Fully retire after military service?

2015-04-11T14:02:30-04:00

Has anyone fully retired after military service? In my line of work I see a lot of retired military working GS jobs into their late 50s and 60s and all seem burned out. It would seem that with a little forethought and planning one could easily retire by age 50. I'm not talking about laying around the house doing nothing, but rather not having to work for money because you need to. Doug Nordman has written the book military finance or something like that in there are a lot of early retirement forums and blogs such as Mr. Money mustache. I am just curious why more people don't seem to do this or maybe they have it we just don't hear about it. Perhaps they are on this board :-)

Response by CW5 Private RallyPoint Member made Apr 11 at 2015 5:30 PM

2015-04-11T17:30:20-04:00

I fall into that category of folks who retired and are now working a GS job, LTC Private RallyPoint Member. I don't feel burned out. I'm still contributing. And I will work till my early 60s, Lord willing.

I didn't plan well enough to retire after the military. Well, that may not be entirely true. I did not plan well, but I could have retired when I left the military - as a CW5 (Ret) over 30 - but I chose to continue working and improve (I hope) my quality of retired life when I do retire.

There are so many factors that go into retirement. Many more in my case that I'm not mentioning here. Bottom line though is that I didn't plan decades ahead for retirement, and I should have.

Here's a link to the book you mentioned (I think):

http://www.amazon.com/Military-Guide-Financial-Independence-Retirement/dp/ [login to see] /ref=sr_1_1?ie=UTF8&qid= [login to see] &sr=8-1&keywords=doug+nordman

And there's a series of RallyPoint command posts by SFC Private RallyPoint Member on investing that would dovetail nicely with this thread:

https://www.rallypoint.com/command-post/tactical-and-strategic-investing-part-i-of-iv

Response by MAJ Ken Landgren made Apr 12 at 2015 5:07 PM

2015-04-12T17:07:17-04:00

Many folks don't have the discipline nor knowledge of the basics of investing. A lot of people live day to day and have rich taste. We should have a discussion for those who were medically retired.

Response by SSG Private RallyPoint Member made Apr 12 at 2015 8:25 PM

2015-04-12T20:25:00-04:00

The answer Sir, is poor planning. Too many people do not plan properly for retirement.

They continue to spend money they do not have and live outside their means in order to try and impress someone.

Another issue is that they get into the Marriage trap around Military installations. Where they get a Woman with no skills or desire to be anything in life. This reduces their paycheck significantly. Especially when kids are involved.

Of course there are others who just cannot let the Military go and need to be around it.

Once I retire I highly doubt I will have any sort of government job. I have a B.A. in Accounting and my Wife has a B.A. in Nursing and an M.B.A. Her career will carry us the first ten years after I retire then she should be able to go part time or contract.

I have not fully decided what I will do. I have my degree, an F.A.A. Rigger Ticket, C.D.L. and Instructional Ratings in Skydiving. Of course I am getting pretty beat up from ARMY Airborne so the latter may not be too viable.

Response by COL Charles Williams made Apr 13 at 2015 12:29 AM

2015-04-13T00:29:55-04:00

I spent 33 years in Army and retired in Jan 13. I am currently working, but not in the GS world; I passed on that and passed on government contracting. I am currently a High School teacher, and I love what I am doing. I will likely stop in the next few years, when my wife can retire. I work because I enjoy it, and I am not sure I would like doing nothing.

Response by CAPT Kevin B. made Apr 13 at 2015 1:22 AM

2015-04-13T01:22:32-04:00

This will sound daunting but there's help. If you do the math, working 10 years after doing a 20 likely won't give you enough to run out 30-40 more years of living. However, doing a second 20 is more like it, especially if going GS.

