FIRE next August??

[DoNorth]

I'm 35 yrs old, married with two children (5 and 2 years old).  Currently living in the DC area

Here are the basics:
Combined income from all sources: $110K/year main job; $60K/year military pension; $20K GI bill living stipend (currently in a graduate program); $35K/year spouse free-lance income
Total: $~225K/year
Overall net worth is just north of $500K
Total Expenses of about $4600/month

Proposed strategy:  Work for just under a year longer in my current position and leave next August. 
•   My military pension is $4895/month so it will cover our living expenses now without my job (and it adjusts to inflation each year so a 1-3% raise).
•    For the first three years of FIRE, I'd like to go to law school or enter a PhD program (would like to do very minimal pro bono/adjunct professor/self-employed consulting type work) and I will have three academic years of GI bill left so tuition, fees, and books are all covered at no cost to me. 
•   In addition, I also will receive a $2175/month living stipend while I'm using the GI bill for the full three academic years.  This means in years 1-3 of “FIRE”, we should have a surplus of about $3000-$4000/month depending on spouse’s free-lance work.  Any surplus income will go toward building our retirement home after I finish school or taxable investment accounts
•   Taxable income would be reduced to around $20K/yr from about $125K/yr; although annual non-taxable income will still be around $60K-$80k due to untaxed portion of pension and untaxed living stipend + spouse puts about $23K/year into solo 401k

Post-graduation strategy:  After finishing the program in year 3, we plan to leave the DC area and move to a Michigan where we own a lake frontage property (about 1 acre).  I estimate building the house will be about $250K.  Our plan is to sell our DC area house and use the roughly $100K equity + our surplus from the past three years + any extra savings needed to construct the new home without a mortgage. 

Due to my veteran's status, we're exempted from property taxes on our primary homestead.  Health insurance is covered via Tricare so those expenses are minimal w/ a low catastrophic cap.  We’ll still have the pension (but not the GI bill living stipend at that point) but won't have a mortgage so living expenses should drop considerably to about $2800/month.  Spouse has a steady flow of work and can always solicit more (and I hope to do at least a little part time work.)  My kids' college is already covered via veteran's status and some programs in Michigan.  We have about $300K in the retirement etc. accounts, but it's all stock and we just plan to do a Roth ladder conversion in FIRE and let it ride until we're 59+  so there are no SWR considerations for awhile.  So, I suppose the question/dilemma here is whether I stay in my current position longer to shore up the retirement/taxable investment accounts a bit more and forgo the school option or take the plunge and start school next Fall??

[DavidAnnArbor]

Since you have so much guaranteed military pension income you can really do what you want. The graduate school is a very full time commitment and may make it difficult at times to spend as much time with your kids.  On the other hand it's always better to go to school now rather than wait later, I think it's hard to do grad school when you're in your 40's or 50's as compared to 30's.
If you go to law school in DC but practice law in Michigan you probably have to take the Michigan Bar exam.
For your house along the lake if possible I would take advantage of geothermal and solar energy so that your property will have low utility bills. Propane is a super expensive way to heat your home right now in Michigan, and a lot of people out in the boonies in Michigan spend way too much money on propane. Your lake front property may not have access to a natural gas line. For solar you would want a roof line of a specific pitch facing the south without any tree shade. Foam insulation in the walls and attic space and other insulation and air sealing methods are ideal, but then if you do, you'll want an air exchanger.

[DoubleDown]

If you don't mind me asking, how does one obtain a military pension of $4895/month at age 35?

[EscapeVelocity2020]

I wouldn't focus quite so much on the finances personally, that military pension is pure gold.  There used to be a Nords fellow that posted around here who is the expert on military ER, I'm sure you can track him down here or on Early-Retirement.org.  I'm no expert on GI bill benefits, but I know there is lots of flexibility on how it is used.

The bigger picture issue is whether you really want what a PhD / JD degree (that's a significant amount of stress with a young family) will give you and if your family prefers the DC area with attendant higher COL or if you really just want to get on with your life and live in Ann Arbor.  If you are only moving in order to save money, make sure the whole family is on board. 

You didn't give enough info about why or if you wanted to quit your job, so I can't give you much more of an answer.  But I will end on a high note, many PF bloggers (RetireBy40, Dividend Mantra, MMM) FIRE'd on far less passive income and medical benefits, so you have a pretty good cushion to shore up that healthy net worth while you try out the SAHD gig.  Good luck and a sincere thank you for your service.

[sd85]

Out of curiosity, how are you collecting a military pension at age 35? Did you take a 15 yr retirement or is there some other trick to it? (We're military and I'm wanting to know!)