Page 2 of 2 FirstFirst 12
Results 13 to 21 of 21

Thread: Help me retire early (a second time). Thxs!

  1. #13

    Join Date
    Oct 2008
    Location
    Stinking desert valley of bad air quality, AZ
    Posts
    2,450

    Default Re: Help me retire early (a second time). Thxs!

    Vicus,
    Sounds like you have a good plan going. Best of luck.

    One small thing about that “Tri-care medical insurance for the rest of my life for me and my spouse (and child till 26 if enrolled in college)”. You don’t have to worry about this for 18 years but should be aware. Based on the amount you stated it sounds like you have Tri-care Prime. Those premiums will increase over time. When you turn 65, it will automatically convert to Tri-care for Life. Tri-care for Life is free. The catch is you must enroll in Medicare part B to get it. This year part B cost $134 per month per person. That is $1608 per year. So, factor that in for both you and the spouse. Of course, the rules may be different 18 years from now and costs will surely be higher.

    I have no ideas for you on how to retire earlier except by lottery tickets each week. Sounds like you are on track to retire by 45.

    PO

  2.  
  3. #14

    Join Date
    Jul 2016
    Location
    Texas
    Posts
    1,817

    Default Re: Help me retire early (a second time). Thxs!

    Quote Originally Posted by Vicus View Post
    I own a home.
    Mortgage = 2781 a month (taxes/insurance included). I am paying an extra $1000 on top of that. $3800 a Month.

    So I will have coming in each year when I retire the following:
    $36660 = Military and VA
    $19200 = Police retirement after 53
    Total = 55860

    I have a military TSP account with around 27k in it that is in a lifecycle fund. I cannot contribute to it anymore.

    I have deferred Comp through the police. I have around 30k in there. They match up to 3000 a year. I usually put in around 4k a year to cover matching. This account should be well past 100k by 45.

    My wife and I both have Roth IRA's. Mine has around 15k in it and hers around 10k. We put in 1-2k each year in each account. Mainly like the funds in the Deferred Comp better but I like the diversity of having money in more then just one place.

    What else can I do to speed this up? I can work more overtime as my salary increases (which is does by 3 percent each year not counting cost of living increase). I plan to bust my butt over the next 6 years make it like I worked 9 cash flow wise. What else am I missing as hidden cost of retirement or big things that could increase my after employment cash flow.
    Have you considered whether or not working less and spending more time at home with family might make the job more bearable? You are doing well but it helps to enjoy the journey What does your wife think of your retirement plans?

    I agree with Boghie re: putting extra money in retirement accounts rather than house. If you itemize on your taxes, you may be reducing you mortgage interest deduction.

    If you retire at 45, you have 8 years before your police pension kicks in. So you are looking at $36,660/year and moving to new location and buying new house, which should reduce living expenses without a mortgage. With a substantial reduction in income, it may make sense to finance the house until your 2nd pension kicks in. When you sell the house, there will be real estate costs (~6-10%) that will be deducted. You need to factor in moving expenses once you decide where you are moving. You may want to factor in where your son plans to go to college, although you have expenses covered through GI Bill, there is substantial difference between instate and out of state tuition if they decide to go to State University where you are now--it might impact when you actually want to make the move. If you move out of the area, there will be travel cost associated with son coming home to visit for holidays.

    You don't have very much in retirement accounts ($27 TSP, $25 Roth, $30 401K) so you should focus on increasing both contributions and earnings.
    I recommend maxing out the Roth for both you and wife (8 years x 11K = $88K + earnings) Think of this as an emergency fund--you can withdraw contributions (taxes already paid) in certain situations and earnings grow tax free Taking Early Withdrawals from Your Roth IRA | RothIRA.com

    Although you can't contribute to TSP, you can still manage it. You didn't say which life cycle fund you have it in or whether it is traditional or Roth. It may be possible when you retire to roll your 401K into TSP or vise versa (don't know rules for your current plan), or all or part to outside IRA. But let's say you have combined $135K when you retire at 45 and start life expectancy payments the following year...you would start at ~$300/month ($3,600/year) using 6% RoR, e.g. https://www.tsp.gov/PlanningTools/Ca...ependentAge=46
    Only problem is that once you start, you have to continue until age 59.5 and a significant market downturn could impact the outcome. Alternatively you can't just turn it off once your pension kicks in at 53 and returns are generally variable, with the calculation being done each year based on end of year balance and age factor. You can change the assumptions but I suggest that you increase your current contributions to 10-15% of your salary

