100% equities

[Atretes1]

That's crazy that you are retiring with $10k pension a month. That's a lot. I can see how if you aren't a officer that it's a very generous match and bonus for 20 years and I would not be unhappy having a pension of $3500. Of course it meant having to work and move for the military for 20 years.

This is a state pension. I work in a jail and there is ample opportunity for overtime. My pension is only that high because I have 3 good years of overtime to put in the formula. I am also doing 30 years to get that. And that pension with my rental properties is why all my investested retirement funds are equities.

[Like2Plan]

Is the 40% pension that much less than 50%? I mean really it shouldn't impact that much and with the matching shouldn't you come out ahead?

Let's say retiring exactly at 20 years, 50% annuity is a 3500 monthly benefit (based on the average of the high 3 of basic pay). 40% would be 2800. If the service person wished to provide a COLA'd survivor benefit for spouse and children, there is a further reduction (around 6.5%). One bright spot is the SBP costs are pretax, the remaining benefit is taxable (Also, SBP costs are no longer deducted after 30 years).


With the matching funds (up to 5%) plus 5% contribution. I dunno. I think you would need someone like Kork to be able to maximize it.

7000-2800 =4200 X12 =50,400 annually (amount you are used to spending that your pension doesn't provide). 4% safe withdrawal rate would require 1,260,000 in savings to make up the shortfall (although, the 4% might not apply here because it would need to last many more years than the typical retirement).

Remember, there is a housing allowance (if housing is not provided) that folks receive while on active duty. That goes away at retirement. (Also other pay that goes away at retirement- a small amount for subsistence. And, possibly other pay (example: jump pay if you are a paratrooper on jump status).)
So, instead of the 1,260,000, maybe you need to save up a little more.... to cover these expenses.

Also, Tricare is not provided for free after one retires (you pay an enrollment fee and sometimes co-pays and stuff until you reach medicare age-.then there is tricare for life as long as you enroll in medicare part b).. The cost varies due to several factors. It might be less expensive that other forms of coverage

https://tricare.mil/Publications/Costs/costs_fees

[Like2Plan]

I am 48 for reference and will retire with a 6 figure State pension at 56. I live in a LCOL area. I keep all my savings (ROTH IRA, 457 and HSA) 100% equities beside keeping a fair amount of cash in my savings for buying rental properties. I will likely be 100% equities in retirement also. I can depend on my pension and rental income to live. I have most of my retirement funds in ROTH investments due to my pension placing me in a higher tax bracket. I also am throwing more money in my taxable Brokerage for fun money if I want it between 56 and 59.5. Anyone else have a pension and keeping their asset allocation a little more risky?

I realized that I didn't answer your original question! I don't think it likely matters very much if you don't have any particular spend plan for the money and you are not planning to use it anytime soon. (It sounds like your costs will be covered without it). I am more risk adverse, so I have bonds, too. With the market going up like it has, my allocation has shifted to 70/30 (used to be 60/40), so I need to do some re-balancing. I do keep all Roth funds 100% equities, though. Hopefully that is where I will see the most growth.

[Atretes1]

I realized that I didn't answer your original question! I don't think it likely matters very much if you don't have any particular spend plan for the money and you are not planning to use it anytime soon. (It sounds like your costs will be covered without it). I am more risk adverse, so I have bonds, too. With the market going up like it has, my allocation has shifted to 70/30 (used to be 60/40), so I need to do some re-balancing. I do keep all Roth funds 100% equities, though. Hopefully that is where I will see the most growth.

I honestly never thought I would be in the position to say that my retirement funds will not be needed or could be used as fun money. I started buying rental properties in 2016 which is good for my retirement also. Half of my net worth is rental properties. I will also continue to max out all my available investment spaces (ROTH IRA, 457 and HSA) for the next 7 years. I currently have about 700k invested now. It would be cool to have 1.5 or 2 mill invested by 7 years. I guess I will see what the market does...LOL

[kork13]

I honestly never thought I would be in the position to say that my retirement funds will not be needed or could be used as fun money. I started buying rental properties in 2016 which is good for my retirement also. Half of my net worth is rental properties. I will also continue to max out all my available investment spaces (ROTH IRA, 457 and HSA) for the next 7 years. I currently have about 700k invested now. It would be cool to have 1.5 or 2 mill invested by 7 years. I guess I will see what the market does...LOL

I started with rental property in 2016 as well, and it's a great way to add semi-reliable income ... especially if you get long-term tenants -- mine have been in place for over 5 years, and commercial RE could have 10-20+ yr tenants.

But you should be able to hit $1.5M without even trying ... Simple growth around 9-10% will get you there in 7-8 years, let alone what you add. By that time, you'll l definitely put had be so one fun money to play with ... It's a nice position to be in.

[Atretes1]

I started with rental property in 2016 as well, and it's a great way to add semi-reliable income ... especially if you get long-term tenants -- mine have been in place for over 5 years, and commercial RE could have 10-20+ yr tenants.

But you should be able to hit $1.5M without even trying ... Simple growth around 9-10% will get you there in 7-8 years, let alone what you add. By that time, you'll l definitely put had be so one fun money to play with ... It's a nice position to be in.

My first 3 properties I bought in 16,17 and 18. I put them all on 15 year loans. My original property has had the same tenant since 2016 she has paid half of the house and they don't plan on moving so they may end up paying the whole house off...lol. Those 15 year loans will be paid off around the year I retire. My next 3 properties I bought in 2022 and I put them on 20 and 30 year loans. I make about 30 grand extra a year on my 7 doors now. Unless, I have extra maintenance or cap ex costs.

[LivingAlmostLarge]

But how do you know the properties will continue to appreciate 9-10% a YOY? You can't even do that with stocks. I would say that assuming that high YOY seems a lot. I think more like 3-4% which would not mean that rate of appreciation.

[Atretes1]

Quoting is not working on here now. But I think the 9 to 10 percent you are referring to was him guessing on what future market rates would be for the next 7 years on my 700k that's invested now. As far as housing appreciation its keeping up just above inflation now. Besides different that I have done like BRRRR's that add equity quicker as long as its done right....lol.