Do I have enough to retire-retire from the military

Post by friar1610 » Sun Aug 06, 2017 8:50 pm

Regarding #6 in IMO's post above...I took SBP at less than the max. Now, at age 72, I wish I had taken the full amount. My wife will still be OK if I predecease her, but there is money in the portfolio that I have to mentally "fence" for her potential future living expenses. If I'd spent a bit more every month in SBP it would have made almost no difference in our lifestyle over the years. But it takes a pretty good chunk of portfolio to guarantee that difference in her future income. Also noticed that your wife was a SAHM - only you know what her earning potential is if she has to work in the event of your demise but it's probably less than if she'd had a career over the years. So my advice is that the best way you can thank her for following you around all these years is to set her up the best you can by maxing out the SBP.

Good luck and thanks for your service.
Friar1610

ThrustVectoring
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Re: Do I have enough to retire-retire from the military

Post by ThrustVectoring » Sun Aug 06, 2017 8:58 pm

Depends on the tax situation and whether the dollars you're quoting are pre or post-tax. The retirement porfolio @ 1.5MM is enough to conservatively get to a 50k/yr drawdown (30x multiplier), and another 57k/yr from the pension, equals probably enough.

SurferLife
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Re: Do I have enough to retire-retire from the military

Post by SurferLife » Sun Aug 06, 2017 9:05 pm

You didn't break out the balance between taxable and tax-advantaged. How are you going to cover the shortfall in your budget between retirement and age 59 1/2? The amount you have in CDs is not going to cover you for that entire timeframe. You should be able to make it happen with those numbers in a LCOL area, but depending on where that money is could prove to make things quite a bit more complicated. Have you had a sleep study done? I would suggest doing one before retirement if possible for the potential disability pay. Many people have it and don't know it, and it pays quite a bit.

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Re: Do I have enough to retire-retire from the military

Post by gwrvmd » Sun Aug 06, 2017 9:20 pm

Retired military here
I think you are ok but if possible I would go for 24 years...that's 60% and the extra means a lot when it is indexed for, hopefully, 40 years.
It is also a couple extra years at probably the highest pay you will ever have. Good luck......Gordon
Disciple of John Neff

eurosceptic
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Re: Do I have enough to retire-retire from the military

Post by eurosceptic » Mon Aug 07, 2017 5:40 am

friar1610 wrote:Regarding #6 in IMO's post above...I took SBP at less than the max. Now, at age 72, I wish I had taken the full amount. My wife will still be OK if I predecease her, but there is money in the portfolio that I have to mentally "fence" for her potential future living expenses. If I'd spent a bit more every month in SBP it would have made almost no difference in our lifestyle over the years. But it takes a pretty good chunk of portfolio to guarantee that difference in her future income. Also noticed that your wife was a SAHM - only you know what her earning potential is if she has to work in the event of your demise but it's probably less than if she'd had a career over the years. So my advice is that the best way you can thank her for following you around all these years is to set her up the best you can by maxing out the SBP.

Good luck and thanks for your service.
Thank you for the advice. I was considering selecting less than the max for SBP but I'm reconsidering that. Yes, my spouse had a promising professional career before we married. Certainly she has less earning potential now than she otherwise would have. An unfortunate result of constantly moving every couple of years, often with few opportunities for her. Thanks again for sharing your experience and all the others who have provided such good feedback.

tnjj
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Re: Do I have enough to retire-retire from the military

Post by tnjj » Mon Aug 07, 2017 6:03 am

There are three questions you should consider:

1. Can my family live well on 55% of my retirement pay?

2. How will we weather "sequence of return" risks during retirement.

3. Can my family weather "sequence of return" risks with only 55% of my retirement pay?

Fishing50
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Re: Do I have enough to retire-retire from the military

Post by Fishing50 » Tue Aug 08, 2017 1:02 am

If the work isn't rewarding, it's time to retire. Staying for 2.5% /yr is the wrong reason. COL could be reason to stay, that's game changing pay / retirement increase. You can't make the wrong decision, even part time work after retirement will be enough if you choose retirement.

SBP is an interesting decision. I don't think it helps. 5.5% of your retirement pay to ensure 55% of your retirement pay seems expensive. If you die in retirement, 55% of your retirement pay doesn't provide enough for your family. I'd guess a term life insurance policy would be a cheaper option to ensure the kids launch and provide for your wife.
It's perfectly legal, go ask the IRS, they'll say the same thing. I actually feel stupid telling you this, I'm sure you would've investigated the matter yourself. Andy Dufresne

Fishing50
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Re: Do I have enough to retire-retire from the military

Post by Fishing50 » Tue Aug 08, 2017 1:14 am

friar1610 wrote:Regarding #6 in IMO's post above...I took SBP at less than the max. Now, at age 72, I wish I had taken the full amount. My wife will still be OK if I predecease her, but there is money in the portfolio that I have to mentally "fence" for her potential future living expenses. If I'd spent a bit more every month in SBP it would have made almost no difference in our lifestyle over the years. But it takes a pretty good chunk of portfolio to guarantee that difference in her future income. Also noticed that your wife was a SAHM - only you know what her earning potential is if she has to work in the event of your demise but it's probably less than if she'd had a career over the years. So my advice is that the best way you can thank her for following you around all these years is to set her up the best you can by maxing out the SBP.