I didn't draw military retirement until 60 under the reserve program and was civil service following active. I had to work. Bottom line, the old pay your bills off, don't have a home loan, and plan on living on 40% of your salary doesn't cut it nowadays. Retirees want to do things besides stay home and knit. I highly recommend a plan that has you stop working at 60 and not see a difference in the monthly income. It's doable, especially if you go the GS route. Buy civil service retirement credits for the active time. The $10K I spent between 86-88 on payroll deduction is giving me $14K/year in extra annuity. Do TSP for 10% contribution. Remember the Feds match the first 5% every pay day. A real no brainer. So at the end of it all, you'll have two annuities. One is 20+ years military, one is 40+ years civil service. The TSP is a 401 equivalent so at 59 1/2 you should roll it to commercial management to earn 2-5% more at the same risk. Social security would likely be deferred as it is earning a real 7-8% per year. You'll want to burn the 401 down between 60 and 70 1/2 as you'll have to take mandatory distribution on the 401 and could get hit with a big income tax. As the 401 burns off, initiate Social Security to backfill. If you set up the burn rates correctly, your annual boost in income will be more than the paltry COLA. Consider rolling some of 401 into a life insurance policy that you pay income tax on the monthly withdraws for payment but at an overall lower tax rate. Then when you're 68 or so, you can cash it in without tax implication. In my case that's a better deal than the added SGLI/FEGLI.

Now the how to do it. Check out the financial houses. As TSP has about 35 or so combinations, commercial sector has thousands. An advisor will analyze all your assets, ongoing income, what you want do do when retire, etc. They then figure out an optimal income stream that give you maximum tax advantage. I recommend a financial house that has a small one time up front fee when they take over your 401. They don't make money unless you do. You just have to give them something to work with.

Please don't use an advisor at a mall kiosk. Real financial advisors are like a program manager. They coordinate all the specialties like tax, real estate, insurance, etc. combining all the expertise to give you the best options to choose from. Once you're retired, you'll be talking to your advisor every 6 months to go over any worthwhile tweaks to your portfolio.

There will be a point where you don't want to or can't work. The money should be there when you hit "don't" but absolutely has to be then when you hit "can't". Make the retired career the best one you'll do.

Response by Capt Private RallyPoint Member made Apr 13 at 2015 10:33 AM

2015-04-13T10:33:54-04:00

I know of two folks that retired after their military time was done. One, as he moved with the military, bought a house then kept it and rented it. At retirement he and his spouse had a pretty good nest egg to work from.

The other and his wife, when he was promoted to E-5, determined that they were living okay on their E-4's pay and for the rest of their military career invest the difference between an E-4 pay and their pay.

Worked for them.

Response by SFC Stephen Hester made Apr 13 at 2015 10:48 AM

2015-04-13T10:48:57-04:00

Many military retirees work a second career and it's not because they didn't plan properly but because they want to continue to feel productive and build for the time when they can no longer work. I think I am fortunate to be working in a job that I love doing and wasn't forced into something simply because I needed a paycheck and didn't have many other options.

I plan to become fully self-employed so it's doubtful that I will ever really "retire" (not that I want to).

Response by MSG Brad Sand made Apr 13 at 2015 11:33 AM

2015-04-13T11:33:42-04:00

I could fully retire but then what would I do all day? It does make it hard some days when sometimes when they do something really petty and I wonder, 'Is this enough to walk away?' Every year around the 15th of April, I wonder why I am working but that is kind of a different issue.

Response by LTC Private RallyPoint Member made Apr 13 at 2015 1:22 PM

2015-04-13T13:22:50-04:00

Thanks for all the responses so far. As originally stated, by retired, I meant not working because you need to in order to pay the bills. I'm all for keeping busy; just not to line someone else's pocket or just doing it because thats what everyone else does. I just think people don't give it much consideration. Its been said people spend more time planning their vacations than their financial life.The more I have read on this the more perspective I gain. With work, you are essentially trading your time for money. Now granted the enlisted side has it much harder, but for the officer side, definitely seems doable.

