Active Duty Military Officer - 6 years left - Then What?

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You Know What I Mean
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Re: Active Duty Military Officer - 6 years left - Then What?

Post by You Know What I Mean »

Parkinglotracer wrote: Sat Oct 22, 2022 3:37 am
You Know What I Mean wrote: Fri Oct 21, 2022 7:24 pm
Parkinglotracer wrote: Thu Oct 20, 2022 8:06 pm
You Know What I Mean wrote: Wed Oct 19, 2022 8:07 pm
CoastieFIRE wrote: Mon Oct 17, 2022 12:38 pm Questions:
1. General overview of investments and their alignment with our goals - below. I plan to stay 100% in stocks viewing my pension as our hedge against market volatility. Will likely allocate 10-20% into TSP G-Fund (US BONDS) when we fully retire. Good plan?
I think so. We were 100% stocks when I retired (USAF 0-5), though I later bought a lot of Series I Savings Bonds in 2000-2001. We gradually downshifted to 60/40 about the time I fully retired (12 years later). Although one son had graduated from college and was on his own, we still had two in college. So, we were a little more conservative with 40% in fixed income. I like your 80/20.

One other thing, about networking. This is something you probably already know. Retired military people generally love to talk to and help future retirees. I took a transition course -- I think it was Stan Hyman's -- and was encouraged to talk to everyone I could who had already been down that road. It was amazingly easy. Whether you know them well, only casually, not at all, a friend of a friend of a friend, etc. -- contact them. I'm not a very sociable person or great conversationalist, but I was surprised how easy it was to learn from others. Just like the great responses you've already gotten on this board, other ex-military folks will usually enjoy talking to you.

You're in a great position. I wish you good luck, but you won't need luck. Thank you for your service.
Retired from military in 2005 with 60/40 asset allocation and retired from 2nd career in 2020 with 70/30 asset allocation. I wouldn’t automatically jump into 100 % stock asset allocation at military retirement time just because one has a safe gov pension. In my experience people may take the amount of risk in their portfolio they need to be successful in their retirement or they may take the amount of risk they think is prudent at their point in life. If one has large nest egg saved even if the majority of one’s day to day living expenses are covered by their pension they may not sleep well at night knowing it is all exposed to the risk of the stock market. Vanguard has a good chart of stock bond asset allocations and the historical one year portfolio declines. While the chart prob hasn’t exactly rung true this year with the bond market declines one might look hard at how much portfolio pain they can swallow as they decide their future Asset allocation.
I hear you, though I don't look at it as jumping into 100% stocks. They already have nearly $500k at ~100/0, with six or seven years to go till military retirement, so presumably are used to volatility. On the other hand, they could certainly invest less aggressively and be fine also. To some extent, it depends on the nature (pay level and security) of his post-military career. If it's a fun but low-paying, unstable job, then perhaps they would want to dial down the stocks.

Perhaps I am biased because I wish we had kept a higher level of stocks.
I may be biased too based upon the recent market pullback wishing I had a bit lower asset allocation of stocks. I guess asset allocation nirvana is a personal place found somewhere in between!

Ps I bought 25K of I bonds in Oct 2000 which have been possibly my smartest move ever (I won’t mention my dumbest moves); I bet yours have worked out for you. In the next 8 years I need to figure out when to cash them in and pay the tax man.
Yup! This is eerie. Similar to you, we bought $24K of I Bonds from May-Dec 2000 and another $4K from Jan-Aug 2001. And like you, we will be paying taxes on them sometime in the eight or nine years -- a good problem to have! Having those I Bonds during an unstable career as a defense contractor was a good feeling. I, too, decline to talk about my many dumb financial moves.

How does this relate to the OP? I think it's really the same advice you mentioned: asset allocation is highly personal. It should be whatever the OP and spouse decide based on their personal situation. They both need to feel reasonably comfortable with it.
"Well, she was just seventeen, You Know What I Mean, and the way she looked... was way beyond compare."
ScubaHogg
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Re: Active Duty Military Officer - 6 years left - Then What?

