Transitioning from Military

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Topic Author
retirementbound
Posts: 24
Joined: Wed Oct 19, 2016 11:10 am

Transitioning from Military

Post by retirementbound » Thu Oct 20, 2016 12:58 pm

Demographics:
Married Couple: M (37) F (42)
Dual Military both Officers
Children: son (15) daughter (2)
Current assignment: AZ
Planned retirement: CO
Male has high risk tolerance (Aggressive Growth) Female does not (Moderate)

Income:
Monthly Gross:
M: $8263.03 ($6,881.40 (base pay) + $1,128 (Housing allowance) + $253.63 (Sustenance Allowance))
F: $10,196.53 ($8,388.90 (base pay) + $1,554,00 (Housing Allowance) + $253.63 (Sustenance Allowance))
Total: $18,459.56

Estimated Pension:
Monthly Gross:
M: $3,569.72
F: $4,131.52
Total (Lowest): $7,701.24

M: $3,784.77
F: $5,416.29
Total (Highest): $9,201.06 (dependent on F promotion)

Investment Portfolio: $525,009

Fidelity Taxable:
Individual Stocks (purchased through Edward Jones over ~18 months (~2015-2016) learned valuable lesson on fees and commissions and owning individual stocks)

Disney (DIS) $3,282.12 (-$523.19)
Johnson & Johnson (JNJ) $5,193.45 (+$265.58)
3M (MMM) $3,908.85 (+131.91)
Proctor and Gamble (PG) $4,110.15 (+240.80)
Verizon (VZ) $3,870.79 (-$11.52)

Index Funds:
Fidelity Total Market Investor Share (FSTMX) $3,457.08 (-$42.91)

Male Fidelity Roth IRA:
Fidelity Freedom Index 2035 Investor (FIHFX) $88,111.28
Female Fidelity Roth IRA:
Fidelity Freedom Index 2035 Investor (FIHFX) $38,085.39
Male Thrift Savings Plan:
Lifecycle 2040 Fund $169,049.33
Female Thrift Savings Plan:
Lifecycle 2040 Fund $121,190.40
Lifecycle 2030 Fund $23,822.30
G Fund (Government Securitites) $58,303.25
Total $203,315.95

Description of 2030 fund: https://www.tsp.gov/InvestmentFunds/Fun ... L2030.html
Description of 2040 Fund: https://www.tsp.gov/InvestmentFunds/Fun ... L2040.html

Emergency Fund $2,000

Housing:
Estimated Value: $390,415 (Mortgage 30 year @ 3.75% $322,663.39)

Education Accounts:

Benefits are based on highest in state tuition for whatever state the child attends. New law states that children will receive in state tuition costs for veteran’s dependents within 3 years of separation. Will benefit son not daughter.
Male (15): Post 9/11 GI Bill (Should cover 100% of in state tuition for 4 years)
Female (2): Post 9/11 GI Bill (Should cover 100% of in state tuition for 4 years)

Additions to Investments (current will not extend into retirement):
Male Roth IRA: $5,500 Annually
Female Roth IRA: $5,500 Annually
Male TSP: $18,000
Female TSP: $18,000
Taxable Account: $12,000
Emergency Fund: $36,000 3,000 monthly until emergency fund totals $30,000 ~June 2017 ($3,000 month will transfer to taxable accounts once total is met.
Total Additions: $95,000 (annually) - $7916 (monthly)

Estimated Budget in retirement (In retirement):
Mortgage: $2,000
Utilities: $1,000
Vehicle Loan (0%): $700
Tithing: ~$800
Groceries: $1,000
Household items: $100
Toiletries: $100
Insurance: $200
Vacation/Entertain: $700
Clothing: $200
MISC: $200
Total (estimating high): $7,000

Key Points of Discussion:

Retirement:
Male will retire September 2018 or June 2019 (retirement rules are currently in flux)

Female will retire June 2019 (not promoted) or June 2021 (if promoted)

Goal is to transition from received income to retirement income to simulate living off of that income. For male begins January 2017 and female January 2018.

Will maintain medical (Tricare) into retirement

Plan is to move to CO after retirement. Decent job opportunity, own home there, great school, friends and church.

