Portfolio review - military retirement? Help

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Dogsbestfriend
Posts: 66
Joined: Wed Mar 25, 2015 2:47 pm

Portfolio review - military retirement? Help

Post by Dogsbestfriend »

Hello Bogleheads,

Recently passed 6 years on this forum! :happy Due to life events, I have been through phases where I am more or less attentive to the forum, and to my retirement savings plan. Am truly grateful for the advice I have received here, and just want to get a check-up and some perspectives on a few questions.

1. What would it take to really retire (as in, no more mandatory work for income) when I hit retirement eligibility from the military in two years? Is it feasible? Are we on the right path to do so? Would like to not get caught in the “one more year” cycle, and want to spend more time with the family while our parents are still around and fairly healthy, and kids are growing!
a. I anticipate an annual pension of around %65K per year (present value) upon military retirement, eligible beginning two years from now (percentage increases for staying past 20 years, but I would more likely look to work part time outside the military once I’ve reached 20-24 years). I think that based on our current retirement savings, we could get to our goal of ~$110K/year for retirement spending at 4% SWR. Not really sure if that goal is realistic though.
b. There are two big unknowns: 1) four kids to get through high school and college (current ages range from 4-12), and 2) we do not own a home.
c. With regard to kids, I have transferred GI bill to them (currently set at 1 year per kid, but could redistribute that if advisable, such as someone not going to college). We also have small 529s set up to supplement (current value for the 12-year-old’s account is $46K, down to $22K for the 4-year-old). Anyone have experience with equitably sharing GI bill and 529s among 4 kids?
d. With regard to the mortgage, we have owned a couple houses in the past. We don’t know where we want to land after the military. Considering RV life for a year or so.

2. Is our AA too aggressive? We are currently at 84% stocks / 16% bonds and cash. Putting 100% of TSP contributions into G fund as traditional contributions (vs. Roth).

3. Anything we’re missing? Especially entering what could be the last few years of active duty military service?

Emergency funds: Yes, in cash and EE savings bonds
Debts: None (but we do not own a home; we rent currently)
Tax Filing Status: MFJ
Tax Rate: Federal = 22% marginal (6% effective); State = N/A
State of Residence: TX (no income tax)
Age: 44 (Spouse is same age, stay-at-home mom to four kids)
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 30% of stocks

Current retirement assets = (~$1.4M):

Taxable (45.5%):
20.7% Vanguard FTSE All-World Ex-US (VFWAX) (ER = 0.11%)
16.2% Vanguard Total Stock Market (VTSAX) (ER = 0.04%)
4.2% Charles Schwab Brokerage Account (individual stocks)
4.3% Cash and EE savings bonds (this actually includes emergency fund)

Tax-advantaged (54.5%):

His 401k (TSP)
27.4% Thrift Savings Plan (TSP) (ER = 0.03%)
- 11.9% G Fund
- 10.1% C Fund
- 5.3% S Fund
- Of the above, 65% is Traditional, 35% is Roth

His Roth IRA
6.8% Vanguard REIT Index Fund (VGSLX) (ER = 0.12%)
6.3% Vanguard Total Stock Market (VTSAX) (ER = 0.04%)

Her Roth IRA
14.0% Vanguard Total Stock Market (VTSAX) (ER = 0.04%)

New Annual Contributions:
$19,500 - his TSP (Roth 401k equivalent) (no matching contributions)
$6,000 - his Roth IRA
$6,000 - her Roth IRA
$20-40K - taxable investments (amount varies depending on expenses in a given year)
[also, $7,200 – kids’ 529 plans]

Available funds in his TSP (401k equivalent):
G Fund (Government Securities)
F Fund (Fixed Income Index)
C Fund (Common Stock Index)
S Fund (Small Cap Stock Index)
I Fund (International Stock Index)
Lifecycle Funds (combinations of the above)

Thank you in advance for any advice or insights!

DBF
Ed 2
Posts: 2692
Joined: Sat May 15, 2010 9:34 am

Re: Portfolio review - military retirement? Help

Post by Ed 2 »

Will bump for you. Thank you for your service. I hope will be someone who can give advice for ex military Boglehead.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
jsprag
Posts: 243
Joined: Sun Nov 26, 2017 10:25 am

Re: Portfolio review - military retirement? Help

Post by jsprag »

A few thoughts:

1. Sustaining $110K/year spending with a $65K pension requires only $45K annually from your portfolio, or ~3.2% of your $1.4M portfolio. You will likely have lower lifetime health care costs than most, so you're probably good to go as long as you...

