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Excessive? how so. I will be making around 56k a year in pensions. While that is easy to live on I wouldn't call it excessive. I would like to become excessive for sure so I can go on more trips ect, but I don't feel that it's excessive. But I want it to be!
I retired on $15K and live nicely and happily.
I see people post here who are terrified if they don't have $4M , so they save up $4M and are afraid they're going to lose it or have to spend it.
I wonder if they were ever happy because money is the poor mans measure of success.
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.
You are doing very well for someone your age - definitely in the minority. My comments below
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.
Pay off your house as early as possible - for sure before retirement.
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.
You have debt - your mortgage. After paying off your home and before you receive Police retirement - put as much as your budget will allow into your Roth accounts.
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.
Your call - pick a rural area - By the time you retire the Boomers retirement home will all be on the market.
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!
You can help get your wife a PT job - keeping in mind that she only needs to work PT. You could work more OT but that would detract from prime family time - stay where you are. You should be sure to diversify your retirement investments - real estate, stocks, bonds, commodities - be sure you don't put too many eggs in one basket.
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 $500 a year for the entire family. It gets taken out of my pension.
I am currently on year 4 of my second career. I am in law enforcement and make around 90 grand a year before taxes. What I actually get paid is realistically around 5000$ 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 Law enforcement 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.
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 $500 a year for the entire family. It gets taken out of my pension.
I am currently on year 4 of my second career. I am in law enforcement and make around 90 grand a year before taxes. What I actually get paid is realistically around 5000$ 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 Law enforcement 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!
Looks like you have a plan, and are evaluating all potential income streams, which is good.
However, if I was in your shoes, I would be wary of the military benefits staying intact.
I also retired as an E-7 after 21 years, and the VA evaluated me at 45% for service related conditions (I hate calling it "disability"). I personally did not qualify for concurrent receipt (retired in 2006) as my evaluation was under 50%. There is a push to kill the military concurrent receipt benefits, and I feel it may be successful, primarily due to budget constraints and ongoing deficits. Here is a link regarding that:
If this does come to pass, that $1512.00 you see each month may disappear unfortunately.
I have a friend that works for the VA in Martinsburg, W. Va, and she has told me that vets get rescreening letters, and their service related condition benefits will often get dropped, especially if they are younger and in second career fields that require certian physical demands. Like law enforcement.
And the Tricare for life? I found out I was kicked off of Tricare Prime in 2012, and I wasnt even notified. Still paying the premiums though, come right out of my military annuity! Tricare basic covers 75% of any claim, but only after co-pays and other deductibles. And it is now required to roll Tricare basic over to Medicare at 65, but who knows how that will stand up to the ongoing tweaking of healthcare in the U.S.
You are running just about parallel to DH and we are 50.
Medically retired Veteran at 19.5 years, so he won't get his pension until 60 or something?
He was Guard, so he was also Police Officer and will retire next July. This is a significant high 3 year for him otherwise he would have retired in Jan.
Here we have a financial adviser who specializes in law enforcement and firefighters. See if you have one. She knew EVERYTHING and told us exactly what to do and when to do it.
I try to make sure we take advantage of all the benefits offered such as FlexPlans (pre tax accounts to pay anything medical related), contribute to deferred compensation, etc.
Pay down everything you can (we have paid off all cars, credit cards etc).
Ironically, we will probably make more money in retirement, if not now, definitely when we hit our 60s.
Tennessee is somewhere we looked at due to the tax friendliness of the state and low cost of living. Too far away from the West Coast for us now. We visited and liked Sedona, AZ and going to look at Carson City / Genoa in July. We want to be able to travel without flying over an ocean every time.
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I see people post here who are terrified if they don't have $4M , so they save up $4M and are afraid they're going to lose it or have to spend it.
I wonder if they were ever happy because money is the poor mans measure of success.
Money is a tool. Sounds like sour grapes when you put down people with money, just having it doesn't mean they worry about it.
