What does it take to retire at 20 years and not have to work?

[BMCS Dennis Endicott (Ret)]

I have a son that is coming up on his second year in the CG. I'd like to be able to give him some solid advice on planning for CG retirement at 20 years. I wasn't able to do so without working and I don't know anyone that has. Is it possible? If so, what does it take?

[BMCM Wray Gillette (Ret)]

Is it possible? If so, what does it take?

Well, not really sure about doing it at 20 years, but I know if you go 30 you can....

What it takes is proper investing, and that means starting NOW.... Not just IRA's, 'cause you can't get your money out till you are 59 1/2....

I'd suggest a good financial counselor/advisor. Of course you have to be willing to invest regularly... Not a lot of spare money for ipods, I phones, and all the latest electronic gadgets...

This may be a good time to get into real estate... perhaps some property.. Waterfront or golf courses are usually good ones....

It can be done.. I guarantee you, when I hit 62 I'm DONE... Running this part time Captain gig is fun & easy money.... when you don't get caught out in the thunderstorms like I did today...:(

Wray... :cool:

[BMC Ronald Simoneau]

Dennis,

Good financial planning. One should not soley rely upon pension from one's company (or military branch) to assure financial freedom in retirement.

A good financial adviser will always say if your company provides a retirement savings plan, max out your contributions, or at least make the minimum amount needed to gain the match. I understand that the TSP has no match, however it is a good tax deferred savings plan.

Roth IRA's are also a great tool for retirement savings, and also one of the most recommended. You can contribute up to $4k per year, and invest it in anything that is traded on the market. I tend to stick to "Blue Chip" dividend paying stocks and Exchange Traded Funds (ETF) in my IRA. Any dividend taken is reinvested in that same stock/ETF.

At a younger age, investing is generally more aggressive, as there is time to make up any losses. However, a good diversified investment plan would mitigate most losses, and assure a 8-12% return year over year.

But, in order to retire at the ripe old age of 38 years old, you would not be able to take any withdrawals from either account, as there is a minimum age of 59-1/2 before you can take distributions.

So the best thing to do is put aside money monthly into a taxable investment account. My last 6 years in the CG (active duty) I put $1500 into a taxable account and invested it all. That account is looking realy nice now due to good financial decisions. Not everyone is able to do that (My wife had a very good job at the time), but even puting aside a little each month helps in the big picture.

Everytime I wanted to make a "stupid" purchase (new stereo, exhaust for truck, supercharger, stuff like that), I wrote a check for that amount to my brokerage account. Worked for me, may not for him. I plan on retiring from work fully at age 50.

[BMC Ronald Simoneau]

My last 6 years in the CG (active duty) I put $1500 into a taxable account and invested it all.

That was $1500 monthly. Sorry I left that part out.

[BMCM Wray Gillette (Ret)]

Oh, this is my part time Captain's gig.....

http://i22.photobucket.com/albums/b317/Stingwray/GaleWinds.jpg

As you can see..... It's for sale if ya want to buy it.... ;)

Wray... :D

[BMC Ronald Simoneau]

Oh, this is my part time Captain's gig.....

http://i22.photobucket.com/albums/b317/Stingwray/GaleWinds.jpg

As you can see..... It's for sale if ya want to buy it.... ;)

Wray... :D

That must be a sweet gig. Looks nothing like the desk I ride during the week.

[BMCM Wray Gillette (Ret)]

Dennis,
Do your son a big favor... Next Christmas put 2K in a IRA for him and tell him you got the ball rolling .. it is now up to him to put that (or more) in every year.

Worked for me....

Wray... :cool:

[ETC Pat Kaschube]

Also if he plans on having a family somewhere along his career, as soon as the little one arrives have him start a college fund. My son is 14 months and we already have 10k for college. Sounds like alot but in 18 yrs that probably won't buy you lunch. Anyway I have met a lot of folks that wanted to fully retire but stayed in to put their children through college. Just a though. We use the Alaskan fund by the way.

[BMCM Wray Gillette (Ret)]

Florida, and several other states have a "pre-paid" college plan... I've paid for a 4 year degree and 2 year dorm plan for all of my kids. (The 2 year dorm costs what the 4 year degree does)...

It's a great deal.. Glad I did it...

Wray.. :cool:

[ETC Pat Kaschube]

Wray
I'd definately like more info on that option.

[BMCM Wray Gillette (Ret)]

Pat, here you go.... Are you a Florida resident?

http://www.florida529plans.com/

Wray... :cool:

[BMCS Jim Madsen]

According to the consumer protection guru that comes on the radio after O'Reilly, (why can't I remember his name?) Utah has the best 529 plan in the nation. I wish I would have known about that 17 years ago. I still might not have had the $$$, but hindsight is 20/20.