Good luck and thanks for your service.
Is your 'fenced' money 5.5% of your retired pay for 30yrs of retired pay? We're considering saving 5.5% instead of paying SBP. We'll be retiring at 50 to go fishing. While I'm alive we'll be in a HCOL area with a boat and extravagant vacations. If I die early, shell probably cash out the homes equity and move to a low cost of living area.
It's perfectly legal, go ask the IRS, they'll say the same thing. I actually feel stupid telling you this, I'm sure you would've investigated the matter yourself. Andy Dufresne

SurferLife
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Re: Do I have enough to retire-retire from the military

Post by SurferLife » Tue Aug 08, 2017 7:53 am

As someone who is quickly approaching this point in my life, I'm curious as to your retirement funds breakout and your way forward. Since you are an "old guy" like me, most of your TSP is going to be in Traditional; did you ever do any Roth TSP? Are you planning on doing a Roth Ladder after retirement? What is your plan, details if you have them, on moving your funds to accomplish this? You are probably aware that once you retire, the ability to move TSP funds is greatly restricted and makes life difficult. As much as I'd like to stay in TSP, it's not very flexible for someone in your/our situation. Again, I'm really looking for the details in your plan because in those details may be the solution to our early retirement plan. We are somewhat close to your scenario, though we have less investable assets, we will receive about 25k/year more in pay due to disability.

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SquawkIdent
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Re: Do I have enough to retire-retire from the military

Post by SquawkIdent » Tue Aug 08, 2017 9:26 am

mckaydw wrote:I'm surprised by the amount of posts saying you can't afford it or that you're right on the line. I'm guessing they don't understand how military retirement works.

You'll receive $57k/ year, starting immediately, adjusted to inflation. You'll take $33k/ year out of investments to cover the rest. $33k is only 2.2% of your 1.5M portfolio, WELL below safe perpetual withdraw rates. Also, you'll get Tricare health insurance for a very low premium. You don't need social security, but it will further add icing on the cake.

As long as you have enough of your nest egg in non-retirement account to safely reach age 59.5, I don't see any problems.

Congratulations on what must have been a wonderful military career. Best of luck to you in retirement.
I agree with this. Congratulations on a great career and thank you for your service. :sharebeer

barberakb
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Re: Do I have enough to retire-retire from the military

Post by barberakb » Wed Aug 09, 2017 5:54 pm

SurferLife wrote:As someone who is quickly approaching this point in my life, I'm curious as to your retirement funds breakout and your way forward. Since you are an "old guy" like me, most of your TSP is going to be in Traditional; did you ever do any Roth TSP? Are you planning on doing a Roth Ladder after retirement? What is your plan, details if you have them, on moving your funds to accomplish this? You are probably aware that once you retire, the ability to move TSP funds is greatly restricted and makes life difficult. As much as I'd like to stay in TSP, it's not very flexible for someone in your/our situation. Again, I'm really looking for the details in your plan because in those details may be the solution to our early retirement plan. We are somewhat close to your scenario, though we have less investable assets, we will receive about 25k/year more in pay due to disability.
What exactly do you mean by this statement?
"You are probably aware that once you retire, the ability to move TSP funds is greatly restricted and makes life difficult. As much as I'd like to stay in TSP, it's not very flexible for someone in your/our situation. "

My wife is retired military, we kept her TSP and we exchange money in/out of different funds multiple times every year and it is super easy just like it was when she was in. She can't add any money to her TSP but can move it around into different funds anytime.

To the OP, you are doing great. You can easily retire with that plan as long as its not in a HCOL area.
TX,TN,NV,FL all those are great for retirees with no state income tax

good luck! :)

alaskantraveler
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Re: Do I have enough to retire-retire from the military

Post by alaskantraveler » Wed Aug 09, 2017 7:08 pm

My opinion, you have more than enough to retire. You are estimating that you want to live on $90k per year. In many areas of the US this is more than sufficient. I live in a Medium COL area and my DW and I and one child have $48k per year of expenses. One of the biggest factors will be housing cost. There was a post on the forum today about a single person who spends $6k per month on an apartment in Los Angeles. There are also plenty of nice places in the USA where you can rent a nice 3 br home for under $1500/month. Judging by your age and the amount you have already saved and the fact that you said you drive an older Honda civic tells me that you are frugal and can likely live on $50k if you need to.