Post by ScubaHogg »

CoastieFIRE wrote: Wed Oct 19, 2022 7:50 am
Will certainly attend TAPS - I've heard mixed reviews on it, but like anything, I'm sure it's what you make of it.
It’s been ten years since I did it, but if you are the type of person who comes onto Bogleheads, TAPS will likely be a monumental waste of your time

(Did you know you shouldn’t smoke in an interview?)
“Conventional Treasury rates are risk free only in the sense that they guarantee nominal principal. But their real rate of return is uncertain until after the fact.” -Risk Less and Prosper
Outer Marker
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Re: Active Duty Military Officer - 6 years left - Then What?

Post by Outer Marker »

CoastieFIRE wrote: Thu Oct 20, 2022 9:16 am Love the simplicity of VTWAX but the tax credit and ability to adjust AA may be worth the switch.

Any tax implications or timing issues shifting to VTSAX and VXUS? Need to look at diversification and expenses more closely before making the shift.

I felt great about 40% international, but the strategy continues to fall short. My gut tells me to lower it, but my head tells me to stick to the plan.

Risk. My wife and I live well below our means and enjoy working. We could live off of my pension and be quite happy. 100% stocks gives potential for generational wealth, drastic lifestyle upgrade, philanthropy, helping family, ect. If it doesn’t work out, we are still in a great spot. Will shift to 80/20 once our income drops… using the Gfund as you stated. Thank you for challenging me on this. By no means closing the door on changing my mind. I welcome you to poke more holes in my plan, forcing me to flex my brain and re evaluate our position.
I wouldn't sell VTWAX and realize capital gains for the small benefit of the foreign tax credit; but if you have lots with losses, consider selling those, and make new after-tax contributions into VTSAX and VXUS.

No one knows, but I think it's quite likely US equities will continue to outperform. US provides a business friendly environment, stable goverment, and is a haven for technology and innovation. US multinationals are strong abroad so you've also got participation in foreign markets through those activities. I force myself to maintain my 20% ex-US position, but I'm glad its not 40%. YMMV.

70/30 is plenty aggressive for me. I don't need 100/0 to meet my goals, and if all goes to plan will leave a sizable legacy for my girls. Part of investing is minimizing regret. They say a gambler feels twice the pain from a loss as joy from a win, and I think the same holds true for investors. You're well set; have "won the game"; and while maybe its not time to stop playing, and least take a few chips off the table. I wouldn't sell anything; especially now; but would direct new money to G-fund and I-bonds. I take comfort in security. If you do chose this course, I'd do it gradually, over time, and not all at once "when your income drops." If you're investing for generational wealth, the arbitrary date you leave the gov't doesn't matter.

Noted economist Benjamin Grahm (Buffet's mentor) recommended an upper bond of 75% equities (i.e. 25% bonds) and a minimum of 25% equities. That seems like pretty good advice.
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Re: Active Duty Military Officer - 6 years left - Then What?

Post by Outer Marker »

The news out of China over the weekend provides another recent example of foreign equity risk we don't have here. All the big Chinese tech stocks down 12-14% on Xi's cementing control for life and potential further crackdowns. Not good for the likes of Jack Ma. When Elon Musk makes his occasional wing nut comments, no one worries he is going to be put in jail and removed from Tesla. Of the once touted "BRIC" countries, Brazil has the possibility of tipping into far left socialism after the runoff elections this week; Russia is at war; India, meh; and China, well . . . Foreign equities have under-performed, and in light of the above, this seems like a lot of uncompensated risk.
pilotmath
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Re: Active Duty Military Officer - 6 years left - Then What?

Post by pilotmath »

I was in a similar position to you a few years ago before I left active duty and joined the reserves. I wouldn't sweat all the comments about intl vs. US equities. Anything up to global cap weight intl equities is reasonable and your overall AA is reasonable too. I agree with the advice of getting additional life insurance. Check out AAFMAA. I compared their coverage with USAA and went with AAFMAA. Good luck to you.
Topic Author
CoastieFIRE
Posts: 35
Joined: Mon Oct 17, 2022 10:45 am

Re: Active Duty Military Officer - 6 years left - Then What?

