Investor Alert

Help Me Retire

June 19, 2021, 11:04 a.m. EDT

I’m 40, and a single, military dad of 2; I have rental income, $100K in retirement savings and expect at least $3K a month in retirement — what am I missing?

Watchlist Relevance

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

Alessandra Malito

Dear MarketWatch, 

I am 40 years old and am a single, military father. My kids are 9 and 7. I signed over my Post-911 GI bill benefits to my children so they should be mostly fine there.

I’ll be eligible for retirement in the summer of 2024. If I choose to retire at that point I’ll have a net monthly income of $3,000 (or $4,000 if my VA disability is approved) and this includes my family’s healthcare premium as well as survivor benefits of $2,200 a month if I were to die before they reach adulthood.

I have a rental property I’ve been paying extra principal on so that the mortgage is satisfied a month before my retirement eligibility. The monthly rent is $1,300 and the property value is $300,000. I’m paying extra on my primary home (valued at $520,000) and I’ve targeted the payoff to be my youngest’s high school graduation month.  

My monthly living expenses are roughly $2,500, including $300 a month for a newly installed solar roof, which will be satisfied before my retirement. I do not have any car notes. Property taxes and insurance run roughly $8,000 a year between the two properties.

I have roughly $60,000 in a military thrift savings plan and I contribute $400 a month to it. I have roughly $40,000 in a Roth that I’m not currently contributing to. I have $14,000 in savings and that grows by about $2,000 a month.

I want to retire and spend the limited time I have with my children. It’s been the three of us since my youngest was only a few months old. My excel spreadsheet says that if I retire at my 20 year point, as long as I stay the course with my spending I should be fine and free from mortgages by 2032. However, if I find a new job netting $6,000 a month (should be fairly easy to do so) I should be able to have the primary mortgage paid around Christmas of 2026 if I deplete my projected savings at that time.

Thoughts on this or things I may be overlooking?

Thanks in advance for your time!


See: The military is giving me retirement and disability pay — but will it be enough to retire at 48?

Dear CC, 

Congratulations on really planning for your retirement. That alone is a wonderful feat. Your children are lucky to have you. 

It looks like you’re already well on your way to being comfortable in retirement, what with your rental income, retirement assets and savings. Still, there’s always room for improvement — here’s what the financial advisers said. 

First, you might want to focus on boosting that emergency savings before you retire. “The biggest thing that struck me was the liquidity,” said Curtis Sheldon, president and lead planner of C.L. Sheldon & Company, a veteran who now specializes in working with transitioning service members. That’s because you may be penalized if you try to take out any retirement assets from your thrift savings plan before age 59½. You might be fine to withdraw from the principal in your Roth account, but it never hurts to have a lofty emergency account to draw from instead. Along with that $2,000 you are contributing, you might want to consider pausing the extra payments to your mortgage right now so you can build up the liquidity in your savings account, Sheldon said. 

Another avenue for savings could be a traditional brokerage account — yes, you’d have to pay the tax on any withdrawals, but the money could potentially grow more than an emergency savings account, and at least you wouldn’t be penalized if you were to need the money in the time until you turn 59 ½, he said. (Of course, you need to invest with the right asset allocation for your goals and time horizon). 

Sheldon wanted to make one quick note about your thrift savings plan, though it may or may not apply to you: if you were contributing to that account while deployed to a combat zone, there’s a possibility a portion of your balance may be tax-exempt. That money is not coded as pre-tax or Roth — it’s specifically known as “tax-exempt” — which means it would be difficult to roll over into another account. Whatever portion of the account was deemed “tax-exempt” could be directly distributed to you should you want to roll over the rest of your assets in that plan, Sheldon said. “It’s something to look out for,” he said. 

Page 1 Page 2
This Story has 0 Comments
Be the first to comment
More News In

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.