An average healthy meal (salad) at my work is about $10. I can bring my own for less than $3. So $7 a day for 4 days a week is $119 at 6.5% interest (reasonable investment return) = $20,267.53 at the end of 10 years. Which would you rather have, $20 grand in the bank or memories of daily food purchases at work for 10 years?
Of course if you regularly buy breakfast at work and eat dinner out a couple times a week, the money can add up even faster. This isn’t to say that you shouldn’t be able to treat yourself to a nice meal, but if you do it every day, is it really that special?
Making my lunch takes only a couple minutes in the morning, even less if my leftovers have survived the teenage pillaging of my refrigerator. Sometimes it is a salad, sometimes a can of soup and a couple pieces of bread.
My goal is that lots of little life changes and a few big ones will allow me to save more to bump up that retirement date.
Based on recommendations from MMM, I’ve recently bought myself a road bike and I’ve been slowly working my way up to riding more. This week, I rode my bike to work and back two times (full disclosure, I drive my car 4 miles to the Mount Vernon Trail and park then bike the remaining 9-10 miles).
The two main benefits of biking to work are saving money on gas/wear and tear on my vehicle and I get a great workout during my commute. This week’s riding works out to 48 miles which I didn’t put on my car.
Above is the bike I bought, an entry level road bike from Nashbar.com. They regularly run sales, so I timed my purchase with a 20% off option and got the bike for less. I’ve since changed out the pedals to clip-in style and the tires to Continental Gatorskins (kevlar lined to minimize flats) and I’ve added some lights and a handlebar mirror.
I opted for a road bike over a mountain bike since I have a fairly long ride and the trail is well-paved. The road bike affords me greater speed so the ride goes a little quicker than it would on a mountain bike.
Biking to work won’t work for everyone, but especially if you have a biking trail that covers a big chunk of your commute, you can really gain benefit from taking advantage of it. I’m fortunate in that the trail I use runs all the way to the Pentagon where I can park right outside our Athletic Center and grab a quick shower on my way to work.
I use the app Runkeeper on my smart phone to track my time/distance/calories burned. Works great!
So what does this have to do with retirement? Less driving = less money spent and exercise = healthier Rich!
I’d love to hear from you in the comment section about biking and other non-conventional ways you get to work.by Rich
I like a sharp looking tattoo. I don’t have one because I haven’t thought of anything I want on my body forever. I’m open to getting one at some point.
This however is a cautionary tattoo tale.
Years ago there was a Boatswain’s (pronounced Bosun’s) Mate on my ship with an interesting tattoo on the back of his neck above his collar. Written in Olde English script was the phrase “Trust No Bitches”. I never had the chance to ask him what sequence of events led to his epiphany.
As luck would have it, this young man’s next set of orders was to a Submarine tender, a Navy ship which at the time was crewed with a high percentage of females as it is classified as a non-combat ship and combat ship roles for females were still being worked out. (I was on an all male crewed ship at the time).
I always wished I could have been a fly on the wall bulkhead when he checked in with his new female Chief/Division Officer/Department Head/XO/CO on his new ship. I’m picturing a frosty reception.by Rich
Should you view your military pension or any other government guaranteed pension like Social Security like a large investment in bonds? The definitive answer is…it depends.
Some folks make the case that since your pension is guaranteed by the government, it is very similar to buying a number of Treasury Bills and that you can adjust your portfolio mix between stocks and bonds to account for this large cache of bonds.
Others like Ric Edelmen say that since you can’t buy or sell them it doesn’t count as part of your portfolio, you just subtract your pension from your desired annual income to figure out what you properly diversified portfolio amount should be to retire.
Nords takes the view that your pension can satisfy your bond requirement if you keep 2 years of expenses out of the stock market to account for volatility. Others say your time horizon should be much longer– say, 10 years to properly account for stock market volatility.
I think between the natural tendency to reduce spending when your investments are down which we discussed in this post and keeping a certain amount of money in cash to account for the variations in the market, a pensioner can take a more risky position with their investment portfolios than someone living solely off their retirement savings.