Other options are Texas due to abundant job opportunity, potential for lower cost of living, tax benefits.

Taxes: Married filing Joint
Retirement Income: $92,414.88 – $110,412.73
Federal 25% ($75,301 to $151,900) based on retirement income alone
Federal 28% ($151,901 to $231,450) if one person works
Would probably be in 33% tax bracket if both work (highly unlikely)

CO State 4.63% (income flat tax)
TX State no income tax

Investments:
No budget to continue additional investments if completely/semi-retired

If one person were to get a full time job intent would be to contribute majority to investments

Intent is to not touch investment portfolio until daughter graduates high school (2032)

Post Military retirement employment:
Male intends to pursue work to fill the gap of bills (~$7,000 monthly) and retirement pay minus taxes. Not sure the extent of that work (full time/part time) (not sure what he wants to be when he grows up).

Female does not intend to work.

Budget:
Currently tracking spending very closely to the penny to get a better understanding of our budget.

Information Requests:
Analysis of investment portfolio

Analysis of tax assessment (first time even considering taxes)

Thoughts or experiences associated with CO vs TX retirement

Overall advice on anything listed and retirement/transition in general

ColoradoRob
Posts: 39
Joined: Thu Aug 27, 2015 8:47 am

Re: Transitioning from Military

Post by ColoradoRob » Thu Oct 20, 2016 4:17 pm

You seem to have done some thorough analysis of your situation which likely means that you will be fine no matter where you go or what you do. One thing you should be aware of if you're considering moving to Colorado: the proposed state constitutional amendment to provide free health care for Coloradans through a 10% tax on top of our existing ~4.5% income tax. Here's more info- http://taxfoundation.org/article/colorado-amendment-69

Legalizing marijuana has brought a ton of homeless coming here from all over for the legal weed. If they pass Amend 69...who knows. Just thought you should consider that & watch the news to see if it passes before moving here.

spooky105
Posts: 133
Joined: Fri Aug 14, 2015 11:38 pm

Re: Transitioning from Military

Post by spooky105 » Thu Oct 20, 2016 11:10 pm

Here's what I'm seeing:

1) The low range of your pension more or less covers your estimated retirement expenses, even after factoring in ~15% loss due to state/federal taxes. This a guaranteed, inflation indexed source of income. Better still, your entire investment portfolio could disappear and you would still be fine.

2) Future big expenses are already addressed (housing is in your budget, education covered via Post 9/11, healthcare, etc.) and your out of pocket exposure is limited. Accordingly, your need to make large withdrawals from your investments are basically non-existent -- you can afford to reduce your withdrawals during bad years or even forgo them.

Considering the above, I would position your investment portfolio to 100% stocks. I know, it sounds crazy. But think of it this way: that pension, when considered as part of your portfolio, is equivalent to a bond. And that bond pays $84,000+ per year, indexed for inflation, for as long as you both live (and some portion continues should something happen to one of you*). Any equivalent bond portfolio (zero risk, with an annual inflation adjustment) dwarfs your $525,000 investment portfolio. Just as a quick example, a portfolio of 30 year Treasury Bonds (zero risk, but no inflation adjustment) would have to be about $3,360,000 based on a current yield of around 2.5% to pay a similar yield.

If the above is too bold, then I would at least position all the TSP assets into the furthest out lifecycle fund (currently 2050, about 85/15 stock/bond) and put the IRA assets in a similar dated fund. Continue to pour money into the Traditional IRA/TSP until retirement. And to the max extent possible, continue to save taxable funds and invest them in a Target Date fund (ditch the individual stocks).

At the end of the day, you are both golden. Folks easily retire (even with young kids) with investment portfolios in the high hundred thousands -- you'll have that plus the guaranteed pension.

*If you haven't already, look into the implications of dual mil pensions on the Survivor's Benefit Plan. Normally, you pay 6.25% of your retirement to guarantee your spouse receives 55% of your retired pay should you pre-decease him/her. This may not be necessary considering you each have your own pension.

Finally, would recommend you check out the Mr. Money Mustache blog and jlcollinsnh's stock series, particularly if the above push to stocks has you feeling uncomfortable.

