Cush job vs. full military retirement - what's the mustacheian move?

[MuchoMula]

My husband (active duty) and I are faced with a career/retirement decision and I wanted to get some feedback from Post FIRE on what's the best move.

He's at 10 years in the military now as a lawyer. His current job has been a dream -- very flexible hours; he's home for breakfast, lunch, and dinner with our young kids. These low stress jobs in his position are rare and becoming even more scarce as military budgets tighten. He's been offered a civilian job in the same role at the same office. But of course it would mean getting out of the military and losing the retirement he'd get if he stayed in another 10 years. It would also mean a whopping 25% pay cut. This is doable for us because we are currently saving about 50% of our income. But ouch. Not only are we giving up military retirement at age 43, but we'd have to cut back on our nest egg savings as well (which is about $300k right now). On the positive side, I have worked out of my home for several years as a freelancer because it travels well. If we did get out and stay in one spot, my income has a better potential to grow. Also, of course we'd get the federal retirement at age 65 (about half of military retirement, but decent)

So Option 1: Take the attitude that work/life balance is the highest priority, especially while our kids are young. Ditch the military in exchange for a (relatively) secure federal job where the hours are easy and life is low stress. Sure, we'll have to work much longer, and I will have to work a little harder as a freelancer. But because we are frugal, we can really make it work.

Option 2: Suck it up for another 10 years! Accept that this is compromising our a great work/life balance for the next 10 years in exchange for the security of a full military retirement on top of a projected $1M nest egg by age 43 (Wow, do we really need all that money as frugally as we live?). Our kids will be 14 and 11, so they'll still be young enough to enjoy some of our post FIRE life with us.

Of course it feels like Option 2 is the more mustacheian attitude because the whole point is retiring EARLY, not at age 65 right? But is it worth enduring all the stress of high pressure work environment, moving, deployments for 10 YEARS to reach that satisfaction of being truly unequivocally financially independent? If you think it's worth it, I need a pep talk from someone who did it!

[Nords]

You're not gonna get a pep talk from me.  I stuck around for 20 due to fear & ignorance, and today my spouse and I are much smarter about the options.

My advice is to stay in the military as long as you're having fun (complexity, fulfillment, maybe even a little autonomy).  When the fun stops, it's time to leave active duty.

Option 1:  always a possibility, but first try Option 1a: 
Leave the military for the federal job.
Join your military service's Reserves or the National Guard.  Or join the National Guard unit closest to your home, even if it's not your current military service.  (Hey, UCMJ is UCMJ.)  He'll probably still be a lawyer drilling in a unit with duties that may or may not relate directly to his legal expertise.  He could also be in a "general" billet learning some other specialty besides the law.  But I know that a lot of Reserve/Guard XOs and COs will be happy to have a military lawyer in the unit to help with mobilization readiness, laws of war, and rules of engagement.

The federal government is expected to comply with Employer Support of the Guard & Reserve, of course.  There may even be an option to combine or cross-train his federal duties with his Reserve/Guard duties.  When he mobilizes (not "if") it'll usually be for less than one year out of five, and his federal job should be held open for his return.  He might choose to mobilize to a combat zone but he might have other (potentially promotion-limiting) mobilization options.  If peace breaks out all over then he might not even mobilize and might end up "just" drilling for the next decade.  He'll even have his military TSP account (no match) and a federal TSP account (with a match).

The point is that he should submit his resignation at least 9-12 months before the end of this current tour, attend TAP (or GPS), and research the legal possibilities between federal & military career tracks. 

After reaching 10 "good years" in the Reserves/Guard, he'll be eligible for a pension that will start at age 60.  This means that you will only have to save the assets to bridge the gap between the day you reach FI and the day his pension(s) start.  You'll be able to do the usual Roth IRA conversion tactics to help supplement the savings in your taxable accounts.  Being a lawyer, your spouse really has no compelling reason to retire and (after he retires from both the military and the federal jobs) may choose to do part-time legal work or contract instruction. 

