Military Reserves + Coast FI? Anyone have experience or recommendations?

[ontheheel]

Does anyone here have experience living on a combination of reservist officer pay, VA disability, and investments? What insights do you have from that lifestyle?

I'm currently an active duty officer (O-4) in the US military, and am at the halfway point to an inflation-adjusted pension and free healthcare for life. I enjoy my job, and am hopeful to hit my golden parachute date at age 48 (ten years from now).

I'm also a husband and father, and am weary of time spent away from my family (currently deployed, actually). While I believe I will be able to shape my career over the next decade to stay home far more, I'm also considering jumping over to the reserves if that turns out not to be the case. I want to be around for my wife and three boys, and not be a FaceTime husband and parent.

The math seems fairly straightforward that we would be able to make it work, even right now. We own two rental properties in Norman, OK, and would move into one of them. The other property throws off sufficient cash flow each month to pay the mortgage on this property, which would mean our housing expense roughly goes to zero. I would receive drill pay each month of about $1,200, VA disability between ~$660 and ~$1,300  (depending on likely rating), and annual training pay of about $6,000/year. Additional Child Tax Credit for three kids, plus EITC would add about another $4,800 or so each year.

Current net worth is $444k from a mix of equities, cash, and real estate (investment properties - not primary residence). Liabilities are two mortgages on rental properties that are cash flow positive, plus about $14k remaining my my wife's student loan (2.625% interest).

Our current budget is right about $4,000/month, plus about $800/month in charitable giving. This does not include a housing expense, because we live on base. That leaves us with a delta of around $1,000/mo (give or take) to maintain our current standard of living if we were to eliminate all saving and charitable giving. Some of that would be accounted for just by moving from HCOL SoCal to LCOL Oklahoma, and the rest would need to come from some combination of part-time income and/or drawing from investments. Realistically, I'd see myself seeking some form of employment below full-time that meets our spending needs in order to not touch our investments and just let them grow, coast-FI style. Once I hit age 60, I could start taking a reserve pension, that would pay out about $3,000/mo (in today's dollars)

There is a massive financial difference between this option and staying the course on active duty. At my current pay grade, I'm able to save a substantial amount of money each month, and would continue doing so for the next ten years, projecting my NW to be around $1.5m at retirement, along with an inflation-adjusted pension of about $5,000/mo (today's dollars) starting the day I retire at 48, free healthcare, and VA disability compensation. We'd be able to buy property, build our dream home, travel, and my youngest would still be in the house for a few more years.

The rub is that there is a fair amount of risk in long periods of separation over the next decade. I only get to negotiate new orders every 2-3 years, so I can't forecast out ahead very far where we'll be or what we'll be doing. I've got another 1.5 years on my current orders, and will hopefully be able to get three years of a duty station where I'll be home every night after that as a payback tour. I'll also be up for promotion to O-5 in two years, which would significantly reduce (but not eliminate) my risk of deployable orders ever again.

I'm fairly certain about getting non-operational orders next, which means I'd be at the 15-year mark when I'd be at risk of another set of operational/deployable orders. Maybe it's just because I'm already five months into the current deployment, but I'm honestly almost willing to drop resignation papers on the spot if I was given orders to another unit where I know I'd deploy. I'm just tired of being gone and away from my family.

With either option, my kids will have their college paid for by a combination of dual credit HS courses (we homeschool), the Post-9/11 GI bill, plus the Hazlewood Act in Texas (if they go to a TX school).

I'm not ready, either financially or emotionally, to pull chocks quite yet, but it is something that is on my mind, especially as I'm only a few months out from starting negotiations for my next set of orders.

[ender]

How marketable are you outside the military?

Depending on your specialization why not consider another option which is to take a private job that pays a lot with none of the military drawbacks?

[Nords]

Does anyone here have experience living on a combination of reservist officer pay, VA disability, and investments? What insights do you have from that lifestyle?

Yes, @ontheheel, and it works fine.  I wrote the post about it several years ago, and it's been recently updated:
https://themilitarywallet.com/leave-active-duty-for-reserves/

It works especially well if you're interested in taking some Reserve orders to active duty (up to a few months, short of actually deploying) or if you start a civilian bridge career around drill weekends.  Real estate can do the job, especially if you have good capitalization rates.  Once you're in a drill billet you'll have a lot more free time to optimize your rental cashflow.