Topic Author
retirementbound
Posts: 24
Joined: Wed Oct 19, 2016 11:10 am

Re: Transitioning from Military

Post by retirementbound » Thu Oct 20, 2016 11:44 pm

Thanks for the heads up. That is crazy. I was shocked that they target pensions and investment income. Also can't believe that even if you have insurance as in our case military tricare which covers almost 100% that we still have to pay. Amendment 69 would probably take Colorado off the retirement list.

Topic Author
retirementbound
Posts: 24
Joined: Wed Oct 19, 2016 11:10 am

Re: Transitioning from Military

Post by retirementbound » Thu Oct 20, 2016 11:52 pm

Spooky thanks for the review. I agree on considering our pensions as inflation adjusted bonds. All future investments are going to total stock market funds. I agree with the concept however my wife is more conservative. We are making progress since when we started she was 60% government securities in tsp. Baby steps lol.

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BL
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Joined: Sun Mar 01, 2009 2:28 pm

Re: Transitioning from Military

Post by BL » Fri Oct 21, 2016 12:23 am

As for risk, you have no need for risk, but you have the ability. So it boils down to what you desire. Pretty much any amount of equity since you are covered by pensions, assuming your lifestyle is not too far out of ordinary. Try to maintain a balance between what she is comfortable with and what you are. I don't see any harm in your being more aggressive and she being less so.

If you will be living (spending) on both incomes then I would certainly consider SBPs. If you only live on one of the incomes, then you probably would have no need.

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Van-Guard23
Posts: 261
Joined: Fri Jan 04, 2008 11:10 pm
Location: Physically in Central TX...mentally, Hawai'i

Re: Transitioning from Military

Post by Van-Guard23 » Fri Oct 21, 2016 3:13 am

retirementbound,
First of all congratulations on you and your wife's upcoming military retirement! My wife and I are retired dual military couples (Army officers with prior service as well) and are early retirees in Hawaii. I turned down Battalion Command in Italy (the process was more difficult than I thought it would be) to stay and retire in Hawaii while my wife served another 2 years stationed in Italy. It was our best decision for her to continue serving on Active Duty after I retired and stagger our military retirements as it allowed us to "test drive" the single income (not counting pension) for a couple of years to see how that would work for us. Just gave us additional confidence we would be fine financially as early retirees...that and Nords' blog.

Like you, we also meticulously kept track of our expenses prior to and during the first couple of years of retirement. With regards to your budget, specifically the budget for insurance, does that include health, dental, term life, auto, homeowners and possibly umbrella policy? $200 a month seems a bit low. When we retired, I was surprised how expensive dental insurance was compared to health insurance (Tricare Prime)...we opted for TRDP (Tricare Retiree Dental Plan/Program) after doing some analysis and comparisons. What we also learned, VGLI wasn't/isn't the best deal for life insurance after active duty and better term life plans from AAFMAA, Navy Mutual (if you qualify) and even USAA were available. The key, like for most things, is to shop around.

If you haven't already, read up on Nords' blog http://www.the-military-guide.com. Doug Nordman, aka Nords, is a retired US Navy submariner whose wife also retired from US Navy Reserves and they currently reside on Oahu as well. Nords has a treasure trove of info and advice for transitioning servicemembers and for those still serving.

VG23
Last edited by Van-Guard23 on Fri Oct 21, 2016 11:48 am, edited 1 time in total.
"I have only come here seeking knowledge. Things they wouldn't teach me of in college" | The Police "Wrapped Around Your Finger"

qwertyjazz
Posts: 1134
Joined: Tue Feb 23, 2016 4:24 am

Re: Transitioning from Military

Post by qwertyjazz » Fri Oct 21, 2016 5:51 am

Great analysis of means
Not so much on ends

What are your goals?
What are you saving for?
Pensions basically cover costs. You have not described any big ticket items. Are you saving for private college for kids, grad school, inheritance?
Once you have figured out costs of reach goals then you can figure out how much risk you are willing to take to reach them and how much work you want to do.
G.E. Box "All models are wrong, but some are useful."