Post by CoastieFIRE »

You Know What I Mean wrote: Fri Oct 21, 2022 7:24 pm
Parkinglotracer wrote: Thu Oct 20, 2022 8:06 pm
You Know What I Mean wrote: Wed Oct 19, 2022 8:07 pm
CoastieFIRE wrote: Mon Oct 17, 2022 12:38 pm Questions:
1. General overview of investments and their alignment with our goals - below. I plan to stay 100% in stocks viewing my pension as our hedge against market volatility. Will likely allocate 10-20% into TSP G-Fund (US BONDS) when we fully retire. Good plan?
I think so. We were 100% stocks when I retired (USAF 0-5), though I later bought a lot of Series I Savings Bonds in 2000-2001. We gradually downshifted to 60/40 about the time I fully retired (12 years later). Although one son had graduated from college and was on his own, we still had two in college. So, we were a little more conservative with 40% in fixed income. I like your 80/20.

One other thing, about networking. This is something you probably already know. Retired military people generally love to talk to and help future retirees. I took a transition course -- I think it was Stan Hyman's -- and was encouraged to talk to everyone I could who had already been down that road. It was amazingly easy. Whether you know them well, only casually, not at all, a friend of a friend of a friend, etc. -- contact them. I'm not a very sociable person or great conversationalist, but I was surprised how easy it was to learn from others. Just like the great responses you've already gotten on this board, other ex-military folks will usually enjoy talking to you.

You're in a great position. I wish you good luck, but you won't need luck. Thank you for your service.
Retired from military in 2005 with 60/40 asset allocation and retired from 2nd career in 2020 with 70/30 asset allocation. I wouldn’t automatically jump into 100 % stock asset allocation at military retirement time just because one has a safe gov pension. In my experience people may take the amount of risk in their portfolio they need to be successful in their retirement or they may take the amount of risk they think is prudent at their point in life. If one has large nest egg saved even if the majority of one’s day to day living expenses are covered by their pension they may not sleep well at night knowing it is all exposed to the risk of the stock market. Vanguard has a good chart of stock bond asset allocations and the historical one year portfolio declines. While the chart prob hasn’t exactly rung true this year with the bond market declines one might look hard at how much portfolio pain they can swallow as they decide their future Asset allocation.
I hear you, though I don't look at it as jumping into 100% stocks. They already have nearly $500k at ~100/0, with six or seven years to go till military retirement, so presumably are used to volatility. On the other hand, they could certainly invest less aggressively and be fine also. To some extent, it depends on the nature (pay level and security) of his post-military career. If it's a fun but low-paying, unstable job, then perhaps they would want to dial down the stocks.

Perhaps I am biased because I wish we had kept a higher level of stocks.
Great insight - you're correct, we have been on the volatility train for quite some time and it has not impacted our sleep or strategy. I also like the idea of deciding future AA based on encore career pay. Higher paying could stay in the 100/0 to 80/20 range....Lower paying job would shift to 60/40 to 80/20 range.

The way I see it, if our investments take a significant hit - I'll still be in the same position as most people who do not invest heavily or live frugally. I won't be in debt and can easily earn more than I spend. On the other hand, if our investments grow at the historical 6-12% rate - that is generational wealth even with a significant increase in lifestyle.
Topic Author
CoastieFIRE
Posts: 35
Joined: Mon Oct 17, 2022 10:45 am

Re: Active Duty Military Officer - 6 years left - Then What?

Post by CoastieFIRE »

ScubaHogg wrote: Sat Oct 22, 2022 10:16 am
CoastieFIRE wrote: Wed Oct 19, 2022 7:50 am
Will certainly attend TAPS - I've heard mixed reviews on it, but like anything, I'm sure it's what you make of it.
It’s been ten years since I did it, but if you are the type of person who comes onto Bogleheads, TAPS will likely be a monumental waste of your time

(Did you know you shouldn’t smoke in an interview?)
:oops: good to know on the no smoking!
Topic Author
CoastieFIRE
Posts: 35
Joined: Mon Oct 17, 2022 10:45 am

Re: Active Duty Military Officer - 6 years left - Then What?

Post by CoastieFIRE »

You Know What I Mean wrote: Sat Oct 22, 2022 9:27 am
Parkinglotracer wrote: Sat Oct 22, 2022 3:37 am
You Know What I Mean wrote: Fri Oct 21, 2022 7:24 pm
Parkinglotracer wrote: Thu Oct 20, 2022 8:06 pm
You Know What I Mean wrote: Wed Oct 19, 2022 8:07 pm
I think so. We were 100% stocks when I retired (USAF 0-5), though I later bought a lot of Series I Savings Bonds in 2000-2001. We gradually downshifted to 60/40 about the time I fully retired (12 years later). Although one son had graduated from college and was on his own, we still had two in college. So, we were a little more conservative with 40% in fixed income. I like your 80/20.