    I'm not sure it is advisable to purchase rental at same time as buying your home because for 8 years you have reduced cash flow and a house is least liquid asset (what if renters don't pay the rent or significant repairs are needed), especially if you are moving to a new area that you are unfamiliar with. I think it would be better to invest the funds and keep some in near cash assets until you are comfortable with your finances and your new location. One option is to buy a less expensive home to live in and later upgrade to better home and rent out the first home. You can also finance the home, which would give you more flexibility (deductible expense if you turn it into a rental). What if you or your wife end up hating the new location?

  4.  
  5. #15

    Default Re: Help me retire early (a second time). Thxs!

    Quote Originally Posted by PessOptimist View Post
    Vicus,
    Sounds like you have a good plan going. Best of luck.

    One small thing about that “Tri-care medical insurance for the rest of my life for me and my spouse (and child till 26 if enrolled in college)”. You don’t have to worry about this for 18 years but should be aware. Based on the amount you stated it sounds like you have Tri-care Prime. Those premiums will increase over time. When you turn 65, it will automatically convert to Tri-care for Life. Tri-care for Life is free. The catch is you must enroll in Medicare part B to get it. This year part B cost $134 per month per person. That is $1608 per year. So, factor that in for both you and the spouse. Of course, the rules may be different 18 years from now and costs will surely be higher.

    I have no ideas for you on how to retire earlier except by lottery tickets each week. Sounds like you are on track to retire by 45.

    PO
    Very useful information. I wasn't aware of the cost of Medicare part B. I will factor that into my plans. Thankfully that is after I am able to pull out must of my investments except Social security. Thank you very much.

  6.  
  7. #16

    Default Re: Help me retire early (a second time). Thxs!

    Quote Originally Posted by James48843 View Post
    The only thing I would offer is that you might want to think about owning rental property as a retirement income stream as well. Since you appear to be doing outstanding in the debt planning department, having a rental property that you manage may give you some advantages when you will be looking to write down some of that income in the future.

    Owning rental property is not for everyone, but I believe you are well positioned to investigate how you might benefit from owning a rental house, or a duplex or triplex. Just thinking out loud about your fantastic position, and how you can put your money to work for you.


    Sent from my iPhone using TSP Talk Forums

    Yep, this is the plan. (It's hidden in that wall of text). I plan to purchase two houses once I sell mine. One to live in and the other as rental property. I plan to live like 40 minutes for a decent size city and try to get a rental property close to the city so it's in higher demand for people who work out of the city ect. Would love to have an extra income for many years. When and if it becomes to much to manage I will sell the place for additional cash (probably when I don't have many years left).

  8.  
  9. #17

    Default Re: Help me retire early (a second time). Thxs!

    Quote Originally Posted by 2moryrs View Post
    Well done! You are well prepared for an enjoyable (2nd) Retirement!
    The only advice I can add is: Keep two eyes on what this administration MAY do to your TRICARE. You may think you have it for life, but our employer (aka The Government) has been known to break the promises that it made to attract people to join the military or some other public service agency. A case in point being considered by this administration and congress: forcing 76,000 USPS (United States Postal Service) retirees to pay for Medicare Part B in order to keep their FEHBP healthcare. And for those of us that are not USPS retirees, this could happen to us.
    Also, are there any grandparents? I know I hate being so far away from my 4 grandchildren.

    And, thank you for your service. I appreciate all I have because I know the sacrifices made by all who chose to serve this great country.

    Check out narfe.org legislative action center for more about keeping the benefits you earned.

    Best wishes to you and your family.
    My son has two grandpartnets, but one of them lives far but flies in whenever she wants. The other we try to visit every couple of years but we might be moving closer to her because the area in Tennessee/Kentucky is pretty cheap cost of living. But we don't have any other family and aren't so close that it would be an issue.

  10.  
  11. #18

    Default Re: Help me retire early (a second time). Thxs!

    Quote Originally Posted by evilanne View Post
    Have you considered whether or not working less and spending more time at home with family might make the job more bearable? You are doing well but it helps to enjoy the journey What does your wife think of your retirement plans?

    I agree with Boghie re: putting extra money in retirement accounts rather than house. If you itemize on your taxes, you may be reducing you mortgage interest deduction.