As someone else said, unless you really enjoy your job, retire, spend more time with your kids, find new hobbies, and enjoy life.

SurferLife
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Re: Do I have enough to retire-retire from the military

Post by SurferLife » Wed Aug 09, 2017 7:46 pm

barberakb wrote:
SurferLife wrote:As someone who is quickly approaching this point in my life, I'm curious as to your retirement funds breakout and your way forward. Since you are an "old guy" like me, most of your TSP is going to be in Traditional; did you ever do any Roth TSP? Are you planning on doing a Roth Ladder after retirement? What is your plan, details if you have them, on moving your funds to accomplish this? You are probably aware that once you retire, the ability to move TSP funds is greatly restricted and makes life difficult. As much as I'd like to stay in TSP, it's not very flexible for someone in your/our situation. Again, I'm really looking for the details in your plan because in those details may be the solution to our early retirement plan. We are somewhat close to your scenario, though we have less investable assets, we will receive about 25k/year more in pay due to disability.
What exactly do you mean by this statement?
"You are probably aware that once you retire, the ability to move TSP funds is greatly restricted and makes life difficult. As much as I'd like to stay in TSP, it's not very flexible for someone in your/our situation. "

My wife is retired military, we kept her TSP and we exchange money in/out of different funds multiple times every year and it is super easy just like it was when she was in. She can't add any money to her TSP but can move it around into different funds anytime.

To the OP, you are doing great. You can easily retire with that plan as long as its not in a HCOL area.
TX,TN,NV,FL all those are great for retirees with no state income tax

good luck! :)
I was referencing moving funds outside of the TSP, to perhaps Vanguard if you wanted to do something like a Roth ladder.

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friar1610
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Re: Do I have enough to retire-retire from the military

Post by friar1610 » Wed Aug 09, 2017 8:41 pm

Fishing50 wrote:
friar1610 wrote:Regarding #6 in IMO's post above...I took SBP at less than the max. Now, at age 72, I wish I had taken the full amount. My wife will still be OK if I predecease her, but there is money in the portfolio that I have to mentally "fence" for her potential future living expenses. If I'd spent a bit more every month in SBP it would have made almost no difference in our lifestyle over the years. But it takes a pretty good chunk of portfolio to guarantee that difference in her future income. Also noticed that your wife was a SAHM - only you know what her earning potential is if she has to work in the event of your demise but it's probably less than if she'd had a career over the years. So my advice is that the best way you can thank her for following you around all these years is to set her up the best you can by maxing out the SBP.

Good luck and thanks for your service.
Is your 'fenced' money 5.5% of your retired pay for 30yrs of retired pay? We're considering saving 5.5% instead of paying SBP. We'll be retiring at 50 to go fishing. While I'm alive we'll be in a HCOL area with a boat and extravagant vacations. If I die early, shell probably cash out the homes equity and move to a low cost of living area.
Recall that I said I did take SBP at a lower level than the max some 20+ years ago. So the delta I have to make up is less than half of what the full SBP payment to her would have been. I've made this up and more by a Variable Annuity I bought years ago and have since moved to VG. (Knowing what I know now, I wouldn't have bought the VA but I can't walk that dog back so I'm making the best of it as further described below.)

What I originally paid for the VA was way less than 5.5% of the delta mentioned above. Since it has more than quadrupled over the years, it's now worth quite a bit more more than the 5.5%. We don't plan to tap it during my lifetime. Since she's the beneficiary,if I die first, she can then annuitize it and more than make up the delta. So it's the value of the annuity that's fenced. Note that the VA payments, once annuitized, are not inflation adjusted like SBP payments.

Your plan may work well for you. I see a big benefit of the SBP being the fact that if one gets hit by a bus on the way home from the retirement ceremony, the payments start immediately. Plans that require an accumulation period of many years (in lieu of SBP) presuppose living that many years, likely a good probability but not a certainty.

I struggled with the SBP question perhaps more than any other decision incident to retirement. I wish you well with your decision and hope whatever you decide works out well for you and your spouse.
Friar1610

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BL
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Re: Do I have enough to retire-retire from the military

Post by BL » Thu Aug 10, 2017 12:21 am

eurosceptic wrote:
friar1610 wrote:Regarding #6 in IMO's post above...I took SBP at less than the max. Now, at age 72, I wish I had taken the full amount. My wife will still be OK if I predecease her, but there is money in the portfolio that I have to mentally "fence" for her potential future living expenses. If I'd spent a bit more every month in SBP it would have made almost no difference in our lifestyle over the years. But it takes a pretty good chunk of portfolio to guarantee that difference in her future income. Also noticed that your wife was a SAHM - only you know what her earning potential is if she has to work in the event of your demise but it's probably less than if she'd had a career over the years. So my advice is that the best way you can thank her for following you around all these years is to set her up the best you can by maxing out the SBP.