[BMCM Wray Gillette (Ret)]

Possibly so, but I am not or never will be a resident of the state of Utah...

Guess you have to do whatever works best for you.... & as always.. read the fine print.

Wray... :cool:

[ETC Pat Kaschube]

Pat, here you go.... Are you a Florida resident?

http://www.florida529plans.com/

Wray... :cool:


Nope, I guess if that is a requirement I'll have to try to track down the requirement in my state of res.

[BMCS Curtis Dewey]

dont get married and have kids....plain and simple. I could live on $25K a year comfortably.

[BMCM Wray Gillette (Ret)]

Most of us don't think that way at 25 or so....

How many kids do you have?

Wray... :cool:

[BMCS Curtis Dewey]

i have enough that i required a 3rd row in the back of my wifes rig

not that i would trade my couple marriages and kids for anything but........

if after 2 years in, i knew for a fact i wanted to retire at 20 and live the good life, marriage and kids couldnt factor in. lets see, mortage that requires 4 bedrooms, saving for college for all in those bedrooms, travel baseball, competition cheerleading(i still dont know how expensive that one is, but i know its alot), grocery bill, cell phone plans, i could go on forever....

something would have to suffer, either now or later.

but nothing is impossible, live well within your means(rarity in todays CG), advance quickly and rathole every spare penny away.

[MKCM Keith Livingstone (Ret)]

FInd a good financial advisor ... one you trust and one that will talk to you whenever you need to talk .. don't just think they will the first time you meet them - shop around!! Talk to others who are investing and get their read on their advisor - how has he done? what kind of return are you seeing on your $$. You will want info .. in easy to understand terms. Investing can be scary to most people. If you don't understand what you are getting into ... DON'T. It may take you several months or longer to fing the "right" financial advisor. Take your time!!! In the mean time if you want to get started ... check out T Rowe Price .. no load funds. Easy to get started ... east to understand info on their funds - you can invest away there until you find an advisor thet you are comfortable with ..... make sure you are!!! If your advisor can't explain the ins and out of why he thinks a particular investment is right for you - and what that particular investment is all about ... in a manner you understand ... walk away! Your finacial advisor should want to talk to you anytime - about anything. Don't know if what I'm saying makes sense ... but it does to me ....

I was lucky to find just that type of advisor..... when I had enough sacked away in mutual funds to play with stocks .. he would take my call and talk to me in very plain language about the company I was wanting to play with ... and wheher or not it was smart thing to do ... he would even call me when he had leads on different things. I trusted him so much .. I basically gave him the run of my account to do what he saw fit. He was very good and did very will for me. He has retired .... and now I just let things grow ... until I find another gem.

[BMCM Stuart S. Slesh]

I think without the lottery or a lucky stock investment, retiring at 38 is hard. Avoiding dependants isn't advice that a perspective grandfather is going to give....... but a retired BMCS should recommend OCS. If he really wants to retire after 20, maximize that base pay, then maximize the investments.
You have to pay for the things you want in life one way or another. He could enjoy his time in service more and take the better jobs, or opt for the better money, and enjoy himself further down the road.

[EMC Travis Parks]

I'm guessing, very, very simple tastes. Wealthy parents who don't have long to live might help too.

[BMCS Dennis Endicott (Ret)]

How do you all feel about purchasing a house early on to build up equity?

[BMCM Wray Gillette (Ret)]

Kinda touchy in todays world..

I got my first one as a SN when I went to Ponce Inlet ... (may have been a BM3) My parents put the down payment on it.. the total sale price back then (1970) was 14,500..... It was a 2 bedroom 2 bath... with a carport, right here in Daytona. My monthly payments were only $99 (insurance included) :eek:

I did have a bit of a problem selling it, (went to the Point Charles down in Canaveral) but,... made a few thousand even back then... renting can be good and bad.. I've had both... I've also made $$$ when I sold my houses and lost it on others...

Bottom line.. it's a gamble... perhaps buying property (land) would be a better deal....

It's a crap shoot!

Wray...
P.S. I have a 3/3 2 car garage town house here in Ormond for sale if ya want to buy it... ;) I think it is listed around 225K...