2. Have an income replacement plan for your military pension should you die while others are still dependent on that income. The Survivor Benefit Plan may be part of that answer but it's not a full replacement, and it's definitely not the best solution for many. Life insurance may be another element, but that will cost much more over your lifetime than you currently pay on active duty.

3. Dedicate time over your final two years to documenting any conditions that may be a service-connected injury or disability. The first reason is so you can get proper treatment. The second is so you can receive appropriate compensation. VA disability compensation can be a game-changer in your post-military financial plan: someone with a spouse, four children under 18, and a 50% rating would be entitled to $1,185 per month (~$14K per year) tax free. Keys to successful claims are documentation, early and frequent engagement, a thorough understanding of eligible conditions and the rating schedule, and knowing when to get help with your claim.

4. We've attempted to equitably share GI Bill and 529 by placing 529 balances and the expected GI Bill value in a virtual pool that each child draws from. Because GI Bill generally pays full costs up to the cap, we maximized the size of the pool by shifting GI Bill months to the child attending the most expensive program, and shifted 529 money to child enrolled in the less expensive programs. We have fewer children and they are closer in age, so the problem was less complex for us.

5. Understand personal and professional impacts of "really retiring" after the military. I've spoken with many veterans who stopped working after their military service and most were unsatisfied and unfulfilled, finding that neither they nor their family dynamic was ready for such a dramatic disruption to the ecosystem. Many of them also discovered that the transition to civilian careers became much harder once they had a 1-3 year employment gap after leaving the military.

6. Social Security - If SSA estimated benefits are any part of your financial plan, understand that those estimates are based on an assumption that you will continue working and earning the same amount from today until you reach the benefit age. For any "early" retiree, its important that you adjust the SS estimates downward (often significantly) based on your future expected earnings record. There are tools online to help with that calculation.

Good luck!
Swansea
Posts: 1532
Joined: Sat Feb 13, 2016 4:16 am

Re: Portfolio review - military retirement? Help

Post by Swansea »

I recommend you also plan for health care costs. I know little about TriCare, but a friend who retired from the the USPHS corps has TriCare, but is also required to enroll in Medicare Part B (he is over 65). 65 is off in your future, but Medicare B (if required) can be pricey if you have a high AGI.
All the best
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HMSVictory
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Location: Lower Gun Deck

Re: Portfolio review - military retirement? Help

Post by HMSVictory »

Hello and thank you for your service to our Country.

First off I think you will be fine with your pension and your investments. By the way great job on amassing a $1.4M portfolio. I think your AA is fine - don't get caught in the trap of being too conservative as you may live for a long long time after you retire. Let that money continue to grow as much as possible in the years moving forward. Your pension is a type of fixed income asset (that pays a coupon to you) so when you calculate the net present value of it your more like 60/40 in your AA. The most important part of your plan is what your expense are going to be. So here's what my advice would be:

1) Can you live off the pension alone? If you can you will be fine - the longer you delay tapping into your retirement funds the more they will grow.

2) At some point you will need to purchase a home and pay cash for it. Are you willing to move to an area where you can purchase a home for a reasonable cost ~ around $200k or so?

3) College - besides the GI bill you are going to have to be upfront and honest with you children that you will be able to help some but not finance a full ride to Harvard at 100k a year. Your existing 529 plans will grow a lot. There is nothing wrong with this and it doesn't make you a bad parent. Kids can work their way through college and or get scholarships - you have to decide what level of support you are going to give them and then just communicate it.

4) Once you start drawing on your funds (which will be compounding nicely for the next few years) can you limit it to 4-5% per year or less if the market has a steep pullback? The ability to skip a withdrawn when the market is down dramatically increases your chances for success!

5) As far was what funds to own - this is a non issue. 3 fund portfolio which is heavily weighted in VTSAX. As little bonds as you can stand. :)
Stay the course!
dan7800
Posts: 390
Joined: Wed Apr 07, 2021 5:49 am

Re: Portfolio review - military retirement? Help

Post by dan7800 »

Thank you for your service.