Good luck and thanks for your service.
Thank you for the advice. I was considering selecting less than the max for SBP but I'm reconsidering that. Yes, my spouse had a promising professional career before we married. Certainly she has less earning potential now than she otherwise would have. An unfortunate result of constantly moving every couple of years, often with few opportunities for her. Thanks again for sharing your experience and all the others who have provided such good feedback.
Agree that maxing out SBP is worth a lot more than many think. Also when you are both 70 yrs-old + have paid in for 30 years, no more payment is due.

You may not even miss the (non-taxed) deduction but the security will mean a lot to your spouse. Losing all or more than 45% of COLAd pension could be devasting for the spouse. Life insurance won't have that inflation protection, nor the protection that comes with having guaranteed income for life.

Fishing50
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Re: Do I have enough to retire-retire from the military

Post by Fishing50 » Thu Aug 10, 2017 2:57 am

I agree SBP is valuable, COLA income. I'm not sure a spreadsheet can provide the answer. VA, term life insurance, or investing the premiums are options. Retiring early, I think the 5.5% premium is too expensive. Declining SBP reduces withdrawal rate from the portfolio.

We'll be retiring at 50/52yrs old and going fishing. We plan to use our TSP partial withdrawal immediately after retirement to rollover/separate tax-exempt (7%), traditional (72%), and Roth (21%) balances into IRAs leaving only the minimum required balance to keep TSP account open. From the tIRA we'll do Roth conversions to the top of the 15% every year before SS payments push us into the 25% tax bracket. Once DW SS starts at age 62, we'll choose to convert the entire remaining tIRA balance to the top of the 25% tax bracket or roll the tIRA balance back into TSP.

In the year of retirement we'll be in the 15% tax bracket, so we plan to max out Roth TSP and catch up contributions while on active duty. Might even have room for some Roth conversions or tax gain harvesting.
It's perfectly legal, go ask the IRS, they'll say the same thing. I actually feel stupid telling you this, I'm sure you would've investigated the matter yourself. Andy Dufresne

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Taz
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Re: Do I have enough to retire-retire from the military

Post by Taz » Thu Aug 10, 2017 6:45 am

Retired navy almost 11 years -- I think you'll be fine.

Random thoughts:
- Rather than speculate on your particular specialty, I'll just say that it might be nice to come back to CONUS for a short tour so you can figure out where to live long term and perhaps situate yourself for a job. You might not want to work right away or even for more than a couple of years, but your value diminishes the longer you are out. Your clearances, knowledge, and useful contacts have a limited shelf-life.
- Even of you don't go back to work you'll have a better idea of expenses & lifestyle needs before the full-time paycheck (and tax free allowances) are gone.
- Lower COL + no state tax beneficial especially when you lose the child tax credits.
The destination matters.

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djpeteski
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Re: Do I have enough to retire-retire from the military

Post by djpeteski » Thu Aug 10, 2017 8:24 am

If your desire is to live in a higher COL area, I'd look into moving into the contracting realm. Sr. officers and NCOs can do quite well and really don't have to do much. I knew one Bradley master gunner that pulled in about 80K per year and did about 3 hours of work per month. For officers, it can be even better. No nights deployed in the field away from your family, nice salary and benefits.

I'd work a few years with the objective of getting another half million into retirement funds plus owning a home with no mortgage and a couple of cars free and clear. Then I would reevaluate.

Oh and thanks for your service.

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friar1610
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Re: Do I have enough to retire-retire from the military

Post by friar1610 » Thu Aug 10, 2017 9:52 am

djpeteski wrote:If your desire is to live in a higher COL area, I'd look into moving into the contracting realm. Sr. officers and NCOs can do quite well and really don't have to do much. I knew one Bradley master gunner that pulled in about 80K per year and did about 3 hours of work per month. For officers, it can be even better. No nights deployed in the field away from your family, nice salary and benefits.

I'd work a few years with the objective of getting another half million into retirement funds plus owning a home with no mortgage and a couple of cars free and clear. Then I would reevaluate.

Oh and thanks for your service.
This (and the advice to take a short stateside tour so you don't have to retire from overseas) is actually good advice if you decide the numbers fall short at this point. (I have no opinion on that as I haven't really analyzed your numbers.) I worked for 6 years with Beltway Bandits after Navy retirement and put away a good chunk of money. The trick is not to let your retirement pay + your BB salary take you to such a high consumption level that you can't afford to walk away in a few years. I know a lot of guys who bought the dream home (an easy thing to do with your newfound income after years of gummint housing), the Mercedes, etc. That pretty much locked them into a much longer civilian career. That's fine if that's what you want but not if full retirement a younger age is the goal.

Personally, I neither found the work easy nor satisfying but it paid very well.
Friar1610

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