I won't go into the fine details but have ran some numbers. I am by no means a big saver-maybe 20% of my pay check and I didn't start seriously saving until a few years ago. But running the numbers show that at a modest 6-7% return rate on investment my current savings should be around $1 mil by the age of 60-in about 20 years. If I do 30 years i will be about 50 yo and even if I stay an LTC my after tax pay will be around $70K/yr. A 24 yr retirement puts me around $50K/yr. There are millions of people in America living well on much less a year. The trouble comes in "funding the Gap" between retirement and age 60. Basically, how to add to my retirement pay during this time. I could and may take the money I am currently investing in retirement accounts and invest them in mutual funds. Also my retirement funds will allow me to wait until age 70 to collect full social security which will be another 30-40K/yr + military pension. Since both of these are Cola'd inflation shouldn't be too big a deal.

Certainly not everyone can do this. I understand divorces, kids, crisis, etc. I think a lot comes down to choices. Expensive cars, vacations, and big homes etc. I believe it is Dave Ramsey that talks about the true cost of these items. A $40K car is in the junk yard in 15-20 yrs where as a $40 K investment could turn into a 6 figure amount and a few years less of work. All these little decisions add up to big money in the end.

For good info I would encourage people to read Doug Nordman's book referenced in one of the posts above. You may also want to check out the Mr. Money Mustache Blog.

Response by Sgt Aaron Kennedy, MS made Apr 13 at 2015 1:44 PM

2015-04-13T13:44:03-04:00

Mathematically, I'm not sure if it's feasible any more.

Assume 30 years from Date of Entry (DOE) and you end up with a 48-52~ year old person retiring with 55% Base Pay (no allowances), as opposed to 75% from even 1990~.

Here's the break down for my area, using very simple math.

E9 - Base pay $7584/month - BAH $2775 = $10359 before retirement / $4171 after (40%)
W5 - Base pay $9408/month - BAH $2892 = $12300 before retirement / $5174 after (42%)
O6 - Base pay $10952/month - BAH $3111 = $14063 before retirement / $6023 after (43%)

Even if you have an aggressive savings plan, live within your means, the hit to pay is just huge.

This doesn't account for disability which at 100% caps out around $3k so it would actually be a wash against the BAH.

Additionally, things like IRA's & 401k's don't come into play until 59.5 years which is 10~ years after retirement for us.

Response by SFC Edward Nicholson made Apr 13 at 2015 3:11 PM

2015-04-13T15:11:28-04:00

I just recently retired in October with 25 years of service and I did look for GS positions but I decided to work for Union Pacific Railroad instead.

Response by CH (MAJ) William Beaver made Apr 13 at 2015 6:24 PM

2015-04-13T18:24:52-04:00

If I'm not helping people for pay, I'm helping people for fun. I will never really retire. Seeing cool new places is fun, but seeing someone's life change for the better cannot be more satisfying. Changing lives gets me up in the morning and always will.

Response by SSG Private RallyPoint Member made Apr 13 at 2015 7:06 PM

2015-04-13T19:06:41-04:00

I can honestly say I tried the "finding employment" during my 100 day transition leave and for about 2 months after my official retirement date. Dismayed at the whole "businesses hiring Vets", I pretty much gave up. Used the available resources, job fairs, interview techniques etc etc etc, pretty much left a sour taste in my mouth. Please, no pity party, not asking for one. This was my experience, other people's experience may vary.

So after this medical business clears, well I hope it does anyways, I will entertain going to Vocational Rehab, relearn what I used know in the information technology field. VA also has a work study program too, so looking into that. I was really gung-ho about working but a part of me just doesn't give a dam anymore. Maybe I need a break from actual work, take the time to focus on new goals or unfinished projects, and just build from their.

I will be very candid, I like the fact I don't have to get up at the crack of dawn, get dressed, grab some coffee and be on the road with traffic for the next hour and a half. At the same time I'm also getting cabin fever, so something has got to give. Eventually I will find a way to make it work.

Response by Col Private RallyPoint Member made Apr 13 at 2015 7:27 PM

2015-04-13T19:27:27-04:00

I plan on retiring from the AF after 20 years of being a nurse. I will most likely work as needed as a Nurse Practitioner. My goal is to only work 3 or so days a week, and live in the RV as we travel.