ColoradoRob
Posts: 39
Joined: Thu Aug 27, 2015 8:47 am

Re: Transitioning from Military

Post by ColoradoRob » Fri Oct 21, 2016 8:34 am

retirementbound wrote:Thanks for the heads up. That is crazy. I was shocked that they target pensions and investment income. Also can't believe that even if you have insurance as in our case military tricare which covers almost 100% that we still have to pay. Amendment 69 would probably take Colorado off the retirement list.
I don't think Amendment 69 will pass; the polls have it lagging. Then again, I didn't think Colorado would have been foolish enough to pass legal weed. Since then our normally low USAA P&C policies have climbed every year. That unexpected increased expense has significantly dented our monthly cash flow. Also- I second what Van-Guard23 posted- consider AAFMAA/NavyMutual for life insurance (USAA-not so much of a great deal for life insurance) and check out Nord's blog. Best to you in retirement.

Topic Author
retirementbound
Posts: 24
Joined: Wed Oct 19, 2016 11:10 am

Re: Transitioning from Military

Post by retirementbound » Fri Oct 21, 2016 11:30 am

Van-Guard23 wrote:retirementbound,
First of all congratulations on you and your wife's upcoming military retirement! My wife and I are retired dual military couples (Army officers with prior service as well) and are early retirees in Hawaii. I turned down Battalion Command in Italy (the process was more difficult than I thought it would be) to stay and retire in Hawaii while my wife served another 2 years stationed in Italy. It was our best decision for her to continue serving on Active Duty while after I retired and stagger our military retirements as it allowed us to "test drive" the single income (not counting pension) for a couple of years to see how that would work for us. Just gave us additional confidence we would be fine financially as early retirees...that and Nords' blog.

Like you, we also meticulously kept track of our our expenses prior to and during the first couple of years of retirement. With regards to your budget, specifically the budget for insurance, does that include health, dental, term life, auto, homeowners and possibly umbrella policy? $200 a month seems a bit low. When we retired, I was surprised how expensive dental insurance was compared to health insurance (Tricare Prime)...we opted for TRDP (Tricare Retiree Dental Plan/Program) after doing some analysis and comparisons. What we also learned, VGLI wasn't/isn't the best deal for life insurance after active duty and better term life plans from AAFMAA, Navy Mutual (if you qualify) and even USAA were available. The key, like for most things, is to shop around.

If you haven't already, read up on Nords' blog http://www.the-military-guide.com. Doug Nordman, aka Nords, is a retired US Navy submariner whose wife also retired from US Navy Reserves and they currently reside on Oahu as well. Nords has a treasure trove of info and advice for transitioning servicemembers and for those still serving.

VG23

Thanks for the advice on the insurance. That is something we haven't looked into. I hate to say it but the whole learning curve on FIRE has only occurred in the last 60 days. Yahoo had an article on "1500 days" and their blog which led me into this world. Since then it has been fast and furious trying to restructure and learn. I have been on the-military-guide.com, read Nords' book. Just got done reading the Boglehead's guide to investing and been sponging as much from blogs, podcasts, and sites as possible.

That insight is what prompted me to post.

The staggered living on pay/retirement test drive is exactly what we are going for. Ideally my wife will get promoted and give us a couple more years to save, invest, and adjust to the lower living standard.

I am not overly concerned with our situation and truly know we are in an amazing situation, but spending 20+ years working out all the little details brings anxiety to the situation. Actually having to choose whether to work or not, where to work/live, and what to do is kind of overwhelming.

If only I could get my wife on board to sell everything move into an RV and travel until we find a place we like.

Topic Author
retirementbound
Posts: 24
Joined: Wed Oct 19, 2016 11:10 am

Re: Transitioning from Military

Post by retirementbound » Fri Oct 21, 2016 11:41 am

qwertyjazz wrote:Great analysis of means
Not so much on ends

What are your goals?
What are you saving for?
Pensions basically cover costs. You have not described any big ticket items. Are you saving for private college for kids, grad school, inheritance?
Once you have figured out costs of reach goals then you can figure out how much risk you are willing to take to reach them and how much work you want to do.
I agree with that.

The one thing we are pretty set on is that there are not any big ticket items at least from a material perspective. Our costs will be vacationing.