I will defer to more knowledge folks here, but the only thing that you MIGHT want to consider is moving the REIT from your Roth to your 401k. With that said, it looks to be "filled" with bonds - so I don't really know what to do there.

Thank you again for service. I cannot tell you the admiration I have for folks who had the guts/dedication to dedicate a significant portion of their lives to a career such as yours.
SteveJones
Posts: 78
Joined: Mon Jan 21, 2019 5:50 am

Re: Portfolio review - military retirement? Help

Post by SteveJones »

I am in a very similar boat. Everyone has replied regarding your investment, but I have a unique (IMO) approach to the GI Bill:

I am giving my GI Bill to my oldest child (10 years old). We started a 529 for him when he was born and the current value is $30k. We can move 529 money between kids tax and penalty free. I plan on shifting his 529 account to his brother who is 5. Basically by giving the GI Bill to my 10 yr old we were able to start investing for my 5 yr old's college 5 years before he was born.
Fishing50
Posts: 671
Joined: Tue Sep 27, 2016 1:18 am

Re: Portfolio review - military retirement? Help

Post by Fishing50 »

With your assets, you won't get caught in the OMY cycle...you might choose to stay like we did. We got some nice duty stations, an unexpected promotion, and the the obvious benefit of longevity raises.

4% Safe Withdrawal Rate is reasonable especially with a pension. A smaller with withdrawal rate moves the success percentage higher, increasing future inheritance.

No problem waiting to purchase a home. Many people move after retirement because they settled in the wrong place, for the wrong reasons. Retire into a rental house, and then plan the future.

We will keep an aggressive AA because I'm more concerned about growth not pacing our needs. In 40yrs, I don't want to regret departing the workforce during my peak earning years. I doubt I'll retire for good next year, but my next career will not be full time, career job.

We don't have an emergency fund, which probably isn't right for you currently. In the future buying a house or paying for college, you might choose to keep much less in the EF. https://earlyretirementnow.com/2016/05/ ... ency-fund/

Best of Luck!
Retired Military Officer. 80% equites / 20% bonds for life, ZERO emergency fund, 100% taxable in equities (dividends in cash), 33% taxable, 30% Roth, 37% tax deferred. Gone Fishing At 52yrs old!
abracadabra11
Posts: 408
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Re: Portfolio review - military retirement? Help

Post by abracadabra11 »

jsprag wrote: Sun Apr 18, 2021 4:19 am A few thoughts...
Excellent post. :sharebeer
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Nords
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Re: Portfolio review - military retirement? Help

Post by Nords »

Dogsbestfriend wrote: Sat Apr 17, 2021 3:58 pm 1. What would it take to really retire (as in, no more mandatory work for income) when I hit retirement eligibility from the military in two years? Is it feasible? Are we on the right path to do so? Would like to not get caught in the “one more year” cycle, and want to spend more time with the family while our parents are still around and fairly healthy, and kids are growing!
a. I anticipate an annual pension of around $65K per year (present value) upon military retirement, eligible beginning two years from now (percentage increases for staying past 20 years, but I would more likely look to work part time outside the military once I’ve reached 20-24 years). I think that based on our current retirement savings, we could get to our goal of ~$110K/year for retirement spending at 4% SWR. Not really sure if that goal is realistic though.
Dogsbestfriend wrote: Sat Apr 17, 2021 3:58 pm Current retirement assets = (~$1.4M):
As Jsprag writes, you’re well within the 4% SWR. You’re likely to have the military pension COLA raise your income faster than you raise your spending.

You can choose to work because you want the challenge & fulfillment, not because you want the money.

I wouldn’t count on the VA disability income until you get the rating letter, but you absolutely need to go through the process to get everything on the record now. I get way too many sad e-mails from vets who are trying to figure out what they were doing 20-30 years ago that could be service-connected to their newly-emerging disability issues. Even worse, some of those e-mails come from their spouses and adult children who are trying to reconstruct their vet’s records and figure out their benefits.
Dogsbestfriend wrote: Sat Apr 17, 2021 3:58 pm b. There are two big unknowns: 1) four kids to get through high school and college (current ages range from 4-12)
c. With regard to kids, I have transferred GI bill to them (currently set at 1 year per kid, but could redistribute that if advisable, such as someone not going to college). We also have small 529s set up to supplement (current value for the 12-year-old’s account is $46K, down to $22K for the 4-year-old). Anyone have experience with equitably sharing GI bill and 529s among 4 kids?
You’ll manage their expectations, including pursuing scholarships. While they’re in college, you can offer profit-sharing after graduation if they’re good stewards of their 529s. You could explain that college is their responsibility, not yours, and that your subsidy will get them started.

