Thanks. And yeah, my military pension represents a different sort of “survivor bias”.
That’s a sore spot with me. I’m not particularly happy with landlording and you’re right about the opportunity cost of cashing out for the stock market. We’ve been unable to solve our self-imposed “bird in the hand” issue.
If the day comes when we can no longer live in our current home, then we (or my surviving spouse) will want to move back into that rental within months or even weeks. However it’d take far longer to find a property as affordable as that one, let alone ready for us to move into. We’ve spent the last several years searching for a place with the same advantages of location and amenities, and they’re just not easily found.
To make it even more interesting, our current tenants have been in there for over seven years and they’re tentatively planning to move out in six months. We’re going to bring in the contractors to rehab the kitchen and both bathrooms (first time in nearly 40 years), fix a couple of gnarly problems with sagging lintels & cracked concrete, and replace most of the carpet with porcelain tile. We want to set that place up as much as we can (this year) for the day (in 20+ years) when we might have to move back into it.
Cash flow and diversification is the good news. At some point in the next 5-10 years we’ll turn the chores over to a property manager. But otherwise our exit strategy is “probate”.
I share your pain on the banking sector. We have the same issue with our asset allocation, but apparently that’s where the money is.
I agree with you about passing on tax-advantaged gifts-- especially if the kids learn to handle large sums while the money compounds with lower taxes.
Ouch! I’ll stop complaining about my expense ratios and taxes.
Thanks for keeping the discussion going! I still haven’t figured out whether it’s worth writing a post on my site or just e-mailing my readers who are dual-military couples with two military pensions.
We agonized over gifting our daughter, and eventually we decided to ask her: “Would this inflict you with affluenza? Would you become an Economic Outpatient Care trust-fund baby? Would this give you enough to do nothing?” It was a great series of conversations over a year of family visits & trips.
As we watched her get qualified on her ship I realized that much of my military career was lived in (and motivated by) fear: fear of failing in training, fear of failing to qualify, fear of hurting or killing my crew, fear of not promoting, and fear of having to get a “real job” in the civilian world. That fear was a powerful inspiration behind our savings rate, but it’s not much of a lifestyle.
We motivated her during college with profit-sharing incentives, and when she graduated she began saving over half of her gross income. She also has a very strong internal locus of control, and I think she’s going to do just fine. We realized (and she agreed) that affluenza was not an issue.
Another looming challenge (which I’m all too familiar with and she’s about to see) is being bribed with large bonuses. In my day you could score an extra 30% Navy pay by signing a contract for five more years. These days she’d be offered roughly $25K/year on top of a base pay of about $65K/year. This is a big deal for an O-3, and a lot of people take horrible department head jobs just to pay off their student loans… or their SUV loans.
She feels a tremendous source of comfort (“empowerment”?) at the savings she’s put away (far ahead of where I was at the age of 24) and she’s living with much less fear. She also knows that she can do just about any Navy billet for a few years (until she can leave active duty) and she won’t be bribed by large sums of money for crappy jobs. She’s also stopped fearing the transition to the Reserves or a bridge career, let alone to FI.
I hope there are no dependencies. But you gotta know your kids and their personalities… and probably their spouses too.
Long story. Our daughter was nine years old when I retired, and she’s been watching her parents enjoy FIRE for over half of her life. That’s an extremely powerful motivation. She and I used to agree that when she was waiting at the school bus stop on a Monday morning, I wouldn’t drive by her with a longboard on my roof rack.
Here’s more practical tactics:
Yep, that suits my confirmation bias.
I know a retired vice admiral (O-9) submariner (with my background & experience) whose military pension is $165K/year… plus an inflation-fighting COLA. He’s a good guy and a real human, which is pretty rare among admirals. For the last four years he’s been in a senior executive position earning at least another $250K/year with lots more deferred compensation. If he ever retires from that career (with another pension) then he’ll spend the rest of his life sitting on corporate boards and “consulting” for easily another $100K/year.
The vast majority of his investments are in permanent life insurance policies. (The rest is in CDs.) He says that he has more money than he’ll ever need, he wants to pass it on without inheritance taxes, and he’s decided to take zero risk. Every few years he takes the money he’s saved up and plunks it down into more permanent life.
I can appreciate the contrary side of the debate, even though I won’t do that with our assets.