Financially, if you reach 20 good years in the Reserves then your assets only need to support your spending until you start your pension (and your cheap Tricare).  Keep in mind that the Reserve pension (typically at age 60) retains its inflation-fighting purchasing power by two features:
1.  It's based on the future pay tables in effect when your pension starts, not on when you reach 20 good years and apply for retired awaiting pay, and
2.  It's based on your longevity in your retirement rank as if you've been on active duty the entire time you're retired awaiting pay.  This is effectively O-4>18, or O-5>24, or O-6>30.
https://themilitarywallet.com/reserve-retirement-calculator/

More importantly, your quality of life will take a huge leap upward.  The Reserves (and the Guard) are a good way for you to earn some income and enjoy the military camaraderie without as much of the sucky parts of active duty.

You should to sign up for a Transition Assistance Program class as soon as you can. 

You should also start talking with Reserve/Guard recruiters in your area.  Depending on your warfare skills and your community, you may find more that interests you in the other services.  For example, Marine Corps Reserve units are not exactly thick on the ground in the middle of the continental U.S., but you'll find National Guard armories much closer to your residence than almost any of the other services.

Feel free to post more questions here.  If you'd rather do it via e-mail I'm at NordsNords @ Gmail.

(For the rest of you forum members reading this thread, my e-mail offer's open to all U.S. servicemembers & vets.)

[tk2356]

I separated from AD at the 7 year mark and have spent another 2.5 years on MPA orders (reducing my retirement age to 57.5). I like the reserve option a lot. For my field, there are always orders to jump on, essentially giving me the option to work as much or little as I wish.

Although you CAN be deployed, IMAs are typically used to backfill the AD folks, and I personally haven't heard of one being deployed against their will in the 7ish years I've been in the reserves. What's more, say you're on MPA orders and something happens where you want out? You are able to curtail your orders (rule of thumb I've heard is doing this more than once is viewed as a red flag, but still..nice option to have).

There are tricks to maximize your benefit as well. I have found a few orders for 179 days, giving per diem, BAH off your HOR (NYC for us) and hotel reimbursement. That adds up quickly.

An AD retirement is the golden goose, but all the benefits in the reserves make it a terrific option if you can't make it to 20 years active.

[ontheheel]

Ender, I have no idea how marketable I would be outside the military. My masters degree is in counseling and I'm a chaplain. State requirements for counseling licensure have changed since I graduated school in 2011, so I'd likely have to go back to school for a year to get my education in line for credentialing, followed by a multi-year internship process in order to hang a shingle. I do have a couple of friends who are senior pastors in Oklahoma and Texas who have informally offered me jobs for whenever I do end up retiring/resigning. I would want to stay in some form of ministry, not just because that's where my education and experience lies, but because it is exceedingly meaningful work to me. Walking with people through good times and bad is what I want to go to my grave doing, regardless of whether it is paid employment or not.

Nords, thank you for the insight and encouragement. I had not considered the National Guard before, but it is intriguing to me. Before my current tour, I spent three years recruiting chaplains for NRC, and I know that we (Navy) did not accept lateral transfers - I'm curious if it would be true the other way around. If I went Navy Reserve, I'd be highly likely to pin on CDR almost immediately (I'd be in zone and highly competitive coming from AD). Switching branches could put me back at O-3. That's not the end of the world, but it does impact the numbers I'd need to meet with investment/other income. I guess the only way to find out is to talk to a recruiter.

On that note, however, that is one more area of experience that I can add to my resume. I owned a territory stretching from Arizona to the Panhandle of Florida, supervising eight line recruiters at five NTAGs (Districts), prospecting, interviewing, and evaluating applicants. I also was able to create a mentorship program now owned by the USN Chief of Chaplains, and is getting some traction/visibility in other communities. Most people hate recruiting, but I loved getting to meet people and walk with them through a pretty major life-altering decision process, as well as being a part of strategizing on a national level for NRC mission.

tk2356, can you explain to me what MPA orders are and how they reduce your retirement age? What branch are you in? I was under the impression that it was only involuntary recall orders to contingency operations that reduced your retirement age.

Thanks to each of you for responding. Apologies for my late reply - bandwidth is limited and time is scarce out here. Like I said, I'm not ready to pull the trigger on a move at this point, but I feel like I'm only one or two more body blows from dropping papers. The work is exceptionally rewarding, challenging, and I've gotten a better deal than most in my career. I honestly couldn't do this as a line officer - I see my peers grinding out through all of the nonsense, talking about how miserable the work is, and really the only motivation for continuing is getting a pension.