In my case, I hope to live off only my pension and any part time work I do for the first 10 or so years after retirement from the Navy. Consequently, I plan to keep my portfolio mix highly weighted towards equities with only small bond positions.by Rich
One of the biggest changes to our flight plan over the years is our middle son Nicholas. Nicholas has autism which has dramatically changed the way our family operates. Early after Nick’s diagnosis I read a short essay entitled “Welcome to Holland” by Emily Perl Kingsley that was helpful in gaining some perspective on our situation. The premise of the essay is that having a child is like preparing to live in Italy, you learn the language, get excited about all the stuff to see and do and you are off! When you arrive, you find you are in a different country with a different language and culture. You are lost.
There are some striking similarities.
On one level, you have challenges that parents who don’t have a special needs child will never understand. A special needs child is a huge drain on the family and a marriage. The “regular” kids in your family often take a backseat to the requirements of the special needs child. Your dreams for your child seem gone forever.
But on another level, a special needs child can be an immense blessing, pulling a family and a marriage even closer together as you face the challenges laid out for you. It is never easy, but it gets easier and you come to have new dreams for your child.
I know for a fact that Nick has made me a better father and husband. For a kid with autism he is fairly flexible, fairly verbal and a very fun kid. He loves to hike, swim, play Minecraft on the computer and draw intricate road designs with sidewalk chalk. He used to make the most amazing 3D structures out of masking tape, but we finally weaned him off after we had to re-carpet our house due to tape residue.
We don’t know what the future holds for Nick, we hope he can find some employment opportunities and potentially live in a group setting, but the most important thing for us is that he is happy.
We are looking into options for a Special Needs Trust to safeguard some money for Nick and additionally the military’s Survivor Benefit Program is something that could provide income for Nick in the future. I will discuss the Survivor Benefit Program in a later post.
In 1998, Philip L. Cooley, Carl M. Hubbard and Daniel T. Walz, wrote a paper called “Retirement Savings: Choosing a Withdrawal Rate That is Sustainable,” This paper is commonly referred to as The Trinity Study as all three were at Trinity University when they published the paper.
The main thesis of the paper is that a 3-4% withdrawal rate would allow the average retiree enough money to live 30 years in retirement. Another way to put the 4% rule is to accumulate 25 times the assets you need for an annual income in retirement.
As an example, to live on $60,000 a year would require 60,000 X 25 = 1,500,000 or $1.5 million according to the study.
Since publications, the study has been referred to numerous times as a guideline for retirement. It has also been widely criticized as unsustainable in the long term, especially if you want to retire earlier than the typical 65, you might find you need more than 30 years worth of retirement savings.
The study referenced data from 1926 to 1995 and 1946 to 1995 and looked at the percent of years various withdrawal rates would support assuming certain portfolio mixes between stocks and bonds. Stock heavy portfolios fared better than those with higher mixes of bonds with the greater risk associated with a stock heavy portfolio.
Of course, one of the facts of retirement not accounted for directly in the study (but referenced in the Trinity discussion) is that retirees may modify their withdrawal rate to account for variations in the stock market, taking a smaller withdrawal in bad years and returning to the standard withdrawal in good years.
Another big assumption of the study is that you will have a good run at least the first few years of retirement, giving your investments a good opportunity to grow well at the beginning of your retirement. If you retired in 2008, that was not the case.
Lots of folks have written on the topic, Doug Nordman of the Military Retirement and Financial Independence blog has written extensively on the topic. Here is one of his articles. The Bogleheads (named after John C. Bogle the founder of the Vanguard Investment Group) also have extensive articles on the topic: here’s one.
So if you have a military pension, how do you account for that in your calculations? Just subtract the annual amount of your pension from your required (desired) income in retirement before multiplying that amount by 25 (good news if you are planning a military retirement and don’t have $1.5M sitting in the bank at the moment).
Next retirement focused article will be on the military pension and how it impacts your portfolio mix (does it make you heavy in bonds since it is backed by the federal government like a Treasury bond?).
As I watched the coup take place in Egypt yesterday, I was reminded how blessed we are in this country that despite our differences, we are able to elect our government without bloodshed and without our military’s involvement. The concept of the military answering to a civilian authority is not well known in large parts of the world.
I served for 3 years on the Joint Staff in the J-5 Directorate that handles Strategy and Policy for the JS. I worked as an Action Officer who liaised between the U.S. and various other countries.
