Reader Questions About Retiring on a Military Enlisted Pension

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A reader asks some very good questions:

“I came across your book and am interested in purchasing it, but I have a few questions.

I’m an E-6. I’m married, with no children, and currently only have a retirement savings account via TSP. Is is realistic to assume that someone in my situation can read your book, apply it, and then live off the retirement?

My spouse and I could retire in another country with cheaper cost of living. Would that help my chances, if the above answer is “no?”

I’m really hoping to retire and start my own business– not because I need to, but because I want to. If your book can give me the information I need to make that a reality, then I will gladly purchase it.”

How the Book Can Help You Plan & Where to find the book

Here are some other book suggestions for “try before you buy“.

First, the blog summarizes most of the book in the ~80 posts between September 2010 and March 2011. There are a few diversions, and the posts don’t have the personal stories of the contributors, but you get a good idea of the contents. (You’re going to have to read the book to get the personal stories.) Scroll through the titles and the opening paragraphs to see what catches your eye.

Second, look up the book at your local library system or on It’s in several libraries on Oahu, and it’s in at least 30 other libraries on the Mainland. You might be able to borrow it from a library near you before you make a buying decision.

Finally, see if your military base’s family service center offers free copies of the 4″x5″ 64-page pocket guide. Impact Publications sells these at a very low bulk price for military transition programs and VA service centers to offer to their clients. The pocket guide doesn’t have the contributor’s personal stories and the chapter checklists that are in the full-size book, but it’s another great way to try it before you invest any money in it.

Retiring on an Enlisted Pension

The process of saving for financial independence is fairly straightforward, but the commitment can be difficult. The challenge is to track your spending, figure out what’s important to you, align your spending with your priorities, and make a plan.

It’s realistic, based on the stories I’ve heard from readers and on the process that people are following from the book. However, your spending and your savings are important. Save as aggressively as you can in your TSP (and your Roth IRA) and put yourself even further along the path to financial independence. But you don’t have to stop there. Your pay gets a lot better if you finish your college degree and apply for a commission. One course at a time, max out the tuition assistance, and see where it takes you. The worst that will happen is you’ll start your education on the military’s active-duty funding and finish it on your GI Bill.

As you save for retirement, project your pension income against your retirement budget. If it’s not enough then you’ll either need to consider a bridge career, be ready to do some part-time work, or cut back your expenses. I can’t tell you which approach will work best for you, but you’ll know when you’ve crossed the line from “frugal retirement challenge” into “deprivation”. The more you can save on active duty, and the higher your retirement rank, the closer you’ll be to financial independence.

The book includes advice from a Navy Chief nicknamed “Boxkicker” who retired as an E-7 at 20 with only a few thousand in his TSP account. He immediately went back to school on the GI Bill (and its housing stipend) to finish his bachelors’ & masters’ degrees in sports management. His “business” is refereeing community sports leagues and teaching golf. He’s one of at least three other veterans (profiled in the book) who have managed to swing the finances on their pension, with little savings, and with part-time work. It takes a low cost of living and some financial discipline, but it can be done. You’re saving in your TSP, so you have a head start.

Retiring Overseas

You absolutely can live on a U.S. military pension in another country. We know a number of military retirees who are doing just that.

The two best resources for your own overseas planning are Billy & Akaisha Kaderli’s Retire Early Lifestyle website, and Paul & Vicki Terhorst’s Early Retirement website. Both couples have traveled the world on far less money than you’d expect. They’re experts at living local in Southeast Asia, Latin America, and Europe. You can also try Gary Pierce’s Frugal Retirement Living website. He and his spouse have lived overseas, but they’ve also enjoyed their retirement in America on a boat and in an RV.

Starting Your Own Business After the Military

I don’t specifically talk about starting your own business in the book. When I first retired, my time & energy went into enjoying retirement. Later I began showing other veterans & families how to achieve financial independence… wait, I guess I did start a business.

If you’re interested in writing then you can read about my experiences in the “Books & publishing” section of the blog. I also talk about earning revenue from the blog, and the sidebar has a whole “Personal finances” section of bloggers who are earning tens of thousands of dollars a year from blogging and advertising. It’s not easy– it’s a job and you might be your toughest boss you’ve ever had– but blogging has a lot of advantages over the office environment. Your earnings are also much more correlated to your effort.

Boxkicker put together his own income in the sports industry. I know of several veterans who have gravitated toward their professional skills, especially training others. As a military retiree, your new business would probably be in the service industry– and in a sector with low startup costs. The advantage of being a military retiree is that you have a safe income to fall back on while you’re growing your business. I’d love to hear from more veterans who’ve used their military experience to start their own businesses and achieve financial independence on their terms. They might not even want to retire from that type of bridge career.

Reader Story – Achieving Financial Independence on an Enlisted Salary

The following section is guest post is brought to you by a military family who’s achieving financial independence on an enlisted salary!

I just wanted to let you know that I greatly appreciate your website and books as they have helped my family tremendously in working toward a financially independent post-military lifestyle. I’m currently active duty enlisted (E-5) Air Force and I plan on retiring after 20 years of service. I would like to share with your audience some tips that I, my stay-at-home spouse, and two small children (ages 2 and 3) use in our quest to become financially independent.