One other thing, about networking. This is something you probably already know. Retired military people generally love to talk to and help future retirees. I took a transition course -- I think it was Stan Hyman's -- and was encouraged to talk to everyone I could who had already been down that road. It was amazingly easy. Whether you know them well, only casually, not at all, a friend of a friend of a friend, etc. -- contact them. I'm not a very sociable person or great conversationalist, but I was surprised how easy it was to learn from others. Just like the great responses you've already gotten on this board, other ex-military folks will usually enjoy talking to you.

You're in a great position. I wish you good luck, but you won't need luck. Thank you for your service.
Retired from military in 2005 with 60/40 asset allocation and retired from 2nd career in 2020 with 70/30 asset allocation. I wouldn’t automatically jump into 100 % stock asset allocation at military retirement time just because one has a safe gov pension. In my experience people may take the amount of risk in their portfolio they need to be successful in their retirement or they may take the amount of risk they think is prudent at their point in life. If one has large nest egg saved even if the majority of one’s day to day living expenses are covered by their pension they may not sleep well at night knowing it is all exposed to the risk of the stock market. Vanguard has a good chart of stock bond asset allocations and the historical one year portfolio declines. While the chart prob hasn’t exactly rung true this year with the bond market declines one might look hard at how much portfolio pain they can swallow as they decide their future Asset allocation.
I hear you, though I don't look at it as jumping into 100% stocks. They already have nearly $500k at ~100/0, with six or seven years to go till military retirement, so presumably are used to volatility. On the other hand, they could certainly invest less aggressively and be fine also. To some extent, it depends on the nature (pay level and security) of his post-military career. If it's a fun but low-paying, unstable job, then perhaps they would want to dial down the stocks.

Perhaps I am biased because I wish we had kept a higher level of stocks.
I may be biased too based upon the recent market pullback wishing I had a bit lower asset allocation of stocks. I guess asset allocation nirvana is a personal place found somewhere in between!

Ps I bought 25K of I bonds in Oct 2000 which have been possibly my smartest move ever (I won’t mention my dumbest moves); I bet yours have worked out for you. In the next 8 years I need to figure out when to cash them in and pay the tax man.
Yup! This is eerie. Similar to you, we bought $24K of I Bonds from May-Dec 2000 and another $4K from Jan-Aug 2001. And like you, we will be paying taxes on them sometime in the eight or nine years -- a good problem to have! Having those I Bonds during an unstable career as a defense contractor was a good feeling. I, too, decline to talk about my many dumb financial moves.

How does this relate to the OP? I think it's really the same advice you mentioned: asset allocation is highly personal. It should be whatever the OP and spouse decide based on their personal situation. They both need to feel reasonably comfortable with it.
Missed out on the +9% IBonds - but with an upcoming move we will need that cash in the next 2 years. Sticking with laddered CDs for at least a few more years.
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Re: Active Duty Military Officer - 6 years left - Then What?

Post by Outer Marker »

CoastieFIRE wrote: Tue Nov 01, 2022 12:49 pm ...we have been on the volatility train for quite some time and it has not impacted our sleep or strategy. I also like the idea of deciding future AA based on encore career pay. Higher paying could stay in the 100/0 to 80/20 range....Lower paying job would shift to 60/40 to 80/20 range.

The way I see it, if our investments take a significant hit - I'll still be in the same position as most people who do not invest heavily or live frugally. I won't be in debt and can easily earn more than I spend. On the other hand, if our investments grow at the historical 6-12% rate - that is generational wealth even with a significant increase in lifestyle.
But why the need to reach for the stars? You've already won the game. I'd take the possibility of any bad outcomes off the table that could impact your lifestyle. It could still well work out that you'll do extremely well and create "generatoinal" wealth, but I would not make that a consideration that would have any impact on your outcome.
bovineplane
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Joined: Wed Jul 26, 2017 5:24 am

Re: Active Duty Military Officer - 6 years left - Then What?