You can be happy and have money, it's much easier to be happy with it!! Doesn't mean you value your family and friends less, can't enjoy a sunset or here the joy in music.
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Thanks everyone for all the info! Really is helpful and giving me some great in sight. But just a note my wife is not going to work. Not that she won't, she has 4 degrees and is one of the smartest people I know but the work she is doing with our son atm is priceless. He is an advance student and needs alot of extra time devoted to that. She is currently in all honor classes and working at a level grade ahead. She supplements the education he doesn't receive from normal school.
I also want to stress that the main reason I am paying off the Mortgage is that I DO NOT want to work past 45. So even if the housing market tanked and I am under what I paid for the house, I wouldn't have to pay mortgage and I could just live in the house until the Market went back up. As long as I have a mortgage payment, early retirement is not an option. If all goes well then I will sell the house for a profit and move to a better market and be on my marry way. If not I will still not have to work and just wait for a good time to sell my home. If you still think this is a bad idea please let me know why
Thanks everyone for all the info! Really is helpful and giving me some great in sight. But just a note my wife is not going to work. Not that she won't, she has 4 degrees and is one of the smartest people I know but the work she is doing with our son atm is priceless. He is an advance student and needs alot of extra time devoted to that. She is currently in all honor classes and working at a level grade ahead. She supplements the education he doesn't receive from normal school.
I also want to stress that the main reason I am paying off the Mortgage is that I DO NOT want to work past 45. So even if the housing market tanked and I am under what I paid for the house, I wouldn't have to pay mortgage and I could just live in the house until the Market went back up. As long as I have a mortgage payment, early retirement is not an option. If all goes well then I will sell the house for a profit and move to a better market and be on my marry way. If not I will still not have to work and just wait for a good time to sell my home. If you still think this is a bad idea please let me know why
That is exactly right, pay off your house and just pay property taxes, and you don't need a high income to retire.
The only thing I can think of (besides noticing that term life insurance cannot be cashed out, which has already been pointed out) is that you're spending a LOT of money living on the west coast for another 8 years. If you're interested in owning a rental when you retire, now is a great time to buy in many parts of the country. By moving to where you want to retire sooner, you could not only drastically cut your COL, save on Mortgage interest, but also start that passive income stream sooner.
Also, your son may become attached to wherever he grows up in the next 8 years, which could cause unneeded strife if you sell your home the second he goes off to college. If you sell your house, move to your retirement home and buy a nearby rental now, you won't have to worry about the real estate markets being drastically different in 8 years, and it will be one less major life change to make when your son graduates.
You owe, what I would consider to be a LOT on your current home. IMO West Coast real estate prices are inflated, if there were a major natural or economic disaster in your area would that ruin your plans?
Also all of the Atlantic coast states are technically "hurricane states". Hurricane Sandy destroyed much of MD, NJ and even farther north. If stable pleasant weather is important to you then perhaps it's worth it to you to stay on the west coast, in which case I would pay down that $350K mortgage ASAP. Most of the rest of the US has one or more very unpleasant season and risk of hurricanes, tornadoes, flooding, brutal winter storms etc. The few places with year-round pleasant weather and low risk of natural disasters are very expensive (Sedona, Asheville).
I think it's wise to invest as much into your son as possible, and you probably should budget to help him with expenses that aren't covered by the GI program. Master's degrees are the new Bachelor's in most fields; it's difficult to get a well paying job without one, and grad school is far more costly than a four year degree. I think this would work out to your and your wife's benefit in the long run, because the last thing you probably want is to have to support your son when he can't find a job and/or can't afford to live on his own while paying down grad school loans. Many student loan servicers have become predatory in recent years and the current administration is back peddling on the small progresses that were recently made. At this point it does not look good for the next generation of student loan borrowers.
You have more retirement income than the average person, but with a large chunk of it being dependent on government funding it's prudent to over-prepare in this political climate.
Last edited by sammichsammich; 05-11-2017 at 10:53 PM..
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