Military Equity/Bond Allocation

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Yelvi
Posts: 2
Joined: Fri Nov 10, 2017 12:19 pm

Military Equity/Bond Allocation

Post by Yelvi » Sat May 26, 2018 5:58 pm

Hello all. First time posting but I've been lurking and soaking up info for awhile now. I'm just looking for a couple of opinions. I am currently 12 years into what will hopefully be a 20 year military career and 32 years old. How should I factor my military pension when considering equity/bond allocation in my Vanguard/TSP investments. My family and I live well below our means and currently anticipate my pension almost completely covering our living expenses. I am currently weighted 95/5 and heavily considering never purchasing bonds again. Is this wise? Thanks for your time!

User avatar
badbreath
Posts: 875
Joined: Mon Jul 18, 2016 7:50 pm

Re: Military Equity/Bond Allocation

Post by badbreath » Sat May 26, 2018 7:34 pm

In my opinion your fine, when your 45 or so start thinking of adding more bonds.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

pilot_error
Posts: 37
Joined: Sat Sep 17, 2016 12:10 pm

Re: Military Equity/Bond Allocation

Post by pilot_error » Sat May 26, 2018 10:50 pm

Makes sense to me, I think you are fine to not continue with bonds. Sometime between now and your 20 the market will likely chill out, and once we are past that dip, then consider bonds as your risk tolerance decreases in retirement.

It also matters if you plan to work once you are retired, if you are living off pension and taxable investments at 42, you may still won't those less volite bonds available to you. But I assume you are thinking of a second career.

User avatar
TierArtz
Posts: 68
Joined: Wed Jan 04, 2017 10:33 pm

Re: Military Equity/Bond Allocation

Post by TierArtz » Sat May 26, 2018 11:59 pm

I retired from the military and my pension makes me comfortable with a smaller percentage slice of bonds than I might choose if it were not for the pension. I'm in my mid-50s, still work in the same career field (I had a chair-borne military job), and am about age-30 in bonds. You are about the same right now with your 95/5 mix. A similar age-X plan might work for you over the next 12 or more years. Just keep on saving all you can (TSP, IRAs, and taxable) and decide if changes are needed when you know for sure if you will retire with a pension. Having implemented BH advice on fund placement, I've decided where my bonds are is more important to me than the selected percentage. To keep bonds out of my taxable account (tax minimization) and Roth IRA (maximal growth), my TSP and follow-on job 401k are both 100% bonds. If your Vanguard holding is not tax-advantaged, keep your bond slice in the TSP.

Savio
Posts: 28
Joined: Sun Nov 05, 2017 7:35 pm

Re: Military Equity/Bond Allocation

Post by Savio » Sun May 27, 2018 10:24 am

Your pension is "safe" money.

So if you are going to err on any side, err on the side of taking more risk/return with your investments.

Stay 90% or higher in equities your entire life.

Fishing50
Posts: 232
Joined: Tue Sep 27, 2016 1:18 am

Re: Military Equity/Bond Allocation

Post by Fishing50 » Sun May 27, 2018 9:53 pm

I think you are fine for now. With a military pension 95/5 or 100 equity is reasonable as long as you can stay the course during a downturn. I recommend total stock market Index and total intl stock market index in taxable accounts because you can hold them forever with tax efficiency.

In 4 or 5 years you need to decide your risk tolerance approaching retirement. If your satisfied the pension will meet your needs you can keep a high equity position. You'll need to consider the opposite too, if you have enough why keep playing?

We're 3 yrs from military retirement at 50yrs old. We're 65/35 now, having been 100% equity 4 yrs ago. We'll probably have a rising equity glide path in retirement.
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

Yelvi
Posts: 2
Joined: Fri Nov 10, 2017 12:19 pm

Re: Military Equity/Bond Allocation

Post by Yelvi » Sun May 27, 2018 11:56 pm

Thank you for all the replies. They have been helpful. I will continue the course with more confidence now.

Post Reply