By the way, the Reserve/Guard pension is calculated based on the pay tables in effect at age 60 and using the effective maximum longevity of his retirement rank.  It's a very effective way to have a deferred pension that keeps up with inflation while you're waiting for your 60th birthday.  Here's a post explaining the financial details, and it's one of the most popular posts on the blog:
http://the-military-guide.com/2012/02/27/calculating-a-reserve-retirement/

Here's more on that theme:
http://the-military-guide.com/2010/12/06/retiring-from-the-reserves-and-national-guard/
http://the-military-guide.com/2013/09/30/national-guard-and-reserve-retirement-at-the-maximum-pay/

Here's more "pertinent" reading:
http://the-military-guide.com/2014/11/01/comparing-an-e-7-active-duty-pension-to-an-e-7-reserve-pension/
http://the-military-guide.com/2013/11/07/options-for-national-guard-and-reserve-retirement/
http://the-military-guide.com/2013/12/12/hanging-on-for-the-military-pension/

I'll add one note of caution.  You know you've achieved work/life balance among your Reserve/Guard unit, your civilian boss, and your family when... they are all equally pissed off at you for missing some critical evolution due to your obligations elsewhere.

Option 2:  No. No. No.  He has not signed a service obligation or a contract extension (right?) and the active-duty lifestyle is at odds with your personal priorities.  "Sucking it up" will only poison the family's relationships while putting more mental, emotional, and physical stress on everyone.

You may eventually decide that active duty ain't so bad after all, and that you'd rather stay the extra 10 years for interesting duty in overseas locations.  But you owe it to yourselves to deeply research and understand the Reserve/Guard options before you decide to stay on active duty.

[MuchoMula]

Thanks Nords! This was a good pep talk to support what we really want to do but are afraid to do.

http://the-military-guide.com/2013/12/12/hanging-on-for-the-military-pension/

^^this touches on great points too.

He has not signed a service obligation, so this is all feasible. We are about 9 months out, which is what I understand about the timetable to start applying for federal jobs. I do think we'll do the Reserve route, though it makes me nervous to hear you say "If, not when, he deploys...", as deployment is one of the stresses I'd like to bid adieu if we get out.

Does the Military Guide have a forum as well? didn't look like it but wanted to make sure I'm not missing it.

Thanks again!

[Nords]

Thanks Nords! This was a good pep talk to support what we really want to do but are afraid to do.

Happy to.  This is a huge pay-it-forward for me, because the "suck it up" option was definitely stressful-- including blood pressure, weight, allergies, and other stress-related symptoms.  If I'd gone Reserves in 1993 then I would've been working as a civilian contractor at the same COMSUBPAC job in a different uniform (aloha, not khaki) and with a different parking spot... for about the same amount of money.  I would've drilled once a month and done two weeks of active duty in the command center.  9/11 would've been a huge disruption but at that point I would've been left on Oahu to backfill whatever billets were emptied out for the Mainland and the desert.

When my spouse left active duty for the Reserves in 2000, our quality of life made a huge prompt jump up.  PACOM was also thrilled to have someone on the island available to do 29 days of active duty midwatches in the command center.  She was kicking herself for not going Reserve way earlier too.

I do think we'll do the Reserve route, though it makes me nervous to hear you say "If, not when, he deploys...", as deployment is one of the stresses I'd like to bid adieu if we get out.

That's very much the corporate line.

However.  I've heard several of the Reserve/Guard recruiters have been offering "one in five" or "no deployments for two years" or "not mandatory unless you want to promote".  In a drawdown, a mobilization is highly unlikely due to budget constraints.  When deployments pop up during drawdowns, there'll be a surge of volunteers and your spouse might be able to step aside without getting a bad fitness report. 

If he's in the Guard, mobilization could include natural disasters and other state emergencies as well as overseas combat.  If you're in an area of the country near a large four-star military command (NORTHCOM, PACOM, Pentagon, STRATCOM) then "mobilization" might simply be midwatches in the command center.  He could also do that in shorter periods of 14-179 days under various other acronym duty orders.