Post by bovineplane »

CoastieFIRE wrote: Mon Oct 17, 2022 7:29 pm
bovineplane wrote: Mon Oct 17, 2022 1:57 pm Retire.

If you dont have a licensed specialty such as law, healthcare etc, start thinking about what you want to do and how you get there.

If you might need a TS clearance for a job try and line up recert early enough that it is good when you retire.

Set up term life insurance now to replace sgli before you get major health concerns or open a VA claim.

6 years is a long time to say you will return to your house. Keep your options open.

Keep saving. Start thinking about what you want out of retirement. Maybe you want a second career. Maybe you want a low stress job to occupy time and make a bit of money. Maybe you want to stay at home with the kids. The pension gives you quite a bit of freedom to seriously think about early retirement without the need for a real second career of stress.

Source - retired military officer x 3 years. Went to work in oil and gas after moving through two other jobs.
Thanks bovineplane!

Wish I had a dream job with licensure to work towards - but nothing is jumping out at me.

Great advise with TS clearance - first I've heard it.

Any advice on term life insurance resources? I'll run a search on hear and start digging in. Everything I've seen has been very sale's pitchy and smelled like a scam.

Options are certainly open - house is close to family, amazing schools, and in an area we love. However, we could sell no problem and are treating it as a rental/resale property - not a forever home.

Great advice - alot of my peers go work in oil and gas - it's an option - but low stress and family time sounds pretty damn appealing too!

Mind sharing any lessons from the two jobs you left? Poor fit? What would you do differently?
I retired into covid. Started terminal leave oct 2019. Worked on a contract gig for a federal agency in healthcare. Covid kicked off. March of 2020 out director i formed us there was a possibility contractors would be locked out if a covid case was diagnosed. This situation wasnt in anyones contract and nobody could say for sure what that meant for pay. Rather than waiting i moved to another federal contract with a different agency i knew woukdnt lock out. Also healthcare.

Fast forward two years my current position recruited me. 9 months later i havent looked back.

Life insurance. I went with USAA. They have a military clause that allows you to purchase an extra 400k without a new exam on separation. Basically reolaces your sgli. I did a 500k policy thrn exercised thr clause on sep for a total of 900k. I did compare but the few $ savings i could have had wasnt worth it to me when i had a banking relationship with usaa. Again, get the policy now before you develop serious issues or start VA claims which inevitably will make your quotes increase.
bovineplane
Posts: 180
Joined: Wed Jul 26, 2017 5:24 am

Re: Active Duty Military Officer - 6 years left - Then What?

Post by bovineplane »

Valuethinker wrote: Tue Oct 18, 2022 6:24 am
CoastieFIRE wrote: Mon Oct 17, 2022 12:38 pm

Oil & gas is a tough industry. That I know. My boss at one time, partner was with one of BP/Shell/ Total etc. Had responsibility for resources in a whole region of the Earth. He was signed off work for several months due to stress & exhaustion, was spending half the week in Europe and half in Houston. O&G seems to be a bit like the military - you get in young, they work you to death, fling you all over the world, then you retire young (hopefully). 4 year stints in Nigeria are pretty tough though.

If offshore is your thing, then there will be a burgeoning industry building offshore windfarms on the US East Coast. Europe is leading the way on this, but US & Asia are beginning to catch up. Getting these things onto the sea bed is huge engineering with many similarities to O&G offshore. Then they have to be maintained long run, and, eventually, repowered or uppowered (that's already happening with some European offshore farms).
I just want to say about oil and gas, it varies. Not every job is like this. Mine is very relaxed. Oil and gas is very boom and bust however.

In O&G there are contract, hourly and salary employees. Contract and hourly are worker bees. Some low paid low skilled. On the high side ours make in the 120-130k range.

Salary can be anything from lower skilled assistants, paid interns, entry level stuff. Mid range would be engineers, safety. Mid senior are the section leads such as industrial hygiene, safety, environmental, supply chain, etc. Senior are the leadership team and higher c-suite.

I am a mid senior lead salary employee. I work 8-4 plus carry a cell. I have holidays and weekends off. I cant get called in on contingency or emergency. It is a very nice change of pace from active duty. I also understand right now we are boom. During the last bust early 2020 we cut 15-20% of employees.
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