While the time separated from family is intensely painful, the people I'm able to help out here make the sacrifice worth it...for now. There's definitely an upper limit to how much I'm willing to ask my family to sacrifice for this. I don't want my kids to grow up like Cameron from Ferris Bueller's Day Off, kicking the proverbial Ferrari (my job), and saying "you love this car (job) more than me!" I'm a dad and husband first.

The immediate future is hopeful, and my orders negotiation process this summer will dictate a lot about how I spend next year and beyond. Again, thank you.

[scardo]

I’m not currently FIRE, but my plan is to do what you are proposing (live off of investments, Navy reserve pay/pension, and VA disability).

I also left AD at the 7 years mark and immediately joined the reserves. I was a Submariner and the prospect of long deployments and long working hours made me rethink staying in to the 20 year mark. I do miss the active duty comradery, but I’ve enjoyed being able to spend much more time with family and having a predictable schedule.

Some insights I’ve learned since joining the reserves:
• I’m also an O-4, and each drill weekend nets me about 1k pre-tax, plus 4-5k for the two weeks of annual training depending on location and per diem rates. Annually you could expect to make around 16-17k pre-tax just for doing the minimum.
• Drill weekends are usually not mandatory. I’ve taken months off to support traveling, and then made up the time later, usually teleworking from home.
• You can volunteer for active duty assignments. These can range from a few weeks to a few years. I’ve done this and spent a year on active duty doing staff work while on full per diem. It was in a convenient to us CONUS location, and I was able to move the family there out of pocket.
• Certain active duty time you perform as a reservist brings the pension collection age forward by a similar amount. The 2 weeks of annual training does not count here. I do not know the exact mechanics, but for the 12 months of active duty I did as a reservist, it brought my pension collection age forward to 59 vice 60.
• You can accrue time in service to be able to earn/transfer GI Bill benefits as a reservist.

The not so good of the reserves (navy centric viewpoint):
• It can be hard to balance a civilian career (if you have one) and being a reservist. Both compete for your time, and while you only drill on designated weekends, you will receive and be expected to respond to emails between drill weekends.
• You still have to do all your GMTs, maintain medical readiness, etc
• If you are O-5 and above your travel costs for weekend drilling are no longer fully reimbursed. Lodging is usually provided, but no mileage for driving or airfare. This can factor heavily into how much you get to save. I know folks who spend a lot of their reserve pay traveling across the country. Good news though is that you can usually get away with just traveling once a quarter, and conduct the rest of the drills close to home or virtually. The two weeks of annual training are also still fully covered, regardless of your rank.
• Depending on your community/rank/clearance, there is the real possibility of being mobilized, even in peacetime. The peacetime risk of being involuntarily mobilized seems to be diminishing with force drawdowns in the Middle East, but individuals still get sent over for 9-12 months on Individual Assignments. There just aren’t enough volunteers to cover everything in some communities. This happened to a few of my peers. However, after being mobilized you get a deferment where you cannot be mobilized again for 5 times the amount of time you were mobilized (i.e. 1 year mobilized = 5 years after where you cannot be involuntarily mobilized). Also, you usually receive a deferment when you initially join the reserves (2 years is most common). To assess your risk here, I would try and talk to someone in the reserves doing what you would be doing. In my experience, the recruiters give a very rosy and inaccurate overview of the risk of being tagged to mobilize.

Overall I intend to stay in the reserves until I hit 20, mostly on the assumption that once I Coast FIRE and no longer have a full time civilian career, the reserve commitments will become much easier to balance. Plus, the reserves gives me a professional network outside of my day job, and it will give me a way to quickly make more money if needed by being able to volunteer for active duty stints.

Hope this helps

[Nords]

I also left AD at the 7 years mark and immediately joined the reserves. I was a Submariner...

After my spouse left active duty, she did over seven years in the Navy Reserves.

She said that when you walked into a room full of Reservists, in uniform or in civilian clothes, you could immediately spot the submarine vets.  It was worth the effort to find them, because they got stuff done on time and beyond standards.

On the other hand she's had to put up with a nuke for over 40 years, so she might be biased.

