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

  1. #1

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

    ***Disclaimer*** I posted this on other retirement websites that do not understand military pensions ect. But was a long post so I cut and paste. Sorry in advance if I explained some military stuff that is common knowledge to most people on here***

    This post is because I want to maximize my chances of retiring by the age of 45 (sooner if possible). I feel like my current plan is on that path but I am all about ways to improve.

    So will try to make this short and right to the numbers to create the least amount of confusion. If you have questions I will try to answer them below.

    I am current 37 years old. I am retired from the USMC. I retired after 17 years as a Gunny due to the Temp Early retirement act when they downsized in 2013. I am also at 70% disability via the VA. (go go 5 deployments). Here is what that provides me a month for the rest of my life.

    Retirement pay is $1512 a month.
    VA is $1542 a month. (basically 3050 combined a month).
    Tri-care medical insurance for the rest of my life for me and my spouse (and child till 26 if enrolled in college). Medical insurance is only $500 a year for the entire family. It gets taken out of my pension.

    I am currently on year 4 of my second career. I am a police officer and make around 90 grand a year before taxes. What I actually get paid is realistically around 5000$ a month. I also work a good amount of overtime and make an extra $15000 a year. (It's usually more but ill do worst case).

    So take home 60,000 + 15000 = 85000 a year.
    Va and Military Pension = 36600
    Total = 121,600 a year.

    I own a home.
    Mortgage = 2781 a month (taxes/insurance included). I am paying an extra $1000 on top of that. $3800 a Month.

    Now for the state I am with the Police I become "vested" in the state retirement plan after 5 years. I plan to quit at my 10-12 year mark. So that means I will get 20% of my HIGH FIVE YEARS salary (which they include department overtime) once I hit the age of 53. So from 45-53 I will NOT be getting this money. When I turn 53 I will get around $1600 a month (gains 3 % for each year after 53. I spoke with the state police retirement rep and we did a realistic estimate to come up with that number.

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

    So additional factors. I bought my house for 475k. Its currently worth around 580-620k Market. I owe around 350k left on it. I plan to have it down to 100k or less by 45.

    I get around 4k in taxes back each year. I put that all on the house.

    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.

    I have zero debt. Both cars are paid for and Zero balance on credit cards though I do have two credit cards both with 20k+ limits. Credit Scores are both around 770-790.

    My wife does not work. I have an 11 year old son. He will be 18 when I turn 45. I have the VA post 9/11 GI bill that was transferred to him and my wife. This means he has his 4 year degree taken care of and will get around 2100 dollars a month for housing as long as he is enrolled full time. They also give 600dollars for books. I do not have to plan to pay for college unless he goes to his Masters/Doctorate. (May make his butt get college loans at that point).

    My wife and I both have life insurance policies. Me 500k, her 350k. Both end around 65. My son has a 100k Term life that he can cash out in the future if he wants.

    Lastly I am not tied to ANY area. When I retire I want to move to a cheap/safe place to live. We are currently thinking around the Nashville area but far enough away from the city so that I NEVER have to deal with traffic. I have no intent to drive into a big city for any real reason. My house I bought here on the West coast for 475k would cost around 200k there. Gas/grocers reflect these deductions as well. But we are open to anywhere in the US minus Hurricane States and we don't like the East Coast, maybe Vermont and Maine are an option.

    I plan to sell my house. Make 400+k profit (thinking this will be closer to 600 but being low end just in case). Use half that money to buy a new house straight cash (retirement home). Use some of the remaining money to purchase a second home as a rental property for income. Everything else into savings. I would also like to have around 100-200k savings by the age of 45. Then on top of that my investments.

    But obviously the main perk to all this is the two pensions and the VA and basically free healthcare for life for me and my wife. I can also include Social Security as I have around 19 years of paid in SS. (they don't take out SS for my police job).

    So that is it. I know there are hidden cost. I don't want to work past 45. I hate work lol. I love my job but still hate work by default. I want to be young and enjoy retirement. I don't want to retire and not get to go out and have fun.

    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.

    Thanks in advance! I really want to make this work.


  2.  
  3. #2

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

    Vicus,

    Out-freakin'-standing !!! You're SO far ahead of most people, who never bother to plot a "way forward", and it sounds like you're making all the right decisions, and asking the right questions !!! Kudos to you !!!

    So you've done a great job at analyzing your potential income, expenses, etc...one question : What do you and the Wife want to do AFTER you retire at 45 ? Yeah, I know...work sucks ! Agree with you there !!! But this is the other half of the equation that you ALSO must address !!!

    Ya need to come up with a "Plan" or an answer to THAT question, too !!!

    Just sayin'...

    Best of luck to you !!!


    Stoplight...
    "Too old to rock and roll...too young to die"... - I. Anderson

  4.  
  5. #3

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

    First and foremost. Thank you for your service to this country. Both as a Marine, and as a law enforcement officer.
    Sounds like you have an excellent handle on the present, and a plan for the future. Outstanding effort on your part.
    As far a potential places to settle after retirement:
    What are your / your family's interests and hobbies? That would be a determining factor in picking a location.
    Weather preference? Sports interests?