Education - Anything above and beyond the GI bill for the kids is their responsibility. Our son will be our guinea pig. We are looking at Air Force reserves since his intended career field is offered which would pay for undergrad and keep GI Bill for grad school. Also working with him to get grants and scholarships to again save the GI Bill for future education.

Inheritance - This is something we talk about in broad strokes. Since we won't really need our investments the intent is to just let it grow until we either find something we want to buy (most likely big ticket travel). I would prefer to gift money throughout their lives during milestones or at some point annually to see them enjoy it. I know how hard I have worked and the ethic it has ingrained in me. I want them to earn their way but hopefully with less mistakes and beginning earlier than I did.

The biggest goal monetarily is to ensure that we are not a burden to our families at any point financially. I believe there are aspects of our life we can cut back on but the one thing we are not willing to sacrifice for savings is experiences.

Topic Author
retirementbound
Posts: 24
Joined: Wed Oct 19, 2016 11:10 am

Re: Transitioning from Military

Post by retirementbound » Fri Oct 21, 2016 11:52 am

ColoradoRob wrote:
retirementbound wrote:Thanks for the heads up. That is crazy. I was shocked that they target pensions and investment income. Also can't believe that even if you have insurance as in our case military tricare which covers almost 100% that we still have to pay. Amendment 69 would probably take Colorado off the retirement list.
I don't think Amendment 69 will pass; the polls have it lagging. Then again, I didn't think Colorado would have been foolish enough to pass legal weed. Since then our normally low USAA P&C policies have climbed every year. That unexpected increased expense has significantly dented our monthly cash flow. Also- I second what Van-Guard23 posted- consider AAFMAA/NavyMutual for life insurance (USAA-not so much of a great deal for life insurance) and check out Nord's blog. Best to you in retirement.
This seems like something that if it doesn't succeed this year CO may continue to try. I will continue to monitor the situation. Either way this topic has prompted discussion to open up our options on where to settle down.

We were very fortunate to develop some good friendships and a positive church community. The place we lived in was good with a good school. Having the entire US as an option if a blessing and a curse. I have too many options and without the Army to tell me what to do makes it challenging. We have always made the best of every situation even when the location didn't link up with what we wanted.

ColoradoRob
Posts: 39
Joined: Thu Aug 27, 2015 8:47 am

Re: Transitioning from Military

Post by ColoradoRob » Fri Oct 21, 2016 1:40 pm

retirementbound wrote:
ColoradoRob wrote:
retirementbound wrote:Thanks for the heads up. That is crazy. I was shocked that they target pensions and investment income. Also can't believe that even if you have insurance as in our case military tricare which covers almost 100% that we still have to pay. Amendment 69 would probably take Colorado off the retirement list.
I don't think Amendment 69 will pass; the polls have it lagging. Then again, I didn't think Colorado would have been foolish enough to pass legal weed. Since then our normally low USAA P&C policies have climbed every year. That unexpected increased expense has significantly dented our monthly cash flow. Also- I second what Van-Guard23 posted- consider AAFMAA/NavyMutual for life insurance (USAA-not so much of a great deal for life insurance) and check out Nord's blog. Best to you in retirement.
This seems like something that if it doesn't succeed this year CO may continue to try. I will continue to monitor the situation. Either way this topic has prompted discussion to open up our options on where to settle down.

We were very fortunate to develop some good friendships and a positive church community. The place we lived in was good with a good school. Having the entire US as an option if a blessing and a curse. I have too many options and without the Army to tell me what to do makes it challenging. We have always made the best of every situation even when the location didn't link up with what we wanted.
Yes, CO may put it on the ballot again if it doesn't pass. This state is evolving and it worries me where it is heading. That kind of changing landscape can undermine one's basic assumptions for moving here (increased taxes, expenditures, fees, etc). One more thing to consider if you move to CO is snow. It never bothered me until recently when I hit mid-40s. Now, running the snow thrower on the driveway is a giant pain. Of course TX has heat. But, you don't have to shovel heat.