    If you retire at 45, you have 8 years before your police pension kicks in. So you are looking at $36,660/year and moving to new location and buying new house, which should reduce living expenses without a mortgage. With a substantial reduction in income, it may make sense to finance the house until your 2nd pension kicks in. When you sell the house, there will be real estate costs (~6-10%) that will be deducted. You need to factor in moving expenses once you decide where you are moving. You may want to factor in where your son plans to go to college, although you have expenses covered through GI Bill, there is substantial difference between instate and out of state tuition if they decide to go to State University where you are now--it might impact when you actually want to make the move. If you move out of the area, there will be travel cost associated with son coming home to visit for holidays.

    You don't have very much in retirement accounts ($27 TSP, $25 Roth, $30 401K) so you should focus on increasing both contributions and earnings.
    I recommend maxing out the Roth for both you and wife (8 years x 11K = $88K + earnings) Think of this as an emergency fund--you can withdraw contributions (taxes already paid) in certain situations and earnings grow tax free Taking Early Withdrawals from Your Roth IRA | RothIRA.com

    Although you can't contribute to TSP, you can still manage it. You didn't say which life cycle fund you have it in or whether it is traditional or Roth. It may be possible when you retire to roll your 401K into TSP or vise versa (don't know rules for your current plan), or all or part to outside IRA. But let's say you have combined $135K when you retire at 45 and start life expectancy payments the following year...you would start at ~$300/month ($3,600/year) using 6% RoR, e.g. https://www.tsp.gov/PlanningTools/Ca...ependentAge=46
    Only problem is that once you start, you have to continue until age 59.5 and a significant market downturn could impact the outcome. Alternatively you can't just turn it off once your pension kicks in at 53 and returns are generally variable, with the calculation being done each year based on end of year balance and age factor. You can change the assumptions but I suggest that you increase your current contributions to 10-15% of your salary

    I'm not sure it is advisable to purchase rental at same time as buying your home because for 8 years you have reduced cash flow and a house is least liquid asset (what if renters don't pay the rent or significant repairs are needed), especially if you are moving to a new area that you are unfamiliar with. I think it would be better to invest the funds and keep some in near cash assets until you are comfortable with your finances and your new location. One option is to buy a less expensive home to live in and later upgrade to better home and rent out the first home. You can also finance the home, which would give you more flexibility (deductible expense if you turn it into a rental). What if you or your wife end up hating the new location?
    Thanks! Great Info and I have some answers for you. So I may work where I move too if I get bored. But I doubt it. I will have worked 27 years and while I know many people are preprogramed to realize they are going to work 40+ years, that is just not me. I LOVE being at home. I love working out, going hiking, completing projects, ect. If I work anywhere it will be because of the benefits that fit me. I would go work at Lowes or Home Depot just to get the discount before I say landscape my backyard or whatever. Or I would go work at best buy for 6 months so that I can create a home theater room as a large discount. But 5 deployments and working the streets, my body is beat up. I don't want to work to the point where I have to retire because I medically need too. trying to ensure I don't need tons of surgeries shortly after I retire because of the wear and tear on my body.

    My wife wants me to retire as soon as I can. We love hanging out together (and not just saying that...we don't get on each others nerves. She not the type that needs her "space".)

    As for retirement accounts, I hear ya! I am about to put my money into them on overdrive. This is the first year I've really made this type of money and next year I make about 6 grand more a year for my final salary bump. On top of that I will most likely clear closer to 25k in overtime but did 15k just to be safe. Two years ago I was injured and only made 80% of this salary and last year I did two big home improvement projects which cost around 20 grand (new stamped concrete patio with geazebo and remodeled master bathroom with marble, dual showers, spa tub ect. But now my house is complete (wanted to enjoy living in it more and increase the value of the house).

    So with that I am going to drop about 15k more into retirement funds and another 10k in my Mortgage. As I gain in my salary and as I see how these new investments turn out, I will adjust as needed. But getting this house paid off is still my priority. But the house values in this area are rocketing. Microsoft, boeing, starbucks headquarters, amazon, Coscto headquarters are all in this area and google just moved here. My house is dead center drive to all these areas. So if I pay off 100k and my house goes up another 50-100k...I might just sell while the getting is good. I'll feel that out.