[BMCM Stuart S. Slesh]

Lots of people will tell you, you can't go wrong with real estate. But as Wray said, that's not always the case now. I know people who bought in areas where the bottom fell out of the market. Someone recently told me that that there was something like 25,000 empty single family homes in Vegas, and they're still building more.
I've also talked to someone who made about $207,000 on his house in about a five year period. If you're looking at buying houses, I'd look at what employment opportunities are going to be there in the future. Alot of the real estate web sites may also list the income demographics for the area you're buying it.

[BMCS Dennis Endicott (Ret)]

I hear you. I'm not saying that you don't have to be careful, but it seems to me that it's a solid investment if done correctly. If I had bought a house and paid it off prior to retirement, I could have lived in it, or resold it and used the proceeds to purchase another without having to carry a mortgage.

If I didn't have a house payment right now, my discretionary income would more than double.

[BMC Ronald Simoneau]

I've also talked to someone who made about $207,000 on his house in about a five year period.

You can add me to that list. My wife and I built our house for $190k, it's assessed at $379k. This is over a three year period. Not a $200k gain (on paper anyway) but still substantial.

A word of warning. Just because you can afford a mortgage note, does not mean you can afford furnishing it, all the utilities, the property taxes (mine are $17 per thousand in grand old 03060). There are a lot of forclosures right now because people bought what they thought they could afford (or were led to believe they could afford) but could not afford anything else. That and Adjustable Rate Mortgages.

Now, can you go wrong with real estate? Yes and no. Yes because like any other investment, real estate is a cyclical market. No because you can always live on/in it if times get rough.

[BMCM Deane Smith]

Savings, savings, savings. Every financial adviser will tell you that you have to save money. The earlier you start, the better off you'll be. The question is what/how to save. My answer? ANY way that works for you. 20 years of savings will add up to a nice little nest egg. Add that with a retirement and you'll be doing OK.

As far as real estate goes? It's a great way to make money. It's hard to take that leap. I didn't buy my first house until I was a Chief. 4 years later, I walked away with about 70K profit. That enabled me to roll it into my current home and save some taxes, etc. Obviously, not everyone will make money in a 2-4 year tour, but it's still a great investment. If you can buy real estate, my advice would be to go for it. I didn't buy land in Colorado when I was a BM1 and 2 years later I would have quadrupled my money. That one still pisses me off.

[BMCM Stuart S. Slesh]

Dennis, stealing something from another thread, but if what that guy that Jim quoted was right, there should be a whole bunch of four bedroom houses coming on the market in the next couple of years.....

[BMCS Jim Madsen]

I have an AA degree in Real Estate so I am a little partial, but I think in many cases, real estate is a great investment. I am in my 3rd house now and have made money each time. Knowing the regional market is key though. Like any investment there is risk involved. I have been conservative and done well. Those willing to take a little more risk, maybe rent a house out will stand to make a little more, but they can also loose if they get a bad tennant, have vacancy problems, get leveraged out... When you sell, do it by owner. Save the big commissions for yourself.

Stu, I think you are wrong. The 4 bedroom homes will be 1. Master, 2. Kid, 3. Den, 4. Craft room, then there will be a need for more space for a game room, guest room...

[BMCM Wray Gillette (Ret)]

If I didn't have a house payment right now, my discretionary income would more than double.

Yep, as soon as I sell that townhouse of my Mothers, I will pay this house off and get another $1600 of my retirement money per month.

You can add me to that list. My wife and I built our house for $190k, it's assessed at $379k.

The assessed price and the selling price are twp very different numbers...... Those that sold their homes a year ago did well.... Those that have their homes on the market are finding out the price they had hoped to get won't be met. The market has dropped, and won't be back for a few years due to all the forclosures and flooded market. Obviously this depends on locale.

I'm sure for every story of a Coastie that made money last year on the sale of their home, this year & next year you will hear quite the opposite.

Wray... :cool:

[BMC Ronald Simoneau]

The assessed price and the selling price are twp very different numbers...... Those that sold their homes a year ago did well.... Those that have their homes on the market are finding out the price they had hoped to get won't be met. The market has dropped, and won't be back for a few years due to all the forclosures and flooded market. Obviously this depends on locale.

I'm sure for every story of a Coastie that made money last year on the sale of their home, this year & next year you will hear quite the opposite.

Wray... :cool:

I know. But, the city of Nashua thinks that they are basing their assesment on 100% market value. Would we make money on our house when we sell it? Absolutely. As much as the assessed value? Probably not.

[BMCM Wray Gillette (Ret)]

Ron, I do believe most will be able to sell their homes, just as I will mine (my Mother's) .... the kicker is, all those 'inflated' prices we have been hearing about will not be what we get for our houses... at least not most of us....