You’ll also encourage them to get the basic course requirements out of the way on their own (perhaps even in high school?) or in community college while saving the GI Bill for the expensive junior/senior years. And with four kids, the odds are in your favor that one of them would prefer certifications & licenses instead of degrees.

If you have that one who insists on following in your military footsteps, I’d encourage them to pursue both ROTC and a service academy in parallel. Let them decide which is better.

As a parent, you’ll know which of your young adults merit extra financial support. The answer might be “none of them”, or the older ones might be willing to leave some of their funds for the younger siblings.

As they reach high school, you’d definitely want to throttle back the asset allocation on their 529s to a mix of cash and bonds instead of stocks. We cashed out our high-school sophomore’s college fund in early 2008, and she was a college junior by the time its old stock asset allocation recovered its share price.
Dogsbestfriend wrote: Sat Apr 17, 2021 3:58 pm b. There are two big unknowns:
and 2) we do not own a home.
d. With regard to the mortgage, we have owned a couple houses in the past. We don’t know where we want to land after the military. Considering RV life for a year or so.
I know lots of military RV retirees who are trying to figure out where they want to live. Homeschooling four kids would be a challenge, but they’d certainly learn geography.

Consider IVMF’s statistic that nearly half of all military vets change jobs and locations within two years after leaving the service. It’s not because they’re miserable failures-- it’s because they originally relocated for the job. Within the next two years they’ve gained a new perspective on where they want to live and what they really want to do. By then they have the employment skills and experience to negotiate a relocation and perhaps a new job. They end up where they now know they really want to be.

You’d continue renting, either for the job or because you’ve finally found a great location after your RV search. Once you’ve found the location then you can take your time to find your preferred neighborhood and then a house that’s selling at a bargain (perhaps with a distressed seller).

Here’s some of the hassles that military families deal with when they try to buy a home right after active duty:
https://the-military-guide.com/dont-buy-home-leave-active-duty/

If you choose to use a mortgage, you can offset a fixed-rate 30-year loan with your inflation-adjusted military pension. My spouse and I are carrying our mortgage until I’m 87 years old, and we’re earning over 7%/year in a total stock-market index fund with money borrowed at 3.5%. Meanwhile during the last 19 years my military pension has risen over 40%, and in three of those years the COLA was zero.
Dogsbestfriend wrote: Sat Apr 17, 2021 3:58 pm 2. Is our AA too aggressive? We are currently at 84% stocks / 16% bonds and cash. Putting 100% of TSP contributions into G fund...
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 30% of stocks
You’re fine. You might even want to stop giving money to the G fund.

For asset allocation purposes, you could consider a military pension to be the equivalent income from a portfolio of I bonds or TIPS. (It’s an imperfect analogy, but it’s good enough for thinking about asset allocation.) Your military pension is so heavily weighted as the world’s most reliable inflation-fighting bond income that you can afford to invest the rest of your portfolio in equities.

Use the TSP as your bond or G fund allocation if you want, but it might save you a little on expense ratios to use the TSP’s I fund for your international asset allocation.
Dogsbestfriend wrote: Sat Apr 17, 2021 3:58 pm3. Anything we’re missing? Especially entering what could be the last few years of active duty military service?
1. Attend the transition seminar now, preferably with your spouse. You’ll each hear the presentations differently, and you’ll have many thoughtful life conversations about what you want to do with the information you’ve learned.

2. Rent an RV for your next family vacation-- and let the kids know that they may be living in one for a year or two. That’ll manage their expectations...

3. Start gathering and documenting the info for your VA disability claim. You can use a Veteran Service Officer to review your records now and to help you get them organized for that 180-day window before retirement with your Benefits Delivery at Discharge.

4. Make darn sure that the VA has the right records for your GI Bill transfer. I’ve had several unhappy e-mails from vets who’ve set it up and later got surprised by a VA error.

