Here's the first part of a three-part post to answer the nitty-gritty details of the following question: If you're receiving a military pension, then how should you invest the rest of your portfolio? Frankly, to the majority of you readers, this will be a boring technical essay. The big picture of this week's posts is that emotions will influence … [Read more...] about Asset Allocation Considerations for a Military Pension
(Thanks to SamClem of Early-Retirement.org for the story that led to this post!) Financial independence and retirement are accelerated by saving as much as possible in the Thrift Savings Plan, IRAs, and taxable accounts. Aspiring early retirees have two ways to accelerate their ER: earn more or spend less. Military earnings rise with each … [Read more...] about Saving base pay and promotion raises
Veterans entering the service after July 1986 are eligible to choose between two different retirement systems. The first system, High Three, offers a multiplier of 50% at 20 years of service and raises it 2.5%/year to 75% at 30 years of service. Each year after retiring, the pension is raised by a cost of living adjustment (COLA) that's an estimate … [Read more...] about Effect of Inflation on a REDUX Military Pension
Let's consider some of the details behind a military pension and its COLA. First, just like active duty pay or drill pay, the pension is paid in arrears. In this case it doesn't show up until the first of the month and it's only paid once a month. The first payment may even be delayed a week or two if the computer network at the Defense Finance … [Read more...] about Military Pension Inflation Protection – How and Inflation Indexed Pension Keeps Up with Cost of Living
Internet discussion boards have some perpetual topics. New members will constantly rediscover the same ground that has been trod by the older members, and occasionally a newbie will neglect to check the archives to see if the issue has already been beaten to death. On retirement forums, two of those perpetual topics are inflation and investment … [Read more...] about TIPS and I bonds for military retirement?
The last post described the long-term effects of inflation and explained how a COLA pension (plus a portfolio of equities) can stay ahead. One of the issues with the COLA system is its reference: the Consumer Price Index, or CPI. Critics claim that the government manipulates the CPI to make each COLA as small as possible. Conspiracy or fact? … [Read more...] about Living with Inflation – How to Handle Inflation in Your Investment Portfolio
It's hard to appreciate inflation's corrosive effect on a retirement portfolio. From one year to the next it's so tiny that it's barely perceptible, and everyone has a different set of personal expenses that are affected by inflation at different rates. The following graph shows the corrosive effects of inflation over four decades. (If the … [Read more...] about Effect of Inflation on a Dollar – Why You Need to Factor Inflation into Your Retirement Plans
I've finished blogging about the main text of the book. Of course I've left out a few things that you'll want to read in the book itself-- the chapter checklists, the personal stories, and other goodies. Impact Publications says that the book should show up at Amazon.com in May and in the exchange bookstores by August. Before I blog about … [Read more...] about Sea Story: Blowing the Job Interview of the Decade
There's nothing wrong with seeking your avocation by trying different types of work or volunteering. But you can simply enjoy "not working" for the rest of your life! You've earned your retirement, and you have no further obligation to society beyond living a fulfilling life that does no harm. Working and volunteering are just two aspects of … [Read more...] about During retirement: Paying it forward
I've spent most of the last five months posting chapter excerpts of "The Military Guide". This post starts the last of the book's chapters. It could also mark the end of the retirement fairy tale: "And they all lived happily ever after." Right? Not so fast. If you retire in your 40s then your age demographic can look forward to a minimum of 30 … [Read more...] about During retirement: You will change. Your plans may change too.