As I see that you are reading FIRE bloggers, you may want to check out GoCurryCracker (http://www.gocurrycracker.com/) specifically his posts titled "Never Pay Taxes Again" and "GCC vs The RMD" which may aid you in deciding if you or both should continue working after active duty retirement. If I have his story right---he periodically converts chunks of his trad401k to Roth IRAs and lives on the dividends without paying (much) tax on the conversion because he has no 'income' from traditional employment. Humbly, it seems to me that you are in a enviable situation where you could live off of your pensions without working and possibly doing something similar. But, only as far as you are able to achieve whatever life-goals you have set based on projected pension. Maybe you both have worked enough? It is good to read that you are so blessed with a positive church community. May I suggest that wherever you move, to make that a keystone of your new life. Finally, you will be fine-do not worry or fret about what to do in retirement.

qwertyjazz
Posts: 1134
Joined: Tue Feb 23, 2016 4:24 am

Re: Transitioning from Military

Post by qwertyjazz » Fri Oct 21, 2016 7:24 pm

retirementbound wrote:
qwertyjazz wrote:Great analysis of means
Not so much on ends

What are your goals?
What are you saving for?
Pensions basically cover costs. You have not described any big ticket items. Are you saving for private college for kids, grad school, inheritance?
Once you have figured out costs of reach goals then you can figure out how much risk you are willing to take to reach them and how much work you want to do.
I agree with that.

The one thing we are pretty set on is that there are not any big ticket items at least from a material perspective. Our costs will be vacationing.

Education - Anything above and beyond the GI bill for the kids is their responsibility. Our son will be our guinea pig. We are looking at Air Force reserves since his intended career field is offered which would pay for undergrad and keep GI Bill for grad school. Also working with him to get grants and scholarships to again save the GI Bill for future education.

Inheritance - This is something we talk about in broad strokes. Since we won't really need our investments the intent is to just let it grow until we either find something we want to buy (most likely big ticket travel). I would prefer to gift money throughout their lives during milestones or at some point annually to see them enjoy it. I know how hard I have worked and the ethic it has ingrained in me. I want them to earn their way but hopefully with less mistakes and beginning earlier than I did.

The biggest goal monetarily is to ensure that we are not a burden to our families at any point financially. I believe there are aspects of our life we can cut back on but the one thing we are not willing to sacrifice for savings is experiences.
Then you do not have much need to take risk and the ability to play it safe with a set it and forget it plan - any reasonable plan should work - do not sweat it that much and use money to not have to worry
Figure out the next stage of your life and not the money part except as an after thought

Save the world - build something cool - be there for your family and just have fun

Congrats
G.E. Box "All models are wrong, but some are useful."

DTSC
Posts: 1185
Joined: Mon Oct 20, 2008 9:47 am
Location: Illinois

Re: Transitioning from Military

Post by DTSC » Fri Oct 21, 2016 9:12 pm

Thank you for your service.

You might want to check out this website - blogs by an early retired Navy officer, Doug Nordman

http://the-military-guide.com/

NoGambleNoFuture
Posts: 309
Joined: Tue Feb 02, 2016 8:17 pm

Re: Transitioning from Military

Post by NoGambleNoFuture » Sat Oct 22, 2016 2:30 am

Don't have anything to add on top of previous posters but wanted to say thank you for your service to our country. I appreciate you.

mouth
Posts: 173
Joined: Sun Apr 19, 2015 6:40 am

Re: Transitioning from Military

Post by mouth » Sat Oct 22, 2016 10:59 am

You've gotten great advice so far so I see no point in repeating what other's have said.

I will however add two things ...

1) START NOW making sure ALL possible medical issues are WELL documented. You will be VERY surprised what will qualify for a disability rating. I have two things that I had no idea would be rated. I didn't even claim them! I claimed others stuff, but not those. I'm just lucky they were documented, the VA saw them, and the VA wrote back that I should submit a claim. Ask for what you deserve and get what you deserve, nothing more ... but know that it can make a big difference. If one of you ends up over 50% rated Texas will quickly pop to the top of your list because they have a lot of benefits that are triggered at 50% ... Austin is my likely destination.

2) From your numbers I was basically at half your situation on the male side in 2014. That is, O-4, single, half the savings, no debt, but no kids. Most relevant though was that I was a FIRE newbie at about 90 days out from retirement (on my very long terminal :) ) In that regard you're way ahead of me! I learned the term FIRE and was agonizing if I should move out of the DC area or not, work or not, etc.