  6.  
  7. #4

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

    Quote Originally Posted by RazorCat View Post
    First and foremost. Thank you for your service to this country. Both as a Marine, and as a law enforcement officer.
    Sounds like you have an excellent handle on the present, and a plan for the future. Outstanding effort on your part.
    As far a potential places to settle after retirement:
    What are your / your family's interests and hobbies? That would be a determining factor in picking a location.
    Weather preference? Sports interests?
    We prefer seasons but not rain all the time (like here in Seattle). Hiking is a big + for us but we mostly stay at home and watch movies and play games together. It's our main hobby together (gotta marry a gamer!). As for location main attraction is cost of living and having decent shopping withing 30 minutes of where we live. I wanna be far enough away to feel like we never have to deal with traffic but close enough that I don't have to drive an hour to hit up a Target or something.

  8.  
  9. #5

    Join Date
    Jun 2014
    Location
    Virginia
    Posts
    465

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

    Wow! You are a planner and you are in really good shape. I'm inclined to say relax and don't wish / work your life away <Grin>.
    You do have a lot of insurance but in your line of work that is probably good.
    In the future it may good to max out your social security by working as a security guard.
    However, you are such a good planner I would begin by using your TSP account as an investor's learning account.
    You can use this to learn about being fully invested in stocks and when to go to safety in bonds or treasuries.
    Learn more about investing and you will learn a trade that keeps you tuned to the world, keeps you busy and also pays the bills.
    Lots of good information on this site and elsewhere. I'm a retired investor who plays a conservative game trying to be in when things are good and not to heavily invested when they are not. It's interesting and keeps me on my game and it's especially rewarding when I know I have made as much or as more as I have withdrawn each month.
    Your such a good planner I wouldn't be surprised if you weren't a certified financial planner by the time you retire.
    Best of luck in the future and thanks for your service!

  10.  
  11. #6

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

    Quote Originally Posted by Vicus View Post
    We prefer seasons but not rain all the time (like here in Seattle). Hiking is a big + for us but we mostly stay at home and watch movies and play games together. It's our main hobby together (gotta marry a gamer!). As for location main attraction is cost of living and having decent shopping withing 30 minutes of where we live. I wanna be far enough away to feel like we never have to deal with traffic but close enough that I don't have to drive an hour to hit up a Target or something.
    Suggest Western North Carolina (Mountains) for retirement location. Great health care (for us old folks ya know), beautiful area, fairly low cost of living, etc. Check it out!

  12.  
  13. #7

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

    Quote Originally Posted by Scout333 View Post
    Suggest Western North Carolina (Mountains) for retirement location. Great health care (for us old folks ya know), beautiful area, fairly low cost of living, etc. Check it out!
    I will keep that in mind. I lived in Asheville for 3 years when I was on recruiting duty but that is not a good judge because I HATED recruiting duty lol. I found an article on yahoo today that showed how much house you get for 300,000 grand in each state. The top ten bang for your buck states are probably my first choices to live. I won't have anymore children to care about schools ect so it will be about living comfortable.

  14.  
  15. #8

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

    Quote Originally Posted by Vicus View Post
    Lastly I am not tied to ANY area. When I retire I want to move to a cheap/safe place to live. We are currently thinking around the Nashville area but far enough away from the city so that I NEVER have to deal with traffic. I have no intent to drive into a big city for any real reason. My house I bought here on the West coast for 475k would cost around 200k there. Gas/grocers reflect these deductions as well. But we are open to anywhere in the US minus Hurricane States and we don't like the East Coast, maybe Vermont and Maine are an option.
    You may want to consider Cheyenne WY.
    No State Income Tax, 5% Sales Tax & Low Property Taxes
    Just about everything is within 3-8 miles,
    They have a VA Medical Center, FE Warren AFB has an outpatient clinic.
    They have Target, Super Walmart, Sam's Club, and one Mall with couple of Department Stores
    45 Minutes from Fort Collins, CO, 1.5 - 2 Hours from Denver if you need large city or more shopping selections
    2 Hours from Denver International Airport (Cheyenne has very small airport)
    I liked the dry climate, high elevation, big skies; they do get snow, but usually doesn't last long, major weather complaint is the high winds in the winter

    I'm planning on visiting Cheyenne to see how things have changed since I left, but I'm seriously considering moving back there. There are too many people and it's too hot/humid here in San Antonio, but hard to move away from family right now.

  16.  
  17. #9

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

    Quote Originally Posted by Vicus View Post
    ***Disclaimer*** I posted this on other retirement websites that do not understand military pensions ect. But was a long post so I cut and paste. Sorry in advance if I explained some military stuff that is common knowledge to most people on here***

    This post is because I want to maximize my chances of retiring by the age of 45 (sooner if possible). I feel like my current plan is on that path but I am all about ways to improve.

    So will try to make this short and right to the numbers to create the least amount of confusion. If you have questions I will try to answer them below.