If your spouse ends up in a legal billet in a Reserve/Guard unit then I'd speculate that deployments would be negotiable.  He needs to talk to other Reserve/Guard lawyers (including at his federal employer) to hear their experiences.

Does the Military Guide have a forum as well? didn't look like it but wanted to make sure I'm not missing it.

Nope.  I'm a regular reader and occasional commenter here, at Early-Retirement.org, and at RallyPoint.com. 

The best way to keep up with posts is to subscribe with an RSS feed, or follow "The Military Guide to Financial Independence and Retirement" page on Facebook, or follow @TheMilitaryGuid on Twitter.  If there are questions that you don't want to ask in public then send me a PM or an e-mail.  I get a lot of them, and they all help generate material for future posts and book projects.

[dude]

MuchMula -- There is a middle ground.  Have your husband look into working as a lawyer with the Federal Bureau of Prisons.  Attorney positions working in the field, i.e., at federal prisons, are full-time law enforcement positions, meaning that one can retire at age 50 with 20 years of service, or at any age with 25 years of service. Assuming your husband is @32, he could be done working at 52 with a pension.  Better yet, one need only work in the prison environment for 3 years before vesting in their LEO pension, at which time you can transfer to a secondary LEO position at a Regional Office or Central Office.  Hours are reasonable, job is pretty low-stress. USAJobs has listings.

[Retired To Win]

The time difference between full military pensioned retirement at 43 versus full civilian pensioned retirement at 65 is to me mindboggling.  Let's spell it out: it's 22 years.  The military option wins hands down.  Except...

You are obviously concerned about the possibility of ten years of military deployment before getting to that FIRE date at 43.  In your shoes, I would evaluate (1) just how many times redeployment is likely to happen, (2) just how much life havoc that really causes after you net out the relocation assistance you would get, (3) and then weigh the "per relo" hassle against the years that going through that hassle would cut off your FIRE date.  (For example, if you think you would go through 5 redeployments, then each redeployment is "worth" 2 years towards your FIRE date AND more than 4 years OFF the civilian standard retirement date.)

And, finally, realize that -- just based on what's in your original post -- the military option IS a FIRE scenario and the civilian option is not.

Good luck.

[lakemom]

Nords....a quick question.  Is the Reserves Retirement age not actually 60 MINUS the years of active duty thus bringing the OP's retirement date to 50?  Or is that another benefit that has recently gone bye-bye for new enlistees?  Dh's pension could actually start before his final reenlistment is up so he'll walk out the door with paychecks starting the following month. 

[Nords]

Nords....a quick question.  Is the Reserves Retirement age not actually 60 MINUS the years of active duty thus bringing the OP's retirement date to 50?  Or is that another benefit that has recently gone bye-bye for new enlistees?  Dh's pension could actually start before his final reenlistment is up so he'll walk out the door with paychecks starting the following month.

I've never heard of that! 

Let me clarify the gory details from federal law:  members of the Reserves and National Guard are qualified for a "non-regular" retirement after a total of 20 "good years" of service (which can include up to 18 years of active duty).  (There are earlier retirements for medical issues or physical disability or the Temporary Early Retirement Authority sometimes used during drawdowns, but those are practically a separate book.)  Of course servicemembers are welcome to stay after 20 when qualified, but at 20 years a "Notice of Eligibility" confirms that they're able to apply for retirement.  If a servicemember thinks they've reached 20 good years but has not received a NOE, then their service record may not be correct in the service's database.  This is especially common for a few servicemembers who started out in one service (usually active duty) and then switched to another (usually the National Guard).

