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.