    I am current 37 years old. I am retired from the USMC. I retired after 17 years as a Gunny due to the Temp Early retirement act when they downsized in 2013. I am also at 70% disability via the VA. (go go 5 deployments). Here is what that provides me a month for the rest of my life.

    Retirement pay is $1512 a month.
    VA is $1542 a month. (basically 3050 combined a month).
    Tri-care medical insurance for the rest of my life for me and my spouse (and child till 26 if enrolled in college). Medical insurance is only $500 a year for the entire family. It gets taken out of my pension.

    I am currently on year 4 of my second career. I am a police officer and make around 90 grand a year before taxes. What I actually get paid is realistically around 5000$ a month. I also work a good amount of overtime and make an extra $15000 a year. (It's usually more but ill do worst case).

    So take home 60,000 + 15000 = 85000 a year.
    Va and Military Pension = 36600
    Total = 121,600 a year.

    I own a home.
    Mortgage = 2781 a month (taxes/insurance included). I am paying an extra $1000 on top of that. $3800 a Month.

    Now for the state I am with the Police I become "vested" in the state retirement plan after 5 years. I plan to quit at my 10-12 year mark. So that means I will get 20% of my HIGH FIVE YEARS salary (which they include department overtime) once I hit the age of 53. So from 45-53 I will NOT be getting this money. When I turn 53 I will get around $1600 a month (gains 3 % for each year after 53. I spoke with the state police retirement rep and we did a realistic estimate to come up with that number.

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

    So additional factors. I bought my house for 475k. Its currently worth around 580-620k Market. I owe around 350k left on it. I plan to have it down to 100k or less by 45.

    I get around 4k in taxes back each year. I put that all on the house.

    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.

    I have zero debt. Both cars are paid for and Zero balance on credit cards though I do have two credit cards both with 20k+ limits. Credit Scores are both around 770-790.

    My wife does not work. I have an 11 year old son. He will be 18 when I turn 45. I have the VA post 9/11 GI bill that was transferred to him and my wife. This means he has his 4 year degree taken care of and will get around 2100 dollars a month for housing as long as he is enrolled full time. They also give 600dollars for books. I do not have to plan to pay for college unless he goes to his Masters/Doctorate. (May make his butt get college loans at that point).

    My wife and I both have life insurance policies. Me 500k, her 350k. Both end around 65. My son has a 100k Term life that he can cash out in the future if he wants.

    Lastly I am not tied to ANY area. When I retire I want to move to a cheap/safe place to live. We are currently thinking around the Nashville area but far enough away from the city so that I NEVER have to deal with traffic. I have no intent to drive into a big city for any real reason. My house I bought here on the West coast for 475k would cost around 200k there. Gas/grocers reflect these deductions as well. But we are open to anywhere in the US minus Hurricane States and we don't like the East Coast, maybe Vermont and Maine are an option.

    I plan to sell my house. Make 400+k profit (thinking this will be closer to 600 but being low end just in case). Use half that money to buy a new house straight cash (retirement home). Use some of the remaining money to purchase a second home as a rental property for income. Everything else into savings. I would also like to have around 100-200k savings by the age of 45. Then on top of that my investments.

    But obviously the main perk to all this is the two pensions and the VA and basically free healthcare for life for me and my wife. I can also include Social Security as I have around 19 years of paid in SS. (they don't take out SS for my police job).

    So that is it. I know there are hidden cost. I don't want to work past 45. I hate work lol. I love my job but still hate work by default. I want to be young and enjoy retirement. I don't want to retire and not get to go out and have fun.

    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.

    Thanks in advance! I really want to make this work.
    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


  18.  
  19. #10

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

    P.S. You may get want to look at Traverse City, Michigan area. 300k can get you a smaller to mid-size lakefront property, if you enjoy lakes. Cost of living is lower than the coasts, but winters do get snowy here.

    Just an idea, anyway.


    Sent from my iPhone using TSP Talk Forums

  20.  
  21. #11

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

    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.
    NARFE The E is silent, BUT WE ARE NOT.

  22.  
  23. #12

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

    Vicus,

    You are looking very, very good, but personally, I would look at some things...

    I think you should be investing assets into 401(k)/IRA retirement accounts rather than moving it into the house. In your situation both are investments for retirement. There are differences however. Here is one: Does the extra $12,000/year give you much benefit? What is the interest savings on that $12K? Does that savings compound? My money is that if you put your planning skills to work you would find that a tax advantaged retirement account would be better - but, then again, you cannot pull the assets out of such an account till you are 60... Maybe use an outside account...

    You might be counting on pensions a bit too much. As folks around here know I do not trust pensions. You might think your city, state, or even federal pension is 100% safe - but I fully expect future politicians to jigger the numbers and effectively cut them. Just look at what happened to Social Security during the Clinton presidency - they started taxing it. Sneaky, eh. Remember, for government entities you pension is a line item on the annual budget. Politicians have spent decades over promising and underfunding public pensions - and private industry is little better. I would count on 75% of projected pension income...
    Lookin' up at the 'G Fund'!!!

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