5. If you’re not already doing so, join Linkedin’s Veteran Mentor Network:
https://www.linkedin.com/groups/4466143/
and start asking questions about your career search. You want to make an informed decision about a bridge career... or no bridge career.
You can also read a library copy of The 2-Hour Job Search and use Michael Quinn’s ultimate Linkedin cheat sheet:
https://www.linkedin.com/pulse/ultimate-linkedin-cheat-sheet-michael-quinn/
* | * | Please see my profile for my next book. I don't read every post, so please PM or e-mail me to get my attention.
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warner25
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Re: Portfolio review - military retirement? Help

Post by warner25 »

SteveJones wrote: Sun Apr 18, 2021 9:20 amBasically by giving the GI Bill to my 10 yr old we were able to start investing for my 5 yr old's college 5 years before he was born.
This is a novel idea to me. Does it assume that your investments will grow faster than tuition will rise?

The opacity of college costs makes it impossible to be truly equitable for multiple kids. Even setting aside the wildly different costs of various schools and scholarship scenarios, which span from $0 to $300k, I'm running the calculators with multiple kids in school simultaneously because I have four kids, each two years apart... so when my oldest starts, it will be just her for a couple years, but then I might have three kids in school simultaneously by the time the younger kids start. Giving our oldest the GI Bill might then yield the most value, since the "expected family contribution" per kid drops as more kids enter school.
NMBob
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Re: Portfolio review - military retirement? Help

Post by NMBob »

1. I emphasize that VA disability ratings can be updated over time, so get big and somewhat minor things annotated, it may be zero percent today but maybe 15 years from now it restricts you much more and you can have the issue re-evaluated since you have the documentation for service connection.

2. Implement your after SGLI goes away at retirement life insurance plan now. Do not leave yourself in the position of having to qualify for life insurance after you retire. VGLI is significantly more expensive than what a fairly healthy person can get on the market.

3. Tied to insurance decisions is your Survivor Benefit Plan (spouse/ young children pension option) SBP decision. There seem to be many calculations around insurance substitute with many not adjusting adequately for inflation/future value needs. An interesting option, I have seen youtube videos where some have opted for sbp for children only with insurance plan for spouse. Even if you thought an insurance option worked out with no SBP, i would question the reliability of the average american managing a large lump sum. I had a somewhat uncommon SBP decision last month being old, disabled and almost uninsurable. Despite being almost self insured, but with a healthier and younger spouse living in a not not high living cost state, when estimating my death in 20 years, it became clear cut to me the SBP premium was the by far the best use of my money. Can't blow the lump, frees up self insured savings for other uses if we desire, allows my wife to work lesser paying more time free job to travel, continues forever verse an term policy which expires. I Looked at the difference in taking a little less than the max sbp percentage of retirement pay and the max amount. If i invested the premium difference between the two, I roughly estimated at the 20 year mark, that extra portion of sbp up to the max, would pay about 7 times larger monthly amount than a saved lump from the sbp premium differential.

If disabled be advised that the SBP offset for receiving Veterans spousal Dependency and Indemnity Compensation is phasing out the next 2 years. So now your spouse doesn't have to cough up SBP money to get tax free DIC payments. Also, if you while alive qualify for DIC after death by being 100 percent disabled for enough years , that allows you to cancel SBP if you choose, which otherwise you can only withdraw from SBP in a window between roughly month 24 and 36 of retirement. There are other boglehead threads about spousal pension decisions which i recall seem to frequently lean to taking a spousal option as opposed to insurance etc. But perhaps many of those folks are making decisions in late 50s age as opposed to 40s.

There is a SBP slide in the DOD presentation, it asks as a consideration, if you can afford it. My point would be, if you can't afford it, then your spouse probably does really need it, and if you can afford it, why do you care about (wasting money??) by owning a very good inflation adjusted , government secured pension for your spouse.
Topic Author
Dogsbestfriend
Posts: 66
Joined: Wed Mar 25, 2015 2:47 pm

Re: Portfolio review - military retirement? Help

Post by Dogsbestfriend »

jsprag wrote: Sun Apr 18, 2021 4:19 am A few thoughts:

1. Sustaining $110K/year spending with a $65K pension requires only $45K annually from your portfolio, or ~3.2% of your $1.4M portfolio. You will likely have lower lifetime health care costs than most, so you're probably good to go as long as you...