    As for moving to a place and not liking it. I plan to rent an apartment for 3-6 months. Something low end and do some traveling to our suspected near areas to live. Once we have decided we will buy the house. I also plan to do zero upgrades to that house *unless its required to make the place livable* until we been there a year and ensure this is where we wanna be. Also this allows me to see how much it cost to live a year while retired, make sure we are more then fine. Probably buy a rental property at that point also.


  12.  
  13. #19

    Join Date
    Jul 2016
    Location
    Texas
    Posts
    1,817

    Default Re: Help me retire early (a second time). Thxs!

    Quote Originally Posted by Vicus View Post
    So with that I am going to drop about 15k more into retirement funds and another 10k in my Mortgage. As I gain in my salary and as I see how these new investments turn out, I will adjust as needed. But getting this house paid off is still my priority. But the house values in this area are rocketing. Microsoft, boeing, starbucks headquarters, amazon, Coscto headquarters are all in this area and google just moved here. My house is dead center drive to all these areas. So if I pay off 100k and my house goes up another 50-100k...I might just sell while the getting is good. I'll feel that out
    A significant increase in home value could allow you to retire sooner but that may be a little harder with your son in school & it would require you to adjust your 2nd pension downward for planning purposes.. For Federal Taxes, you can exclude gain on the sale of primary residence of up to $250K/Single or $500K/Married filing jointly; I believe every 2 years. Make sure that you keep detailed records for all improvements you have or will make on your current house especially in a hot real estate market.

    Following website has very good information by state: https://www.retirementliving.com/taxes-by-state
    Just be careful to look at the detail since you are planning on retiring very early. Some state tax advantages apply at a certain age or are limited based on income or specific type of income for state income and/or property taxes. There are also some specific to military & military disability in many places. Since you are already living in state without a state income tax, make sure you know what to expect in any potential place you plan to relocate to.

  14.  
  15. #20

    Join Date
    Oct 2008
    Location
    Stinking desert valley of bad air quality, AZ
    Posts
    2,450

    Default Re: Help me retire early (a second time). Thxs!

    Quote Originally Posted by Vicus View Post
    Very useful information. I wasn't aware of the cost of Medicare part B. I will factor that into my plans. Thankfully that is after I am able to pull out must of my investments except Social security. Thank you very much.
    You are very welcome. This one kind of took me by surprise as I had already accepted that “free medical care for life” was not free but did not know it’s cost would increase by 268% for me and another 268% for the wife when she turns 65. This is based on $23.55/month each for Tri-care Prime v $134/month each for medicare part B.
    Quote Originally Posted by Vicus
    So I may work where I move too if I get bored. But I doubt it. I will have worked 27 years and while I know many people are preprogramed to realize they are going to work 40+ years, that is just not me.
    27 years! How about 50+ years? Pfaaah! Best of luck GySgt and I hope it all works out as planned.

    PO

  16.  
  17. #21

    Default Re: Help me retire early (a second time). Thxs!


    I shouldn't have much for living cost. We shop at discount stores, Kohls, commissary, Costco ect. We have Netflix and Sling TV (30 dollars a month for both). I also use an HD attenna. I don't have cable TV but have cable internet which is 60$ here. We have two hybrid sedans that are paid for. Cost of fuel is around 20$ every 14-15 days. I live in Washington State near Seattle. Cost of living is pretty high but so is the salary. I will probably be moving somewhere that the cost of living is half or more then half of what it is now. We mostly stay at home and play MMO's together and watch TV shows/movies. I have a pretty beast surround sound system so it's like going to the movies on the cheap. We will want to travel a decent amount in the future but not the first year. Just travel the new area where we live and get comfortable and see what our costs are.

    I upped my savings into my deferred comp and my two roth IRA's by an extra 1k a month (combined between the three). I have been able to get a lot of overtime that is atleast locked on for the next 5 months (adding around 3k more a month). That will go into my house/investments. So far on tracking and pushing the pace.

  18.  
Page 2 of 2 FirstFirst 12

Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
S&P 500 (C Fund)
S&P 500 INDEX,RTH (^GSPC)
DWCPF (S Fund)
Dow Jones U.S. Completion Total Stock Market Index (^DWCPF)
EFA (I Fund)
iShares MSCI EAFE Index (EFA)
AGG (F Fund)
iShares Lehman Aggregate Bond (AGG)
Source: https://finance.google.com/finance