US veteran with $1.53 million in assets considers early retirement — MarketWatch
A 58-year-old veteran and federal employee from California, United States, with $1.53 million in financial assets, is considering retiring early and moving to Alaska or Texas. He expects at least $9,000 in monthly retirement-related payments before federal and California state taxes. The man also receives $4,000 per month in disability compensation from the US Department of Veterans Affairs.
As MarketWatch reports, the man works as a federal employee at the GS-12, Step 3 level and earns $119,356 per year. He also has 40 years of service in the US Army Reserve at the rank of lieutenant colonel and is due to complete his Reserve service at age 60.
Assets and planned payments
His assets include $500,000 in stocks, ETFs, index and mutual funds; $330,000 in 401(k) and Thrift Savings Plan accounts; $295,000 in certificates of deposit; $180,000 in savings; $117,000 in a deferred annuity; $97,000 in Series I savings bonds; and $10,000 in cash. This amount does not include the future value of his pensions, Social Security payments and veterans' benefits.
The man plans to leave federal service at age 62, with approximately 33 years of creditable service in the Federal Employees Retirement System after making military service deposits. He expects to retain Federal Employees Health Benefits health insurance, FEGLI life insurance and TRICARE health coverage. By his estimate, at age 68, at the end of December 2035, he will be able to receive $2,431 per month from Social Security.
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Portfolio assessment
The columnist noted that with such projected income, the main question is not so much whether his savings are sufficient, but whether the man will need to make substantial use of his investment portfolio. He advised consulting a certified financial planner and a tax professional to calculate expenses, the sequence of withdrawals, Roth account conversions and the timing of starting Social Security benefits.
In the case of a hypothetical annual withdrawal of 4% from a $1.53 million portfolio, the amount would be about $61,000 per year, or approximately $5,000 per month. The column also noted that about $700,000, or roughly 46% of the assets, is held in conservative instruments: certificates of deposit, savings, Series I bonds, cash and a deferred annuity.
Moving from California to Texas or Alaska may affect the tax burden, but when choosing a place of residence, the author also advises assessing housing, insurance, transportation, utilities and healthcare costs.