2. Have an income replacement plan for your military pension should you die while others are still dependent on that income. The Survivor Benefit Plan may be part of that answer but it's not a full replacement, and it's definitely not the best solution for many. Life insurance may be another element, but that will cost much more over your lifetime than you currently pay on active duty.

3. Dedicate time over your final two years to documenting any conditions that may be a service-connected injury or disability. The first reason is so you can get proper treatment. The second is so you can receive appropriate compensation. VA disability compensation can be a game-changer in your post-military financial plan: someone with a spouse, four children under 18, and a 50% rating would be entitled to $1,185 per month (~$14K per year) tax free. Keys to successful claims are documentation, early and frequent engagement, a thorough understanding of eligible conditions and the rating schedule, and knowing when to get help with your claim.

4. We've attempted to equitably share GI Bill and 529 by placing 529 balances and the expected GI Bill value in a virtual pool that each child draws from. Because GI Bill generally pays full costs up to the cap, we maximized the size of the pool by shifting GI Bill months to the child attending the most expensive program, and shifted 529 money to child enrolled in the less expensive programs. We have fewer children and they are closer in age, so the problem was less complex for us.

5. Understand personal and professional impacts of "really retiring" after the military. I've spoken with many veterans who stopped working after their military service and most were unsatisfied and unfulfilled, finding that neither they nor their family dynamic was ready for such a dramatic disruption to the ecosystem. Many of them also discovered that the transition to civilian careers became much harder once they had a 1-3 year employment gap after leaving the military.

6. Social Security - If SSA estimated benefits are any part of your financial plan, understand that those estimates are based on an assumption that you will continue working and earning the same amount from today until you reach the benefit age. For any "early" retiree, its important that you adjust the SS estimates downward (often significantly) based on your future expected earnings record. There are tools online to help with that calculation.

Good luck!
Thank you so much for the detailed and thoughtful response to my post!

#2 - I definitely have some work to do on this. Currently have a term life policy on top of SGLI, but need to get smart on the post-active duty options and figure out what is best for my family.

#3 - Wow, thank you for bringing this up. I have been blessed with good health overall (aside from the usual musculoskeletal aches and pains), and have also been the one to just self-treat and rehab, so I will need to get more aggressive about actually getting my stuff documented.

#5 - This is a very good point. I am not certain that I will ultimately want to "really retire" as soon as eligible, but would like to know if -- financially -- I could do so if I wanted to.

#6 - SSA benefits aren't part of my plan. I've never counted on them for planning purposes, so I suppose that, like VA disability, any SSA I end up with would be icing on the cake.
Topic Author
Dogsbestfriend
Posts: 66
Joined: Wed Mar 25, 2015 2:47 pm

Re: Portfolio review - military retirement? Help

Post by Dogsbestfriend »

HMSVictory wrote: Sun Apr 18, 2021 6:51 am I think your AA is fine - don't get caught in the trap of being too conservative as you may live for a long long time after you retire. Let that money continue to grow as much as possible in the years moving forward. Your pension is a type of fixed income asset (that pays a coupon to you) so when you calculate the net present value of it your more like 60/40 in your AA.
Thank you for your feedback! Good point on the AA with pension. That's why I am comfortable at my current AA, and could possible go more aggressive.
Topic Author
Dogsbestfriend
Posts: 66
Joined: Wed Mar 25, 2015 2:47 pm

Re: Portfolio review - military retirement? Help

Post by Dogsbestfriend »

SteveJones wrote: Sun Apr 18, 2021 9:20 am I am in a very similar boat. Everyone has replied regarding your investment, but I have a unique (IMO) approach to the GI Bill:

I am giving my GI Bill to my oldest child (10 years old). We started a 529 for him when he was born and the current value is $30k. We can move 529 money between kids tax and penalty free. I plan on shifting his 529 account to his brother who is 5. Basically by giving the GI Bill to my 10 yr old we were able to start investing for my 5 yr old's college 5 years before he was born.
Thank you for replying to my post. We are thinking about doing something similar. Our oldest is 12; then we have a gap to our 8, 7, and 5 year olds. Might use the GI Bill for our oldest, who will likely be our only college student for four years. Once the younger siblings start, we will have up to three in college simultaneously. Just trying to be equitable, but also smart in how we maximize use of the GI Bill. Still plenty of variables, to include scholarships, decisions of college vs. no college, grad school, specific college choices/expenses.
Topic Author
Dogsbestfriend
Posts: 66
Joined: Wed Mar 25, 2015 2:47 pm

Re: Portfolio review - military retirement? Help

Post by Dogsbestfriend »

Nords wrote: Sun Apr 18, 2021 12:12 pm You can choose to work because you want the challenge & fulfillment, not because you want the money.

