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.
by Rich with 2 Comments
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?).
by Rich with 1 Comment
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 with No Comments
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 with 5 Comments
The best way to estimate your military pension is with one of the calculators available on militarypay.defense.gov. For most folks in the window to retire, the High-3 plan will apply where you receive the average of your highest 3 years of base pay on active duty (usually your last 3 years).
You plug in your retirement year (or estimate) years of service, grade, and then estimate inflation and pay raises plus your tax rate after retirement to generate a fairly lengthy output. There are several graphs of how much your retirement amounts will increase over time and such, but the most important chart is at the very bottom and it is labeled Summary Results Table. This chart shows your your monthly and annual pay before and after taxes and provides an estimate of how your pay will change based on the active duty pay raises you selected.
So now you can calculate what your pension will look like with various scenarios on inflation, cost of living increases and tax scenarios. Some states either don’t have a state income tax or exempt military pensions and these facts are important to consider when you are picking your retirement location.
In this scenario, the pension isn’t enough for an average family to live on without some pretty severe belt tightening, but it provides a nice supplement to either a second career income or to offset the amount of retirement savings or other income producing investments (such as real estate) you have to draw from upon retirement.
The best characteristic of the military pension is that it represents a government backed annuity with guaranteed cost of living increases.
Next post we will punch some numbers on example retirements.by Rich with No Comments
I recently had my eyes opened on retirement. I was trudging along planning to retire from the Navy with a generous pension and then get a “beltway bandit” job at a defense contractor to rake in some big cash before I permanently retired. Now, I might find myself going down the contractor path, but as of right now that is not my plan.
After some research I discovered I might be able to just retire from the Navy.
Currently, we live in Northern Virginia and the cost of living here is very high. Way too high to retire on just my Navy pension. That’s ok as my wife and I have no intention to retire in this area. We are looking at several locations, our most promising current locale is Northwest Washington State. My goal between now and retiring from the Navy is to save for a big down payment on a house in the Pacific Northwest.
In this blog post I want to discuss some the websites I peruse regularly for financial/retirement advice, some of the calculators available online and budgeting options, to include Excel spreadsheets and paid for software.
So the first site I stumbled upon for the topic of early retirement was a guy who calls himself Mr. Money Mustache (mrmoneymustache.com). His blog focuses on budgeting, cutting costs and retiring earlier. MMM and his wife retired at 30 to raise their son. Their current annual budget is $27,000 (they own their home outright). MMM has been featured on a slew of financial, self-help and news sites/programs, most recently in a Washington Post article (http://goo.gl/FcuQk).
His frugality may be more than some folks (your dedicated scribe included) can live with, but he provides some great motivation with financial “face punches” to folks spending huge amounts of money and working their entire lives to maintain a ridiculous” Exploding Volcano of Wastefulness”.
MMM has over 300 blog articles and a very active forum of “Mustachians” who share advice and “badassity”. A great group of folks.
Next up is The Military Guide website (http://the-military-guide.com) Doug “Nords” Nordman has literally written the book on military financial independence (http://goo.gl/ur3HY). He and his bride are retired (he from active duty Navy, she from the Navy Reserves). They live in Hawaii, where he splits his time between surfing, managing a rental property and running a kickass website/blog.
Nords posts tend to be more aligned with military financial independence and retirement, but he still covers a lot of ground of great use to almost anyone. He is a regular poster on many other sites (to include MMM, where I first found out about him). His posts are very well written and very entertaining.
There are a slew available online. I’ll discuss two I really like.
Todd R. Tresidder is the owner of financialmentor.com and a financial coach. His website provides a plethora of advice and some of the best financial calculators out there. My favorite is his Ultimate Retirement Calculator, http://financialmentor.com/calculator/best-retirement-calculator
This calculator asks for your age at the end of the current year, age to retire, life expectancy, annual desired income and allows you to input several variables, such as cost of living adjustments to pensions, expected rate of return, expected inflation etc. It is a fairly comprehensive calculator, but lacks any type of historical averaging or Monte Carlo simulations, it just runs the numbers against your predicted returns. The lack of historical returns is on purpose, Todd does not think it is particularly relevant. It is a great calculator to run various dollar amounts through as far as how much income you will need, what size estate you want to leave etc.
Nords did a great review/explanation of Todd’s calculators here (http://goo.gl/BHigD)
Firecalc http://www.firecalc.com/ is a very powerful retirement calculator that runs your predicted finances through scenarios involving data from every year since 1871. The end result looks like a kid’s Spirograph gone horribly wrong, but will show you the percent chance your retirement plan will work across all the years. This is handy to give you a percent chance your savings and spend plan will support you your entire retirement. If your plan survives contact with the crash of 1929 you are probably in pretty good shape!!
There are a bunch of financial calculators available, and I have only listed two. They are my favorite and you should try several to see what works for you. It is important to understand the investing philosophy of the owner of the calculator and ensure that philosophy aligns with yours.
I have toyed with many budgets over the years with limited success. Once my wife and I got serious about this new retire early plan, I modified an Excel based monthly budget and started using it.
What really made it much more effective than previous attempts was one important change to my system. Previously we spent pretty much what we wanted and did our best to pay off debts early. With the new system, my wife and I agreed to pay ourselves an allowance every two weeks. This allowance was automatically transferred to our own accounts to be spent however we wanted. Everything else in the main checking account went to monthly bills and investments.
This has worked very well to help us pay off debts and get our financial house in better order.
Recently, I purchased YNAB – You Need a Budget (youneedabudget.com) This is a software budget system(cost is $60) and focuses on giving every dollar a job by budgeting. The other goal of YNAB is to get you out of the paycheck to paycheck cycle allowing you to get a month or more ahead.
I am fairly new to YNAB, but really like it. The software has a broad following and a strong forum community to answer questions as well as lots of free training to go with your software. Definitely a community feel and focus.
Here is my affiliate link which will get you $6.00 off the price (full disclosure, it gets me $6 as well!) http://ynab.refr.cc/WJ2XRXZ
So that is a very quick rundown of various sites and software I’m using to chart my family’s plans for the future. Future posts will run some example retirement scenarios to see how they work.
I’d love to hear from you on your retirement plans and goals in the comments section.
by Rich with 8 Comments
Welcome to Chartprepping.com! I’m Rich Davis and I wanted a blog to talk about many things including my plans for retirement, finances, the U.S. Navy, helicopters, motorcycles, my faith, beer brewing and other stuff I haven’t thought of yet.
Why chartprepping.com? Aspiring Naval Aviator’s spend a lot of time preparing aviation charts before flights. Marking the different flight legs, time for each leg, fuel required etc. as well as planning for alternate landing sites in case something goes wrong with the aircraft or weather.
I think chart prep is a great metaphor for life. We try to plan out our flight through life and often find we have to detour our flight path around bad weather or realize we can’t reach our original goal due to an unexpected headwind.
My wife and I are knee-deep in planning for our lives post Navy and we want to share our thoughts and plans with you.
Thanks for checking out the site!by Rich with 1 Comment