Getting a drill billet in the Navy Reserves at O-5 or above was a challenge.  On the other hand if you're near a four-star staff (of any service) the active-duty billets are usually only 70% staffed.  Orders were readily available, especially short-notice hot-fill orders of 29-179 days.

When our daughter left Navy active duty at five years in 2019 to serve her remaining three in the Reserves, the recruiter offered a $15K bonus for agreeing to serve in a drill billet for all three years.  She checked with her network and learned that was designed to ensure they were available to mobilize for the third year.  She was already at LeanFI so she declined the bonus, did two good years, and went to the IRR for her third. 

[Michael in ABQ]

I'm coming up on 20 years in the Army National Guard. I just moved into an O-4 slot so should get promoted in the next 6-12 months.

I'm not too familiar with the Reserve side but I know it's a whole different beast compared to the National Guard. The Guard has a lot more locations but the flexibility of grouping a few months of drills at once due to travelling hundreds of miles to a reserve center is not really a thing. The expectation is that you will be at drill every month unless you're on orders for something else (i.e. a school) or some special circumstance like going to a police academy where you have to be gone for a few months.

Tricare Reserve Select is the best health insurance you can get. $240/month for family coverage and maybe a few hundred more out of pocket each year. At least here in Albuquerque most doctors/hospital systems/specialists take it and there's no need to get referrals or have a primary care provider to clear everything first.

Drill pay is about $1k per month and then a few thousand during Annual Training (including partial BAH and BAS which are both non-taxable). There are usually opportunities available for picking up a few days or weeks of temporary orders. I've volunteered for some funeral details as there is always a need for officers since they try to have someone of equal or greater rank to present the flag to the next of kin. That's basically all I do while a couple of other Soldiers who are on full-time orders handle everything else (folding the flag, bugle, etc.).

Deployments are certainly still a possibility. It's been about every 5 years on average - I just missed out on two as I was in Officer Candidate School during one and transferring between states for another. There's another one coming up in a year or two I could volunteer for, but I've got a business to run now and don't want to put my family through that again - especially if it's not even my unit deploying.

[Kierun]

...can you explain to me what MPA orders are and how they reduce your retirement age? What branch are you in? I was under the impression that it was only involuntary recall orders to contingency operations that reduced your retirement age...

MPA is one "type" of active duty orders that may or may not reduce retirement age.

Link below is a decent article explaining the reduced retirement age topic.
https://www.military.com/benefits/veteran-benefits/guard-reserve-soldiers-and-reduced-age-retirement.html

Active Duty, for this purpose, means service pursuant to a call or order to AD on orders specifying, as the authority for such orders, a provision of law referred to in section 101(a) (13)(B), and performed under section 688, 12301 (a), 12302, 12304, 12305, 12406, and chapter 15 (insurrection), or under section 12301 (d) of Title 10 USC.

Active service includes service on Active Duty as defined in subparagraph 6.5.2.2 of DoDI 1215.07, and Full-time National Guard when under a call to active service by a governor and authorized by the President or the Secretary of Defense under section 502(f) or 115 and 502 (f) of Title 32 USC for purposes of responding to either a national emergency declared by the President or a national emergency supported by Federal funds.

Active Guard Reserve (AGR) duty under section 12310 of Title 10 USC, will not be included as service on active duty for determining eligibility for reduced age retired pay for non-regular service.

Air Guard here, currently in a unit where our mobilizations/"deployments" is essentially backfilling AD members in the state. Our members on mobilization orders go home to their families every night. I can't believe we're the only unit in the entire Guard Bureau that does that so you may be able to find a similar unit that won't take you away from family when called upon.

[ontheheel]

On the eve of homecoming from this deployment.

We were transiting back to California a couple of weeks ago, just a couple days out of Hawaii, when we got orders to get gas and stores in Pearl, then turn back around to do typhoon response in Guam, extending our deployment by a minimum of a month. We made our stop, then transited west for a day or so before getting called off to go back home and redeploy on time.

That was a whiplash of emotions in a very short period of time, for sure. One of the reasons that weighs on the "go to the reserves" side of the scale is to lessen my life exposure to the ever-changing needs of COCOMS. I realize it doesn't eliminate it, but it seems like it would be drastically changed.