The truth of the matter is, the houses will get back to where they probably belong, making us a profit, just not the huge one we had hoped for...

Wray... :cool:

[AMTCM John Long]

I think Stu's advice was good. Go "O". At the moment O3-E @ 20 is $5716, O4 is $6252. Knock off taxes, say 25% and that puts you at $4287 and $4689 respectively per month.

Invest early and often. Wifey and I started with a no-load mutual fund back in 1983ish. Still have it plus a few more as IRA's w/auto deductions and a sprinkling of stocks. Also started the TSP back in 2001ish (C & S fund). Doing good with that too. In 1986 ,we bought $30K in savings bonds ($15K cost) @ 7-1/4% I think, the money doubled in 10 years.

Wray had good info too, lose the Ipods and Iphones. I'd add Beamers and $100 dollar bar tabs. You don't have to buy everything brand new, it's ok to buy used on some stuff. Don't live on plastic. If you can't pay off each month, interest rates will eat a person up.

Also....I said I was going to bail after my 4 year hitch. That never happened, things change over time.:cool:

[SKCM Linda Reid (Ret)]

So ... if he plans on not working at age 38 ... what will he do with his life? Yeah, he could probably scrimp and save and then live frugally ... and maybe the kids would luck out on some scholarships or assume student loan debt ... but wouldn't it be better to think of an interest he has that he could develop part-time while in the CG and then maybe turn into a business he loves afterwards? One CWO I worked for loved to read ... saved all the books he bought over the years ... upon retirement he was planning on opening a used book store in a small resort town ... right up his alley.

Or does he just want to play golf every day like a real retiree??

Gee, Wray, that Capt gig doesn't look so bad!

[BMCM Wray Gillette (Ret)]

Gee, Wray, that Capt gig doesn't look so bad!

No Linda, it's not bad at all.. Never been on a cutter with marble decks in the head ... or marble showers... pretty nice... it's also the first boat I have run with a bow thruster.. nice....

here is my bosses 'other boat'

http://images.google.com/imgres?imgurl=http://www.centralyachtagent.com/yachtadmin/websites/1469brochure1.jpg&imgrefurl=http://www.centralyachtagent.com/yachts.php%3Fid%3D1469%26d%3D1%26uid%3D208&h=323&w=500&sz=158&hl=en&start=82&um=1&tbnid=IFDrxwGwSM6B6M:&tbnh=84&tbnw=130&prev=/images%3Fq%3DGAle%2BWinds%26start%3D80%26ndsp%3D20 %26svnum%3D10%26um%3D1%26hl%3Den%26sa%3DN

I put the guy through BM "A" school who is the Captain of that one.. He is the one that got me the job on this boat.. and .. his ex wife is my deck hand!

Life is good.. :D :D

Wray... :cool:

[BMC Wayne Kidd]

I have the intention of fully retiring at 20 years or as soon thereafter as they will let me retire. Three things allow me to do that 1) I am retiring in a low cost of living area (Kentucky). 2) I have a six figure supplemental retirement fund that will provide about $1400 additional income monthly until I reach age 62 (if it maintains a 6% growth rate) and 3) I have no dependants. Without any of those three I would have to work at least part time.

And what I intend to do with myself is golf a minimum of 4 days a week, join both my brother's bowling leagues two other days and drive out to my mom's and take her to bingo on Tuesdays. Thats about 4 hours of each day of the week, the other 20 hours are mine to do as I wish :)

[BMCS Dennis Endicott (Ret)]

See! It can be done!

[BMCM Stuart S. Slesh]

But Dennis.....no dependants..........no little Endicotts running around the house. Are you willing to give up all of the but grandpas just so your son can retire at 38?

[BMCS Jim Madsen]

I guess if your lifestyle will allow you to save on average 10K per year for 20 years on what the Coast Guard pays you, then you should be able to maintain that same lifestyle on a 20 year retirement plus the 200K that you would have saved and invested at 6% return. Everyone needs to decide for themselves, what their priorities are. Some may not want to have dependents and thats fine for them. I would not trade mine for all the tea in China. Besides, I need someone to look after me when I get old.

[BMCS Curtis Dewey]

i only said that a month ago

[BMCS Jim Madsen]

Sorry Curtis, it has been a verrrrrryyyyy lonnnnngggg hottttt month.

[BMCS Curtis Dewey]

at least you have a dry heat;)

i'm dealing with my first ever "excessive heat advisory" been going since last sunday, ending tomorrow.

101 today with a heat index of 117:eek: never in my wildest dreams did i think mother nature could be so cruel

ps..i was replying to Dennis's reply