As I consumed the many FIRE and military transition forums and talked to folks who, like me now were 2-years transitioned, one theme was clear ... you can always stop working after you leave the military, but it gets harder and harder to start again. You have the resources all locked and loaded to help you the most during your transition, your skills are the freshest they will be, your professional network is the freshest it will be, and you will be at your peak earning potential years age wise. Even working just 2-3 years and then finally calling it quits for good can make a HUGE difference in your savings account especially if you keep your lifestyle under check and bank as much as possible. My net worth curve has taken a very nice upward bend!

I just passed my 2-year anniversary at my employer. Luckily I'm very happy with them and my client and will keep going a little longer. Ideally I'd get them to move me to Austin soon, do another year to settle in, and be done. Or, they can piss me off tomorrow, or metro traffic will push me too far, and I know I can just walk away. It is an AMAZINGLY different mind set going to work knowing you have the freedom to walk if you don't like it anymore. For that matter its an amazing mindset to know you can go find what you like doing because you don't HAVE to do something you don't like.

I encourage you to try out that experience. It's rewarding, profitable, and completely on your terms and timeline.

Topic Author
retirementbound
Posts: 24
Joined: Wed Oct 19, 2016 11:10 am

Re: Transitioning from Military

Post by retirementbound » Sat Oct 22, 2016 2:38 pm

mouth wrote:You've gotten great advice so far so I see no point in repeating what other's have said.

I will however add two things ...

1) START NOW making sure ALL possible medical issues are WELL documented. You will be VERY surprised what will qualify for a disability rating. I have two things that I had no idea would be rated. I didn't even claim them! I claimed others stuff, but not those. I'm just lucky they were documented, the VA saw them, and the VA wrote back that I should submit a claim. Ask for what you deserve and get what you deserve, nothing more ... but know that it can make a big difference. If one of you ends up over 50% rated Texas will quickly pop to the top of your list because they have a lot of benefits that are triggered at 50% ... Austin is my likely destination.

2) From your numbers I was basically at half your situation on the male side in 2014. That is, O-4, single, half the savings, no debt, but no kids. Most relevant though was that I was a FIRE newbie at about 90 days out from retirement (on my very long terminal :) ) In that regard you're way ahead of me! I learned the term FIRE and was agonizing if I should move out of the DC area or not, work or not, etc.

As I consumed the many FIRE and military transition forums and talked to folks who, like me now were 2-years transitioned, one theme was clear ... you can always stop working after you leave the military, but it gets harder and harder to start again. You have the resources all locked and loaded to help you the most during your transition, your skills are the freshest they will be, your professional network is the freshest it will be, and you will be at your peak earning potential years age wise. Even working just 2-3 years and then finally calling it quits for good can make a HUGE difference in your savings account especially if you keep your lifestyle under check and bank as much as possible. My net worth curve has taken a very nice upward bend!

I just passed my 2-year anniversary at my employer. Luckily I'm very happy with them and my client and will keep going a little longer. Ideally I'd get them to move me to Austin soon, do another year to settle in, and be done. Or, they can piss me off tomorrow, or metro traffic will push me too far, and I know I can just walk away. It is an AMAZINGLY different mind set going to work knowing you have the freedom to walk if you don't like it anymore. For that matter its an amazing mindset to know you can go find what you like doing because you don't HAVE to do something you don't like.

I encourage you to try out that experience. It's rewarding, profitable, and completely on your terms and timeline.

I appreciate the insight. I feel that working after retirement is a huge plus. I like the stimulation of work and the challenge. I also feel that moving to a potentially new location with a job in hand will make the transition easier and less stressful.

I also agree that a couple of years with the ability to just bank an entire paycheck will allow us to not only increase our savings greatly but settle into living on our pensions.

vagabond76
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Re: Transitioning from Military

Post by vagabond76 » Sat Oct 22, 2016 3:55 pm

We are in a very similar situation, only a few years further out and we have three kids between the ages of 12 and 15.