I've had a handful of conversations with my wife about getting out, and she tends to respond pretty emotionally to the idea of the reserves and slowing down in life. She knows how financially secure we are with a great (and guaranteed) paycheck, plus a pension in ten years. Her dad had a stroke when he was not much older than me, and was unable to hold a steady job for the rest of his life due to personality shifts resulting from it. That caused financial chaos in their home that was primarily borne by her mom, and she's not-so-secretly afraid that scenario will happen to us. I don't really know how to communicate through that fear, because it's basically a show-stopper on the discussion.

I'm not willing to move forward without her on board, but I don't see how to break through this logjam. I roll to shore duty next year, which will hopefully be an opportunity to take a knee, but I also know I've been nominated for a billet in DC, which would be long hours, no sunlight, high stress, and traffic - if I get selected for it. I'd rather not get picked, because it's not the kind of billet you can say no to - you just get orders and that's it. She has expressed a willingness to re-evaluate our situation while on shore duty, which is encouraging.

[Nords]

First, @ontheheel, welcome home!  There must be lots of happier people in your Navy town this week.  (I know there’s a bunch of happier people in all four generations of our family.)  Speaking as an Oahu resident, that Pearl Harbor “liberty port visit” truly sucked for you folks.  But well done at the pivot from being a homeward-bound ship to tackling just one more humanitarian assistance & disaster relief mission... for what could’ve been an extra month of an already overlong deployment.

Re-reading your posts in this thread, I have a couple of suggestions. 

As much as I’d like to recommend talking with a MrMoneyMustache group in SoCal, I don’t know of one.  (Maybe other readers of this post can help.)  However there’s a big bustling ChooseFI San Diego Facebook group.  You might be able to connect in person with their members about dealing with the emotions of financial independence.  I’ve been to several of their meetup events, and one of the headquarters ChooseFI team lives in SD.  You and your spouse could apply to join the group and then contact my friend Jennifer Mah and the other members about their next meetup:
https://www.facebook.com/groups/choosefisd

I’ve talked with many skeptical spouses of FI enthusiasts (“Welcome to the cult!”) and their concerns are rarely about the money.  Instead it’s more about the emotions of behavioral financial psychology and the upheaval of the transition from a steady paycheck to... whatever’s next.

Of course your family has already experienced many upheavals with the Navy, and you’re way more resilient than most.

Today, your fundamental issue is trading more of your life energy (as much as your active-duty life sucks right now) for more money (that you could get in other ways) while hoping that nothing bad happens during the years until you retire from active duty (or from the Reserves/Guard). 

That’s scary stuff, and it’s even worse when it’s amplified by your spouse’s earlier family trauma.

However there are far worse things to be afraid of in life, and you don’t want to experience those while gutting it out to 20 on active duty.  Your spouse will not want to deal with any of that either.
https://militaryfinancialindependence.com/2023/04/11/fear-and-the-just-one-more-year-syndrome/

All your years of saving & investing have paid off with a foundation of CoastFI.  If you don’t like your life, you have an opportunity to change it for the better by cutting back on your current employment (Reserves/Guard) or by... finding a new civilian job.  You both have tremendous human capital, and there’s no reason to deplete it by being miserable in the pursuit of a pension that you don’t need. 

Now that you’re back in homeport, if your travels take you to Oahu then I’d be happy to continue the discussion over a cup of coffee.  But hopefully you and your spouse can get at least as much of that during one of the family-friendly ChooseFI SD meetups.

[ontheheel]

@Nords, thank you for the warm wishes, and yes, that final "liberty port" left a little to be desired, haha. It's good to be back at Pendleton decompressing.

Thanks for the recommendation about the ChooseFI group. I remember hearing about that the last time we were in SoCal a few years ago - I'll talk to my bride about checking it out.

As an update to all of this, she came to me yesterday, unprompted, and said she's willing to consider getting out. I was pretty shocked by this, and am taking a beat to process. We were pulled off of a deployment for next year, so the next 15 months or so I have left on station *should* be very relaxed.

I am up for orders in September, and am considering using that as a decision point. If the detailer cannot offer family-friendly orders, I'll likely pull the ripcord. I'm going into the negotiation with the perspective that I don't really care about a career-enhancing billet next, but will explicitly ask to take a knee. I realize that could kick the can down the road a ways, but if I can get a more laid-back three years at the same pay and benefits, I'll take it. If there is nothing but operational (or stressful shore billets), I'll get in touch with the OCM and work on a career transition package.

I appreciate the offer to link up in Hawaii - I wish we could have had more freedom off the ship, but hopefully we're not done with Hawaii (we lived there 2013-2014).