The traditional Reserve/Guard pension starts at age 60.  However the 2008 National Defense Authorization Act allowed pensions to start earlier under some conditions.  Starting on 28 Jan 2008, if a Reserve/Guard servicemember deployed to a combat zone for at least 90 days in a fiscal year, then their pension could start three months earlier.  Some eagle-eyed accountant noted that the law was written so that all 90 days had to happen during the same fiscal year, which meant that a combat deployment of 90 days ending on 1 Oct did not count.  That was corrected in the 2015 NDAA for deployments starting after 30 Sep 2014.  The most that these 90-day periods could accumulate for an earlier pension start is age 50... which would be a total of 40 combat deployments of 90 days each.  The earliest retirement ages I've heard of (so far) have been late 50s.

Reserve/Guard healthcare benefits start at age 60 despite the possible earlier date of the pension.

Could you tell me more about your spouse's retirement?  At what age will your spouse's pension start?  Does he have a NOE or retirement orders or other confirmation of that?  Do you have a reference or a link that I could research?

[dude]

MuchMula -- There is a middle ground.  Have your husband look into working as a lawyer with the Federal Bureau of Prisons.  Attorney positions working in the field, i.e., at federal prisons, are full-time law enforcement positions, meaning that one can retire at age 50 with 20 years of service, or at any age with 25 years of service. Assuming your husband is @32, he could be done working at 52 with a pension.  Better yet, one need only work in the prison environment for 3 years before vesting in their LEO pension, at which time you can transfer to a secondary LEO position at a Regional Office or Central Office.  Hours are reasonable, job is pretty low-stress. USAJobs has listings.

I should add, by the way, that with this option, you can buy the military time towards your FERS pension.  That's what I did.  The basic benefit for a Fed LEO pension is 34% for your 20 years of LEO, plus 1% for every year of non-LEO service.  I served in the Navy 6 years, bought the time, and will have a combined 29 or so years of service when I retire, for a pension benefit that will be around 43% of my High-3 Average Salary (plus the SRS until I'm 62, and COLAs begin immediately).  Matched with the TSP (and those matching funds) and Social Security, it's hard to find a better deal anywhere.  And so far as I know, the LEO thing is unique to BOP lawyers in all of government.

[cdnstache]

Option 2: Suck it up for another 10 years! Accept that this is compromising our a great work/life balance for the next 10 years in exchange for the security of a full military retirement on top of a projected $1M nest egg by age 43 (Wow, do we really need all that money as frugally as we live?). Our kids will be 14 and 11, so they'll still be young enough to enjoy some of our post FIRE life with us.

I am in a very similar boat and also had to make the tough decision with 10 years remaining. I'm in Canada with 15 years of service (we get a pension after 25 years). My contract is up for renewal this month and I went through much of the same pros and cons as you are currently doing. In the end, I decided that I will be getting out (11 days left!) in order to spend quality time with my family (2.5 year old and another due in Oct). At the very least I plan on taking the next 5 years off to stay home with the kids and then if I need/want to work part time once they start school then I will decide at that time. I figured there is so much unknown that could happen in the world over the next 10 years (countless postings and deployments) that the stability and family time that I will be giving my family will be worth it in the long run even though they have that carrot on the end of the stick (pension/health benefits for life) and you are looking at it everyday. I tried to explain this to my dad and he said "well, 10 years isn't that long to work." He's not in the military so he doesn't understand the stresses involved in a military family. 10 years of dragging your family around the country and then spending half that time away from them is not a way I want to spend my time with them. If I had decided to suck it up and stick out another 10 years my oldest would be a young teenager and who knows if he would want to hang out with me at that point. Call me selfish but I want to spend time with them now and take the "risk" of possibly working for a little extra money a few years down the road.

Good luck with your decision!

[Bob W]

My Brother-in-Law was a career JAG officer.   He left as a Colonel.   He makes a huge retirement income and lives a fabulous life with super benefits.   He could have signed right back on as a contractor but chose to kick back instead. 

It has been a very good life for him.   He was ROTC.  They moved to some cool places such as Hawaii, Germany and Japan.  I think he retired around age 50.

He saved a lot of money and apparently invested well.   My sister is a PT.  She could get a job at most places they went within days.   They are way too rich imho. 

[electriceagle]

I know rather little about the millitary pension system, but I am curious about the math.

