Retire in 5 yrs or stay in another 15?

[thongcongnghetcucre]

@mellowyellow It's best to retire for that 50k a year, mainly because you need to start a new career and you'll be at the bottom of the totem pole. Even if you start as mid level management then you'll still be at the bottom of that for awhile.

 

[pigjackey]

@mellowyellow If you are only staying in for retirement and are “gritting your teeth” to stay in you should get out. The people you work with and those that work for you deserve better than someone waiting around until retirement. Just my opinion. Don’t be miserable and make those around you miserable for another 7 years. I’d say you should jump ship as soon as possible.

 

[princessj2]

@mellowyellow If you still like it stay in. I’m doing the same route you did. We basically have the same plan, but I’ll be in around 25 years when I retire which will put me at 62.5 percent at my retirement. This is when I’ll be eligible to retire in the Officer grade. Tbh, I’ll stay in no matter how much bs I have to put up with. That retirement is gonna be nice if I can do 28 years and retire as a major. To me it makes more sense to just stay in. I hope you still enjoy it!

 

[mellowyellow]

@princessj2 That's my thinking. I need to try and get reinvigorated for service in these last 5 years before I'm ret. eligible. I do want to stay in, I really do, haha. I just don't want to be a salty/uncaring officer as I know that's not good for anyone.

 

[princessj2]

@mellowyellow That’s true. I think you care deep down, just might have to suck it up, for like 3 years and the last 2 just focus on yourself.

 

[texasjo]

@mellowyellow You have 5-6 years to start looking at fields/companies/specific jobs. I would dig into the details during this time and really see what you're signing up for. As other have mentioned, that $200k a year starts going down significantly when you start adding all the hidden costs of being a civilian. Health insurance, life insurance, no BAH/BAS, etc. Not to mention you'll likely have 10 days of vacation vs the 30 you have now. A single $200k salary for a family of 7 in a HCOL area isn't much these days.

Without knowing more details about your current job and the civilian one you're referring to, you also need to consider quality of life. PCS moves & deployments vs long salary hours, potential for layoffs, etc. Life as a civilian isn't all sunshine and rainbows.

If your ultimate goal is to retire and never have to work again, then a guaranteed income from day 1 of retirement that provides your current quality of life is really nice. Retiring "early" and getting a well paying job is good while you're working, but if you don't properly plan for retirement then you could start to feel the strain as you get older and are relying more and more on the reduced pension. At a minimum I would try to start maxing out your TSP now, the contributions now are really going to be what you're living off of later due to the compounding interest.

 

[tryhonesty]

@texasjo I mean, he would be eligible for Tricare as a retiree and for veteran's group life insurance (if he wants more coverage then that is a separate issue). Also, technically it would be $200k + pension + disability pay. Agreed that life as a civilian isn't all sunshine, but several of the things you mentioned are mitigated by retiring vs just leaving the service.

 

[resjudicata]

@mellowyellow You could also get disability, which after 20 is probably not nothing. Your Tricare should still be covered as a retired.

Also there's something to be said of if you'll keep promoting-nit guaranteed, especially if there's a draw down one could assume is on the horizon with major combat operations in two wars ceasing. If you don't promote to O5 can you stay past 20? (I'm Navy, and statutorily we're out at 20, per Congress so extremely difficult to get waiver. Not sure how that works from the former E side or if different for AF)

I'm in the same boat (though a few years behind you)

Will the pension allow me to take the job I want? Teacher with 50k+ kicker from Uncle Sam in mil pension looks a whole lot more feasible than without it.

However if you are inclined to stay in money/lost income opportunity isn't everything: Looking at friends making 200k+ in civilian sector have way worse hours than I currently do (when not deployed) nice thing about mil is it ebbs and flows. You know by now what tours will require you to give everything, especially if looking for Major vice what ones will allow you to focus on home life/yourself. Plus civilians ain't getting 96s on top of 30 days leave. That's something to be said especially if your kids will be the ages you can hang out with them.

Edited with more thoughts, antithetical to abovd: if trying to stay to spend time with your 5 kids and grand kids, you'll need to be fighting hard to stay promotable (the mil knows you aren't putting on a star, and probably not a full bird with time in already) which means harder tours...and this not seeing your kids. Vice civilian job, you know your hours and if you get a shitty one, you can just leave/ find a new one. There's probably a few companies that care about what you've done and those skills to parlay into another similar role. You know you won't go hungry, so it'll also allow you to get creative on what you want to do, and how you can manage what you want out of life which seems to be prioritized on time with family vice number in bank.

(That's for posting this question, it helped me work through some stuff of my own career and it's nice to see something from the O side in this subreddit, which is refreshing)

 

[ndune4jc]

@resjudicata Prior E officers do not have to get out at 20. From the USGOV perspective, you are starting a whole new career. OP can almost certainly stay in and retire as a Lt Col/Col with 40 years TIS if OP is so inclined.