Response by SSG (ret) William Martin made Apr 13 at 2015 11:00 PM

2015-04-13T23:00:49-04:00

Sir, I am moving on after 20 years. I do not want a government job. I do not want to apply for several government jobs I will probably not hired for. Nor do I want to start a career for an organization where the management does not share the same vision, mission, and they happen to be corrupt. I am going to back to college to attend law school. I want to be an attorney and hopefully become self employed. I'd rather just totally leave the military behind me if that is possible.

Response by SGM Erik Marquez made Apr 14 at 2015 9:00 AM

2015-04-14T09:00:25-04:00

While it's possible to live frugally, invest wisely and then retire completely living on ROI and a military retirement benefit..
In doing so I would have missed out on racing off road vehicles in Australia, riding and racing off road motorcycles in many states, visiting family and friends in far places, owning, building , riding many dozens of motorcycles along the way, owning and building a 1969 Mustang Fastback, 2005 Mustang, 2007 GT500, accumulating many tens of thousands of dollars worth of tools, machinery and tooling ...all of that cost money... all of that money COULD have went into investments allowing me to be retired worry and work free..And what a dull life it would have been.

I'm living a dream,,,NOT fully retired.
I work on bikes for fun and wages.
I teach others to ride bikes for fun and wages.
I teach off road riding on post.
My wife is the service manager for a 6 brand dealer locally
My younger son is a tech at the same dealer.
I do contract work for the same dealer
I may not be "fully retired" post service, but damn if I ain't having fun.

Response by 1SG Brian Allen made Apr 14 at 2015 8:59 PM

2015-04-14T20:59:43-04:00

Some of the reason is due to lack of planning. Also some people are not ready to doen grade their lifestyle which requires them to work. Retirement from the military without growing a nest egg for 20 plus years makes them have to work.

Response by SFC Private RallyPoint Member made Apr 14 at 2015 11:32 PM

2015-04-14T23:32:39-04:00

The issue for us is when we retire we will have three kids in college. supporting them unail they finish school will require me to have a job after I retire. Once they are own their own I can spend my days playing with my animals and working in my garden.

Response by TSgt Alana Alberto made Apr 22 at 2015 4:53 PM

2015-04-22T16:53:10-04:00

I retired from the Air Force after 20 years of service in 2012 and my husband just retired last year after 27 years and we are both totally retired. I'm considering going back to work in the Fall, not because I have to, but just because I feel like I need some sort of purpose...I am only 42 and it feels very odd to be "retired". I only plan on going back parttime though, seeing we enjoy traveling :)

Response by LTC Charles Sherman made Apr 22 at 2015 6:24 PM

2015-04-22T18:24:54-04:00

There is a way. It's not a way I recommend, but it works. It's also not something you plan for, or even really want: Medical Retirement with significant disability (90% VA/60% Army). Because of my injuries (knees, back, ankle), I will realistically not be able to work a full-time...or even part-time...job for the rest of my life. I just don't have the stamina or energy to do things without regular breaks and rest periods. I'm fortunate that between the Army and the VA, my wife and I can live reasonably comfortably.

Now, getting used to the idea of being permanently retired, well short of 65? Not as easy as it might sound.

(I did 33 years in the Reserves, with 14+ years of Active Duty, most of which accumulated after 9/11.)

Response by LTC Private RallyPoint Member made Apr 26 at 2015 8:19 PM

2015-04-26T20:19:29-04:00

I have been fortunate to have a reserve retirement and a teachers pension.(and a bit of social security reduced 40% due to windfall reduction) Also saved and invested for 20 years and did well on that. (Wish I had started 30 years ago!) I know plan to do a little travel and continue volunteer work with Coast Guard Auxiliary, Sea Cadets, Civil Air Patrol and some veterans groups.