What is Working for Us – Communication and Keeping Our Goal In Sight

First and foremost, I think the biggest thing that has helped us work together successfully toward financial independence is communication. We constantly sit down, talk, plan, and re-plan our goals as things change. We use a spreadsheet budget that we change monthly as different months bring different cost issues.

For example, we may leave more float money in the budget during the winter holiday seasons than in the quiet early spring months where not much is going on spending-wise. As we go through each new phase of life, we have to come up with new strategies to meet our goals as new challenges arise. With that being said, we’ve both agreed that the constant we will not budge on during any life phase is that we are both content to live the simple life and stay the course with our savings and investing plan no matter who’s President or even if the economy is in a down market.

Our goal is to continue to max our Vanguard Target Date Retirement 2045 Roth IRAs out until we’re 60, own our house outright by retirement, and live off the pension.

Moreover, long-term financial independence is more important to us than being here-and-now conspicuous consumers. We’re generous and frugal with our resources but we’re not misers. We constantly try to find the balance between being too cheap and too wasteful as either extreme is unhealthy. So, here is a list of things we do to live a simple life.

Housing – How We Are Able to Live Within Our BAH and Pocket the Difference

I’ve been in the Air Force for eight years and have been married with children while being stationed at this large base for four of them. My spouse served four years in the Air Force but separated from the service after we got married. That is a big deal as I will explain later on. We arrived here in 2008 on the cusp of our area’s oil boom. We were fortunate enough to buy a 3-bedroom, 1-bathroom single family house for $125,000 using my VA loan. The monthly mortgage payment was $972 with everything rolled into it. From the beginning, we were paying at least $100 toward principal every month using an automatic allotment.

Sadly, in 2011, a historical flood ravaged the area and got our house pretty good. From the basement to about four feet on the main floor was flooded. The bad part about this is that we didn’t have flood insurance. Only about 10% of the community had it as well. We were told when we bought the house that we didn’t need it as we were in an extremely low-risk flood zone. Rookie homeowner lesson learned. We will always buy flood and earthquake insurance even if we’re in a low-risk area. Thank goodness, we were able to research and maximize every opportunity that was available to us. We lived on base during the nine months it took to get the flooded house back in livable conditions.

Since we lived on base, we lost our housing allowance but still had to pay the mortgage. We were still able to swing it as well as invest because we had no debt aside from the mortgage. So, we shut off all flood house utilities and were still able to max out my and my stay-at-home wife’s spousal Roth IRA. We both invest through Vanguard and both have the Target Retirement 2045 fund. Additionally, we were still able to not only pay the mortgage but continue to pay the extra $100 toward principal every month. We also saved additional money on gas because we didn’t have to drive as far to work.

We moved back in the house back in April 2012 and recently refinanced from a 5.875% rate to a 3.75% rate which lowered our monthly mortgage payment with everything rolled into it from $972 to $713 a month.  The oil boom has driven up housing costs in our area so this year the military raised the E-5 with dependent housing allowance rate from $1056 to $1701 a month. So since our mortgage is so low we use the difference of $988 to max out my and wife’s Roth IRA (an $833 a month allotment) and pay down the principal from the leftovers and a little bit from base pay. So our base pay is mainly used for bills and fun.

Everyone Needs an Emergency Fund

We have a 3-6 month liquid emergency fund in a money market account. A financial advisor once told me that we only need a few thousand dollars in an emergency fund since we have stability in the military. I disagreed with him and am glad I did. The emergency fund helped us tremendously to get back into our flood house relatively quickly.

We have no debt except our mortgage. We now have flood and earthquake insurance. We have our home insurance deductible to the highest limit which saves us hundreds of dollars a year. Both of our vehicles are owned outright. We have the auto insurance deductibles set to the highest limit which saves us money. All of our insurance needs are carried by USAA.

Saving Money on Daily Needs, Entertainment, & Extras

My wife is at home so we don’t have to pay for daycare. She makes our family breakfast, lunch, and dinner on most days which cuts down on eating out costs. She makes toothpaste, deodorant, laundry detergent from scratch, and grows her own vegetables. If you’re motivated to go to that level, there’s a ton of free resources online and it saves you so much more on price per unit than you would buy at the commissary. She cuts my hair. We bought a pair of good quality clippers and made our money back on them within the first month.

We buy our children’s clothes from the thrift store, get free hand-me-downs from friends, and rarely buy them anything new as they usually soil it, break it or at least still learning how not to break them. We take them to the library to read books for free instead of buying them books. We use Freecycle in our area whenever we‘re on the prowl for house stuff like desks and odds and ends furniture.

We use two old school flip cell phones. No bells and whistles. No texting/Internet. We use the military discount. It costs us about $75-80 a month combined for two of them.

We don’t have cable or satellite TV. We use Netflix live streaming with two DVDs. That costs about $21 a month. We also check out DVDs for free from the base and local library.

We watch our utility usage. We turn lights off when not in use and my spouse dries our clothes outside on the clothesline during nice weather months which saves us money on dryer usage.