I distinctly remember a meeting between the Fijian CHOD (Chief of Defense Force) Commodore Josaia Voreqe Bainimarama and one of the Flag Officers in J-5. The main topic of the meeting was a discussion on why Bainimarama shouldn’t take over the government of Fiji, which he viewed as corrupt. The Flag Officer made a compelling case invoking the United States as a model on how the military should act, but Bainimarama was having none of it. He had previously “dissolved” the government and wouldn’t hesitate to do so again if he thought it appropriate.
Later that year he conducted another coup and is currently the Prime Minister of Fiji.
On this day remember the relative rarity of a country who has followed the same Constitution and successfully transferred government peacefully for our entire history (setting aside that unpleasantness called the Civil War). There aren’t many other countries with that kind of track record.
Enjoy your Independence Day!by Rich
I work in the world’s largest low rise office building. Despite the important mission of the Department of Defense, I see some pretty hilarious stuff. Due to the security rules of the Pentagon, I can’t post pictures, but I can describe what I have witnessed.
Friends from Facebook will recognize some of these I’ve posted there before. In my opinion they get funnier with age.
People of the Pentagon – Not dressing out for PE.
Remember in Physical Ed class if you didn’t dress out for class you didn’t get credit?
I keep seeing my Army brethren working out in their ACUs (cammies) instead of putting on some workout gear like the rest of us. Now I get it, in the field, it is a great stress relief to do a quick couple sets, but since your PAC membership comes with free towels and soap, do us all a favor and dress out for PT. Your office mates will appreciate your lack of fragrance. Are you guys HUA(ing) what I’m saying?
People of the Pentagon, Parking edition. North parking at the Pentagon consists of a very small amount of general parking spots folks fairly close to the building and a ton of spots significantly further away over the I395 bridge. If you’ve got the time to idle your car every morning waiting for a spot to open up close in, BUSYMAN might not be the best vanity plate for you.
(Posted April 1st)
They have closed off an area of a common area in the Pentagon on my floor to replace lighting or some such nonsense. Semi-permanent walls with construction tape all around.
Made up some official looking signs letting folks know it’s going to be a To-Go version of Buffalo Wild Wings!
Now we wait…
People of the Pentagon high winds, poor hygiene, poor judgement, multi-tasking edition. Today’s top wind speed outside the Pentagon was measured at “Porta-John blown over” speed. On the lack of hygiene/judgement front I saw a gent urinating and brushing his teeth at the same time (not in the sideways porta-potty). I am ashamed to say it was a Naval Aviator. I cling desperately to the hope that he was an F-18 pilot…
People of the Pentagon: Callsign edition!
For aviators, callsigns are cool! The “Remove Before Flight” ribbon with your call sign embroidered on it looks sharp hanging from your backpack. The overall effect is dimmed a bit by the lunchbox attached to your backpack that is also embroidered with your callsign…9 year olds with their name embroidered on their lunch box are cool, Air Force fliers, not so much “Spanky”.
Todays Person of the Pentagon:
I rode my Harley in and parked across from an Air Force LtCol (in uniform) getting off his white Vespa. Then he pulled out a spray bottle to fix his helmet hair…
Back by popular demand: People of the Pentagon – Parking Lot edition!!
Today I was 4 cars behind a lady in a Suburban “trying” to back into a spot. This would have been fine except it took her 4 trips back and forth from Drive to Reverse to accomplish this goal.
In her defense, she accomplished this feat with a cell phone to her ear and with the added flair of a spoon in her mouth (didn’t appear to be a silver spoon).
Today’s People of the Pentagon is Pentagon Athletic Center focused:
1. Soldiers too lazy to put on PT gear, PTing in their cammys.
2: Folks who run outside and then continue their run inside all the way to the locker-room.
3. Stretching in the locker-room…naked.
and lastly and related an important gym rule – The Naked Man Always has right of way…Always!!
I work in the Pentagon. The building that represents the most powerful military in the history of the world. Billions of dollars spent on the most advanced weapon systems ever conceived. On my way out tonight, 5 workers were chasing 3 sparrows with butterfly nets.
Badminton is the official “sport” of the United States Air Force. I have seen several AF officers in the Pentagon with specially designed gym bags for their badminton rackets. I am not making this up.by Rich