Can you calculate what his pension would be at age 43 if he were to stay in?

Can you calculate how big a stash would be required to generate this monthly income at... say an 8% SWR (the theoretical stash would have to last only 17 years to reach the national guard scenario)?

Can you then divide the equivalent stash to determine the equivalent additional pay per year?

[DoNorth]

Nords explained the merits of both very well.

I work (for another three weeks) with an ex Marine JAG who was faced with  something similar.  8 years active, got out, stayed in reserves and then accepted a GS 14 position in his old office.  He is pursuing a Masters in law and his office is letting him go to Switzerland for six months and paying him his whole salary while he's there.  In the meantime, he does drill etc. and loves it.

If your husband goes that route, he may initially take a pay cut if he starts as a 12/13, but assuming he gets promoted quickly to 14 or even 15, the difference will be negligible especially if he stays in the reserves.  he can then buy back his time in the federal system, achievee 5 weeks vacation/year within five years and work 20 more years to get to a 30 year FERS retirement+ reserve retirement at ~60

One big word of caution though--the FERS-RAE is almost a 4% contribution for new employees so we have to put in much more than employees hired before 2013.  Also, health premiums are fairly high in contrast to Tricare and you pay more for dental as well.  I was shocked when I got my first federal civilian paycheck at how much is eaten up by taxes, SS, medicare, dental etc.

Economically speaking, staying in is the best move if he can handle the assignments and your family doesn't mind moving a few more times.  I was medically retired at about 14 years so I didn't have to go all the way to 20, but I was certainly planning on it.  Needless to say, I'm glad I stayed in because had I gotten out at 10, I wouldn't have known about the the medical things that were wrong with me and would not have received the retirement pension or Tricare and all the other benefits.

[Welshrabbit]

MuchMula -- There is a middle ground.  Have your husband look into working as a lawyer with the Federal Bureau of Prisons.  Attorney positions working in the field, i.e., at federal prisons, are full-time law enforcement positions, meaning that one can retire at age 50 with 20 years of service, or at any age with 25 years of service. Assuming your husband is @32, he could be done working at 52 with a pension.  Better yet, one need only work in the prison environment for 3 years before vesting in their LEO pension, at which time you can transfer to a secondary LEO position at a Regional Office or Central Office.  Hours are reasonable, job is pretty low-stress. USAJobs has listings.

Dude or anyone else: I am 35, have 9 years as a Fed LEO and 4 years in a non-covered position.  I have been living/planning on staying at my job until at least my 50th birthday because that is the earliest I can retire with no penalties to my pension.  This blog has obviously changed my goals...

Have you or anyone else reading this explored the options/ramifications of retiring before the 20 year at 50 or the 25 at any age provision and determined how it would affect the pension?  I've looked online but can only seem to find discussions related to the regular federal pension when retiring early.

[Cassie]

I would stay in for both the early age to fully retire, pension & great health benefits. 10 years is nothing at all. Also here the guard has been deployed a lot overseas so don't think that is less likely if you are with them instead of being active duty.

[Nords]

I would stay in for both the early age to fully retire, pension & great health benefits. 10 years is nothing at all.

I've heard from a few more people since this thread was started, and here's some feedback from a friend I've known for nearly 50 years:
http://the-military-guide.com/2015/07/09/finding-your-military-work-life-balance/

If you're having fun then 10 years is a blip in the highlights reel. 

But if your job is killing you then even "just one more year" is risking more than any amount of money or benefits could be worth... especially posthumously.

[Basenji]

I would stay in for both the early age to fully retire, pension & great health benefits. 10 years is nothing at all.

I've heard from a few more people since this thread was started, and here's some feedback from a friend I've known for nearly 50 years:
http://the-military-guide.com/2015/07/09/finding-your-military-work-life-balance/

If you're having fun then 10 years is a blip in the highlights reel. 

But if your job is killing you then even "just one more year" is risking more than any amount of money or benefits could be worth... especially posthumously.

Roger that!