Using Tuition Assistance and the GI Bill for Education

And since my wife was active duty, her goal is to use her post 9/11 GI Bill and go back to college for a masters in speech-language pathology when the kids are school age. In the meantime, because of all the previously mentioned little things we do (that add up), we are still able to afford to go on across the country vacations outright in cash, go to theater/sporting events/concerts, buy good quality appliances for our house where it matters, buy brand name clothes for me and my wife, go out to eat at nice restaurants, etc.

We also have taken advantage of the educational opportunities that the Air Force has to offer. I don’t know how it works in other services, but we can earn a regionally accredited associates degree in our career field specialty. I took a few additional classes and earned an associate’s degree from the Community College of the Air Force.

There’s also a program called the Air University to Associate Bachelor Cooperative (AU-ABC) program which has agreements with various regionally accredited schools. In other words, if I have my associates degree and the cooperating university is a part of the program I only have to take 60 credit hours to earn my bachelor’s degree. I took part in that program and earned a regionally accredited BA Sociology in 15 months. I’m now working towards a regionally accredited master’s degree in organizational management.

My spouse attained her bachelor’s degree as well without using her post 9/11 GI Bill. When she was active duty she earned her associates degree from the Community College of the Air Force. When she became a civilian military spouse in 2008, she then qualified for the MyCAA program. That is an educational grant program that gives military spouses $4,000 towards certain bachelor’s degrees. That’s how it worked back in 2008/2009, so it may have changed since then. But because of her associate’s degree and college credits earned prior to joining the Air Force, she was able to earn a bachelor’s degree within 12 months using the MyCAA money without tapping her post 9/11 GI Bill.

I hope this information is helpful to your readers. Yes, we are in a unique situation living in an area with an oil boom, but we would still live like this no matter where we were stationed. The only thing we would do differently is live on base housing or rent if we got stationed anywhere else. Taking on a house is a tremendous responsibility.

Should You Buy the Book?

I may be biased, but I think it can help most military members and veterans get a better understanding of how they can reach financial independence.

I hope this article helps you with your book-buying decision. Whether you decide to borrow or buy it, please let me know what could make it better!

Related articles:
Frugal living is not deprivation
Reader questions about retiring on a military enlisted pension
Military retirement with low savings
Old-school frugal
If I only knew then what I know now
Military retirement with low savings
Starting your bridge career after the military
Retiring on multiple streams of income

WHAT I DO: I help you reach financial independence. For free. I retired in 2002 after 20 years in the Navy's submarine force. I wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

  1. Okay, I can’t resist – the comment about trying to get a commission stuck out like a sore thumb. Every enlisted person has heard this line when trying to figure out finances, and it’s really not particularly helpful. There are only so many commissions set aside for prior enlisted. You also can’t even look at this option once you hit a certain point in your career. Plus, being an officer is not for everyone. My own husband, also an E-6, is never going to be one, and we’re totally okay with that. We’re still planning on making his retirement real (although, he doesn’t entirely believe me when I tell him it’s possible – luckily, I’m the one who handles the money since he deploys).

    • No offense intended, and perhaps it’s a difference in services or warfare communities. In the submarine force, the commissions perpetually go begging and the OTS/OCS slots go unfilled. I’ve been trained to give enlisted a nudge in the right direction if they’re interested, but there’s no pressure. I agree that not everyone wants a commission, and not everyone should pursue one. But hopefully one of this blog’s readers just thought “Hey, I could do that!”

      Here’s how it was in the submarine force. Between 1997-2002 I was an instructor in a department of roughly 50 enlisted instructors of ranks E-5 through E-9. Over half of them were taking some sort of college courses. Some semesters would have enough demand for certain courses that the local colleges would send the instructors to our military building. One E-6 actually finished his doctorate, but was definitely not officer or enlisted leadership material (and he could read about that in his evaluations). An E-9 finished his master’s degree and retired to pursue his bridge career. The majority of the chief petty officers had their degrees or were close to getting them. One of our best instructors, an E-6, also finished his master’s degree– and today is an O-4 getting close to the O-5 selection board.

      Every year for four years, our department had 4-5 instructors finish their bachelor’s degrees. Of those, two or three would pursue their commissions. Two of them were so desperate to get out of the submarine force that they actually joined the Air Force. Another became a Navy pilot.

      My cousin joined the Army Rangers because college seemed pretty intimidating. After four years and a few combat deployments, he was a very experienced specialist and suddenly West Point wasn’t all that scary. He finished his five years after that and is now pursuing his bridge career & MBA.

      I feel that commissions from the ranks should have a higher priority than from ROTC or the service academies or OCS. I think enlisted should also have a higher priority for ROTC and the service academies, although they might prefer to complete their college degrees through other programs. I know our ROTC daughter is hugely impressed with the prior enlisted in her unit, and many of them are Marines.

      You make very good points about your service, and I agree that being an officer is not for everyone, but it might be different in other services as well.

      I think the best situation of all is being able to advance to a rank that has a work/life balance and still gives the opportunity to save for financial independence!

    Comment? Question? What's on your mind?