Happy Sunday / Mother’s Day!
I was curious for those who retired at the O-5+ level. How is life retired? Was it hard getting VA %? Any tips for a Junior Officer debating if military retirement is for them? What was your realistic net worth when you did retire? Thank you for your service & time!
Background Info:
Current O-2 about to hit 3 years TIS, contribute 10% to TSP, own a townhome with $100K equity, fully funded emergency savings, contributing to a HYSA currently.
Realistic Officer Retirement Questions
byu/Brendo_dasher99 inMilitaryFinance
Posted by Brendo_dasher99
10 Comments
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I am not an O-5+, but I will say that getting your VA% doesn’t change whether you are an O, W or E. Also you should consider the full value of a military retirement. One of the most under-appreciated benefits is your healthcare being covered for life for you and your spouse/future spouse. That alone is worth potentially 1/2 million to more in premiums, deductibles, co-pay etc.
If you keep on your current path with savings and put the throttle down even more as you gain rank you will be sitting with a great pension, a large TSP account, IRA account, and taxable brokerage account plus possibly a nice real estate portfolio. Just know that there will be a lot of short-term pain points as you contemplate if it is really worth staying in, but look long-term and there is no doubt that it will be.
Not exactly your demographic, but close. Retired W5. Made sure my medical issues were documented during my last two years, that made the disability application and screening process pretty easy.
For me and my family, it was worth sticking around for the retirement. Between the pension and the VA, a pretty comfortable baseline life is all funded.
I tried to fully retire when I left the service, but going from the pace I had been working to zero was much too abrupt of a change for me, so I went back to work. Now I work because I want to and it pays for the extras in life. Much less stress now because if I get sick of what I’m working on or who I’m working with, I can just quit because my family’s baseline life is funded. Not sure how long I’ll continue working, but I’m happy for now.
I’d say that a major benefit of sticking around for a military career is that you get to work on something hopefully meaningful to you, with some great people, and you earn a guaranteed income for life in your early 40s. If you want to keep working afterwards, hopefully you continued your education and built skills while in service that you can use to find a nice second career or post retirement job.
A career in the military isn’t for everyone, but it was good for me.
Retired as an O4 with 25 years of service in 2013. Being as retired officer provides you the opportunity (if you make smart financial decisions) to do what you want to do. My retirement pay is about $64k a year, I retired 100% debt free with about $800K in investments and net worth of $1.1M. I did work for another three years during the past 10 years, my current nw is $1.8M. I fully retired two years ago at 52 and haven’t looked back. Best piece of advice I can give is to invest early and max out all available retirement options. Time is on your side at this point your wealth will grow tremendously over the next 17+ years. I’m a big fan of not going into debt except for investing purposes. Pay cash for everything, if you don’t have the cash then you can’t afford it. Every car I’ve owned and every house I’ve bought was with cash.
Is 10% maxing out your TSP? If you have a good emergency fund you should look into investing in the market. HYSA will not provide you the max return.
You can use an Annuity calculator and 20-year O-5 pay and see that the retirement pay alone is worth $1.5-2M. That doesn’t count any disability or your healthcare for life… So even if you saved nothing it’ll like retiring a millionaire.
If you save smartly and invest your entire career you could also have well over a Million in the bank as well. My wife and I combined broke the $1M mark in our mid 30s and $2M in our late 30s, will probably retire over $3M if the markets average their historical rates…
Max your Roth and TSP, go all in on the C Fund in the TSP and grab a bunch of QQQM in your Roth and you’ll live like a king at 42 when you retire and never have to work again unless you want to.
Good luck!
As an O2 you should be contributing no less than $1250/mo to Roth TSP and ideally max at $1920/mo… you make the equivalent of $120-160k on the outside.
O5 retirement will be enough to cover my living expenses, but this is because I controversially paid off a 3.25% mortgage over maxing retirement every year with a family of 5 to plan for this transition. The math doesn’t work when I’m 75, but I want to enjoy financial freedom and as a mil retiree I’ll statistically be dead by then.
I’ll take a cushy WFH job to have fuck you money and put the kids through college.* Then retiring at 60 to take early SS. At that point, the $1.2M in TSP will just rot.
*Between 9/11 GI bill transfer and 529 savings they each have $60k towards college, more than I ever had. Plus the yellow ribbon program.
My wife is O4. Between high-3 O5, TSP, VA, and her IRA I am projecting $10k a month ish. And I am being lenient with the O5 promotion date. I factored in just enough for high-3, but she will make it before that, I think.
As for VA rating… Document, document, document.
I wrote an Excel spreadsheet to let you play with numbers / ailments to see what you need for 100%. Happy to share it with you if you do me an email. Not sure I can DM you an .xls.
Edit. Also projectu g her TSP around $1.8m
Yes. Totally worth it.
I retired under high 3, 27 years. 80% VA.
I am pretty much set.
Retire from Active Duty
Network into a Federal Government job
Apply for VA Disability if you have issues
Max out your Civilian TSP
Start a side business. One with minimal labor costs. Like a Car Wash
Retire at 62
Collect Disability. Federal, Military, Social Security and TSP every month
The more you work. The higher the rank. The more you get each month