 

[resjudicata]

@ndune4jc Ah, my bad, thank you!

 

[lydiathyatira]

@mellowyellow Punch out for the opportunity cost/benefit at 20. Life at O-5 doesn’t get easier (depending on the career field of course). Unless you really love your job/mission/locations/etc I’d punch and avoid gritting teeth. Your troops and family will very much love you for it.

 

[icantplayguitar]

@mellowyellow Great spreadsheet and interesting discussion. You have 1 life, and I highly recommend you do what makes you and your family the happiest. If you can make 200k while collecting a 50k pension and have free healthcare, that seems like an awesome position, especially if you enjoy your job. Who cares if you could come out 100-300k ahead in the long run if it means 10 years of working a job you dislike, or spending long periods of time away from family and friends? Spending 10 years in the civilian sector during prime working years can also lead to so many more interesting part time consulting jobs down the line, which may add to a nice work life balance or allow you to have fun working later in life.

 

[markfill]

@mellowyellow I’m in the uk but have almost the exact same dilemma. Stay at o5 for the next 15 years or roll the dice and try something new. Our pension arrangements at 20 years aren’t quite as generous as yours but we still get a modest income each month which most would be very happy to receive.

Anyway, let me know when you find out what the answer is…

I also suppose there is a recession coming which plays into thinking

 

[carabu]

@mellowyellow If your goal is to be able to not work at age 50 w/ a collection of assets (pension/investments) that results in an income of $101k/yr, its seems like the question your spreadsheet needs to be asking is - what level of income is needed between your retirement eligibility age and 50 that enables you to maintain the same paycheck while also allowing you to save enough to have an investment nest age ready to draw from at age 50?

Back of the envelope says based on regular military compensation, when you are retirement eligible at 20 years as an O-4 youd be making $150,000 per year.

In order to have sufficient investments by the age of 50 (assuming no current investments), to make up the difference between what your 31 year retirement vs 21 year retirement is (about ~$80,000 a year), youd need to have about $2,000,000 saved. This is based on being able to safely withdraw 4% each year.

Assuming you had $0 saved the day you separated at 21 years, to have $2,000,000 in 10 years you would have to invest about $12,000 a month or $144,000 a year so that with a rate of return of 7% it would result in $2,000,000.

If you wanted to keep the same $150,000 lifestyle when you separate, while also saving this amount in order to be ready to not work at age 50, your annual income would need to be $294,000. Since youd be earning a retirement paycheck at that point, youd only need to have a job that pays you $242,000.

Now, I made a bunch of assumptions here, like no current savings, the goal being to not work at all at 50, and your risk posture as far as what draw down rate youd want for your investment portfolio.

So my gut check is that if your goal is to have $101,000 income at age 50 with no need to work, stay active duty until you can retire at 31 years. Otherwise, some other variable needs to change about the $101,000 @ 50 without work. I dont know your field, but I doubt that a job that can bring in $240,000 a year is going to be that much better when it comes to work life balance, stress, or benefits as being active duty. Also, that seems like a pretty tall order to snag such a job and keep it for 10 years if your goal really is to not have to work at all at age 50.

Side note - check my math people, I may be wildly off here.

 

[whitehorse]

@mellowyellow There's a program that you can do as an officer that basically lets you go TAD to a company for the last 6-12 months of your enlistment if your command approves it.

You basically go thru the acclimation phase of a company while still being enlisted and then when you get out, you can make an easier transition AND you're already working for someone. That's if you're planning to get out at the 20 mark.

 

[mellowyellow]

@whitehorse Thanks for this, I will look up this program. If anyone knows the name of the program reply here for ease in research.

 

[whitehorse]

@mellowyellow https://ripplematch.com/career-advi...d-to-hiring-and-supporting-veterans-b649973c/

 

[panzerkamfwagen]

@mellowyellow Towards the end, it all orients to your kids. High School stability is a quantity all its own. …

 

[annyfins]

@mellowyellow One possible variable to consider is VA disability. At 20 years, you'll likely have a list of ailments that may qualify you for VA disability. It's not a lot, but there can be other benefits besides the payment that should be considered from a financial perspective (e.g., tuition discounts / free for dependents (typically @ 90-100% rating though). Too many to get into, but check out the wiki on r/VeteransBenefits for more info (including state specific).

Obviously, entirely up to you if you do apply for a VA rating. However, I would encourage you to, even if you could reasonably expect only a low rating. Eventually, some of those 0 or 10 percent ratings start become problematic, and it's much more work to get a VA rating if you wait until long after leaving active service.

 

[msmat]

@mellowyellow Staying in to 30+ years is usually a function of whether you make Major and Lieutenant Colonel. You need to take a hard look at your potential for promotion and base your decision on that. It does you almost no good to stay to 24 years if you don't make Major. In general, once you are past 40 every year that passes makes getting hired for a new career more difficult. It's illegal, but age discrimination is very very real.