Dual officers (both O-5s, 5 and 8 years from retirement); similar TSPs and investment accounts, and two Post 9/11 GI Bills to pay for the kids' college. We also have three rentals to supply additional income. Instead of paying out of pocket for the third child to go to college, my plan is to use the housing allowance to purchase condos for the kids and they can rent rooms to other students. That extra income will pay for the third child's education. That is something you might want to think about.

We have no interest in working post-military. We have a house on the beach in Destin, Florida, that will be our "home base" after retirement from the Air Force. We also plan to get a condo in the Colorado mountains as a vacation home. We already have a small Class B RV to get from one place to the other, and everywhere else in the country we would like to see.

I am confident that we can afford this lifestyle on just the two retirement pensions and won't ever have to dip into the investment accounts or use the rental income, but they are there as a cushion. More likely those assets will become multigenerational wealth. I hope we can replace the "stimulation of work" with a fulfilling lifestyle of travel, exercising, and watching the kids make it on their own.

One note about the Survivor Benefit Plan--I conclude this is an unnecessary expense for dual military pensioners. When one spouse dies, the other still keeps his or her own pension. The cost of the plan is a flat percentage, which means as your retirement check increases every year, the cost does as well. Conversely, the value of the plan decreases every month as you get one month closer to the end. I know that sounds morbid and I wish every service member a long and happy retirement, but it is the truth.

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BL
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Re: Transitioning from Military

Post by BL » Sun Oct 23, 2016 12:15 pm

SBP is paid up after 30 years.

lemme think
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Re: Transitioning from Military

Post by lemme think » Mon Oct 24, 2016 8:11 am

Another dual retired military couple here! You have already received a lot of great advice, I will add some from our personal experience.

GI Bill -- if you haven't already, make sure you give a portion of each GI Bill to each of your children, even if you give 35 months to one and 1 month to the other. This will give you complete flexibility with both GI bill entitlements, because you can adjust the number of months for each dependent at any time, but you can not add dependents after retirement (unless the rules have changed). This will allow you to adjust if one child receives full scholarship, or only uses a portion of the entitlement. GI bill does use actual months enrolled in school, (we could only transfer one GI bill, split evenly between two kids) and we found that 18 months of GI bill actually covered our oldest for his first 5 semesters. A pleasant surprise!

SBP -- this was a tough one for us. Our nest egg was substantial when we both retired, and we lived within our combined pensions. If one of us were to be left a survivor early into our retirement, it would much harder than if it were to occur after two or more decades of portfolio growth, We settled on taking the "child only" option (our youngest was 4 when we had both retired). MUCH lower cost than the spouse option, would pay out until youngest reached 23 (as long as a full time student), and would provide enough cushion for the survivor.

Best of luck!

RetiredMarine
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Re: Transitioning from Military

Post by RetiredMarine » Mon Oct 24, 2016 5:26 pm

Another dual officer retired family here - we have 3 kids, ages 9 to 22. I retired a little over 3 years ago and my spouse retired recently. Just a few additional thoughts:

As previously mentioned, take a good look at all insurance requirements. May want to add umbrella insurance if you don't have it and you may well need a Tricare Supplemental if there's no Tricare Prime wherever you land.

Also, ensure budget reflects sufficient flexibility for kid's activities, gifts, and house/car maintenance. And regarding your move, of course pay attention to other taxes like property, sales, and personal property as they can differ greatly especially property taxes.

Not too long before I retired we went from 100% stock funds to a 50/50 stock/bond fund balance for a couple reasons: plan to use some portion of the portfolio (extent still uncertain) for significantly increased travel (already have taken many more trips since I retired - still have to work around school schedule though for awhile), and not sure what kind of legacy we're interested in leaving so just leaving things a little more moderate for now.

Concur with those who recommend against SBP for dual military officers especially if you have a decent portfolio (and consider getting a term life insurance policy as well - Navy Mutual Aid is pretty solid).

Regarding post-retirement, I worked for awhile at a defense contractor but got tired of that and am currently content to be a parent/volunteer/travel/exercise/read/etc (as is my spouse). Didn't take too long before I was comfortable with it, but may still re-engage in the workforce after a move next year (spouse may as well).

Biggest worries clearly should revolve around what to do with your time as the resource situation shouldn't be much of an issue unless you have any significant lifestyle creep.

Good luck and take care.

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