I think that most burnout from work is caused when the leadership on your job is poor. When you get poor leadership everyone one burns out and performance worsens. That leads to earlier retirement or getting another job! Why are some many supervisors and managers blind to that fact? I think that if all supervisors in jobs practiced the principles of leadership as I learned in the Army, most people would keep working until physically unable to do so. It even happens in volunteer groups, but if you encounter it there, you can just quit and move on to another volunteer position!

Response by LTJG Robert M. made Apr 26 at 2015 8:24 PM

2015-04-26T20:24:38-04:00

Retired June 30,1996. Employed on second career 7 days later.

Response by CPT Private RallyPoint Member made Jul 16 at 2015 2:22 AM

2015-07-16T02:22:23-04:00

I planned well and can now sit back and enjoy the fruits of my retirement. Physically I am limited on what I could do but quite frankly I'm enjoying being able to do whatever it is I choose. No inheritance, no lottery, just simple mathematics and living within my means. Crazy concept!

Response by MSgt Curtis Ellis made Jul 16 at 2015 5:52 PM

2015-07-16T17:52:02-04:00

Normally, I would agree with you, Sir, however, many (myself included) run into unavoidable/unforseeable financial issues that can quickly drain your savings and the base funds for that savings... There is a saying my dad used to tell me... "Sometimes, your best laid plans won't always get you laid, but they'll often get you screwed..." I've experienced just about everything from the death of my first born to a lot of things that TRICARE does not cover, to a few "home financial declines" during my deployments, to a few "mental" issues, to my eventual divorce a little more than 4 years ago (yeah, should have done that one a lot sooner)... Without going into detail of what I've already allowed you to glimpse, let's just say, with everything that has happened in the last 30 years, a military career, two kids and a divorce later, I had to begin again from scratch, at age 45... And yes, I have 26 years Active. And? The ex getting half of my retirement doesn't help either! LOL! I know my situation may or may not be the norm for everyone else, but it is, what it is... I enjoy my GS occupation, and am well on my way to rebuilding my "nest egg", and I agree with you... I wish I didn't "have" to work, but knowing me, I would have probably been working this GS occupation anyway!!! :)

Response by SSG Private RallyPoint Member made Sep 27 at 2015 11:13 PM

2015-09-27T23:13:19-04:00

My Dad told be to save 10% of my paycheck every month just for myself. Had a heeded that advice I'd probably be ready to retire now that I'm 50. I suspect that baring any huge crashes to the stock market I'll be able to retire at 65 (plus or minus 2 years).

I see GS workers in their 70's as well, in some cases it's not about the money though... they are doing what they love.

Response by LTC Private RallyPoint Member made Jan 5 at 2016 9:54 AM

2016-01-05T09:54:42-05:00

As a reservist, I am planning on staying in until I can draw my military retirement (7 more years). As soon as my military retirement checks start coming in, I am giving my 2 weeks notice at my civilian job. There are plenty of things I can think of to do other than work after I hang up my boots.

Response by CPT Christopher Webb made Jan 5 at 2016 10:56 PM

2016-01-05T22:56:20-05:00

My observation is that most senior officers who retire are expecting that their next career is going to pay as well as or better than their pay on active duty ... for the vast majority it doesn't. There is no doubt that the retirement program is generous, way beyond any common program in the civilian sector. But you can't live like a senior officer in the military once you are out unless you work.

You are right in that a person with stellar self control can put money away consistently for decades, invest it wisely for decades and wind up with their military retirement and a huge nest egg to draw from. But the truth of real life is that we spend to the limits of our incomes, not because we are dumb, but because we have wives and children that we invest in instead.

All officers, including me, went into the military knowing all about dollar cost averaging and the power of time regarding the growth of investments. I started putting money away and did so every month for the 10 years I was in the military. Thank God I had it ... because the instability of the civilian world required the use of most of my saved money to pay for everything I took for granted in the military.

The short answer to the question of why more don't save money: we think the generous pay and benefits of being an officer will continue after we retire or leave the military.