I wouldn’t count on the VA disability income until you get the rating letter, but you absolutely need to go through the process to get everything on the record now. I get way too many sad e-mails from vets who are trying to figure out what they were doing 20-30 years ago that could be service-connected to their newly-emerging disability issues. Even worse, some of those e-mails come from their spouses and adult children who are trying to reconstruct their vet’s records and figure out their benefits.
Nords! Thank you so much for your incredibly detailed response to my post! This spurred a lot of great conversation with my wife, and we are so appreciative of your willingness to take the time to share your experience and insights.

Will work on getting my medical conditions documented. I have spent a career trying to stay healthy -- both in reality and on paper. So I have stayed out of the doc's office, so I am a bit behind on this. You and others have ignited a commitment to put some effort into this.
Nords wrote: Sun Apr 18, 2021 12:12 pm I know lots of military RV retirees who are trying to figure out where they want to live. Homeschooling four kids would be a challenge, but they’d certainly learn geography.
Nords wrote: Sun Apr 18, 2021 12:12 pm 2. Rent an RV for your next family vacation-- and let the kids know that they may be living in one for a year or two. That’ll manage their expectations...
We are planning on doing the rental -- the youngest kids are super excited; the oldest a bit less so, unsurprisingly. :wink: Regardless, it will help us figure out if we really want to consider RV life with kids, or wait until it's just the two of us and a smaller footprint.
Nords wrote: Sun Apr 18, 2021 12:12 pm For asset allocation purposes, you could consider a military pension to be the equivalent income from a portfolio of I bonds or TIPS. (It’s an imperfect analogy, but it’s good enough for thinking about asset allocation.) Your military pension is so heavily weighted as the world’s most reliable inflation-fighting bond income that you can afford to invest the rest of your portfolio in equities.

Use the TSP as your bond or G fund allocation if you want, but it might save you a little on expense ratios to use the TSP’s I fund for your international asset allocation.
This is an excellent point. I have held my international allocation in taxable, which provided a couple significant TLH "opportunities," while also allowing me to claim the foreign tax credit. I wonder if the lower ER in the TSP I fund would outweigh those benefits.
Nords wrote: Sun Apr 18, 2021 12:12 pm 5. If you’re not already doing so, join Linkedin’s Veteran Mentor Network:
https://www.linkedin.com/groups/4466143/
and start asking questions about your career search. You want to make an informed decision about a bridge career... or no bridge career.
You can also read a library copy of The 2-Hour Job Search and use Michael Quinn’s ultimate Linkedin cheat sheet:
https://www.linkedin.com/pulse/ultimate ... ael-quinn/
Thank you for these recommendations! Will definitely do both. And thanks again for your reply! I feel honored that you took the time to answer my post.

-DBF
Topic Author
Dogsbestfriend
Posts: 66
Joined: Wed Mar 25, 2015 2:47 pm

Re: Portfolio review - military retirement? Help

Post by Dogsbestfriend »

NMBob wrote: Sun Apr 18, 2021 3:13 pm 2. Implement your after SGLI goes away at retirement life insurance plan now. Do not leave yourself in the position of having to qualify for life insurance after you retire. VGLI is significantly more expensive than what a fairly healthy person can get on the market.

3. Tied to insurance decisions is your Survivor Benefit Plan (spouse/ young children pension option) SBP decision. There seem to be many calculations around insurance substitute with many not adjusting adequately for inflation/future value needs. An interesting option, I have seen youtube videos where some have opted for sbp for children only with insurance plan for spouse. Even if you thought an insurance option worked out with no SBP, i would question the reliability of the average american managing a large lump sum.
NMBob, thank you for replying to my post! I currently have the SGLI for $400K, plus another $600K term life policy through 2030. The latter has a military future insurability rider to replace SGLI, if exercised within 240 days of separation. However, if I retire as soon as eligible (as early as 2023), it only gives me 7 years before the term policy expires. I will have to look into these calculators and options to get a better understanding of what I would really need for insurance with different SBP options. It does not look like a straightforward decision.
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