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Retirement: BRS/High 3

Gatordev

Well-Known Member
pilot
Site Admin
Contributor
Any examples? Does 10 U.S. Code § 12646 specifically exclude general and flag officers?
CNR, CNAFR, Deputy CNAL...

Hey, I don't have access to their ASOSHes, but don't tell me they're not over 18 years of active duty time filling the positions they're in...especially if you have any inside knowledge on the orders certain individuals execute regularly.

But maybe I'm completely wrong. Wouldn't be the first.
 

Flash

SEVAL/ECMO
None
Super Moderator
Contributor
In today's system, you will never hit sanctuary. Ever.
There are always exceptions to the rule, I know of an O-6 that was able to do it because he worked for an Admiral who put in and got an exemption for him. I know of several others too, including a few that slipped through the cracks. A small handful, but they exist.

Unless you're an Admiral.
...active duty time filling the positions they're in...orders certain individuals execute regularly.

But maybe I'm completely wrong. Wouldn't be the first.
Reserve Admirals effectively operate under a whole different personnel system, we had one on the staff I worked for on MOB and he talked to us about his career after making flag and how they use reserve Admirals to fill in for active duty billets all the time. He was leaving the MOB overseas and going home but then soon leaving again on orders to take over for a gapped Admiral billet in CONUS for close to a year, apparently that was a pretty regular thing for him and his colleagues.
 

pourts

Marine F/A-18 pilot, former FAC
pilot
With $300,000 invested in the stock market, you can make $20,000 in dividends. You can also lose $100,000 in a year, which happened in 2008. You can also lose $200,000 over the course of three years, which would have happened from 2000-2003. You can also only make 1-4%, which happened in 2011 and 2015.

So what is your strategy for those years to pay the mortgage? "Sorry Mr. Banker, the stock market crashed, I'll pay you in a few years once I get my money back though."

There's a reason that financial advisors tell people to move their funds away from the stock market post retirement. One bad year and your income will be cut drastically.
Sorry for the late reply. A football game and some other stuff got in the way.

Ah, risk... a much more interesting discussion. All your points above are true. The stock market is not without risk. However, I think it is a prudent risk going forward. Whether you agree with Thomas Piketty regarding returns to capital vice labor, or you agree with Elon Musk about the dangers of Artificial Intelligence, I believe it is important to be an owner of capital. If robots are doing most of our jobs in the future, don't you want to own the company that owns the robots/algorithms? I do.

Your strategy is not risk-less. What about the people living in Detroit that paid off their houses early then saw their value plummet? I bet they wish they could walk away with an extra pile of $$$$ in some kind of account and give the house back to the bank. What about using that extra money to buy an investment property in another city with positive cash flow in year 1? When the factory closes in your town you won't be hosed with your entire net worth rolled into 1 asset.

You are correct about market drops. If someone is about to retire, by all means increase that bond allocation. However, if you are just a bad market timer, do not frett, just leave the money in and you will be OK. Here's an interesting story about the world's worst market timer.

Yes, annual lump sum investing is an assumption in the model, but really it's not very significant - maybe like $20,000 off after 40 years at your 8% margin rate and really the final difference in numbers are an order of magnitude higher. I assumed end of year investing because as a brand-new 0-1 you haven't been paid yet. The amount of time it would take to build a monthly model vice an annual one isn't really worth the squeeze- that spreadsheet took me 15 minutes and a monthly one would take me at least an hour.

The bigger problem with it is that 100 * 1.07 * 1.07 =/= 100 * .93 * 1.14. A true model would be stochastic and choose a random variable with a mean of 7%, adjusted for the percent invested in the stock market, and then average 30 or so trials. This is actually easier to do than calculating a monthly model.

But you can smooth all of that out by just lowering your overall assumption of average compounding, which is why I keep telling you that your 7-8% average is a pipe dream. I can nearly guarantee you that sometime in the next 20 years the stock market is going to lose nearly half its value again.
Regarding the random variable, that would add greater realism to the model, but only if we could be confident about the distribution of that random variable. Is it normally distributed along a bell curve like natural phenomena, i.e. heights of humans? Or is it some other distribution? For example, consider a random group of 100 people, then add Bill Gates to the group. Did the average height change much? No. How about the average net worth? Changed a lot. As a comparison, adding an 8' tall man wouldn't really change the average height of a group of 100 people as much. Long Term Capital Management assumed financial market movements were normally distributed, then they got hit with what they assessed to be a 10 sigma event (extremely rare, maybe once in 1 trillion years or so). Maybe their assessment of probability was off. Maybe they were really unlucky. You decide. Nassim Nicholas Taleb and his books "Black Swan" and "Fooled by Randomness" do a great job of arguing against normal distribution in financial markets for anyone who is interested. Interesting discussion, and no model is ever perfect, or else it would be called reality and not a model.

I'm not quoting 7-8%. Many pension funds out there are banking on 7.x% returns in order to meet their obligations, and they are probably wrong. Something with a 6 handle is probably more likely. Lots of articles in the financial press lately about overly rosy pension expectations. I made a point earlier that if I only need to beat a 3.5% hurdle (your insanely low mortgage rate) I can be more conservative and decrease my expected future volatility. I would maybe put together a 50/50 bond and stock portfolio, which will dramatically lower expected volatility. Voila, less risk. When you try to hit home runs every at bat, you are more likely to strikeout occasionally. If you are only looking for walks or singles, you are likely to have a much higher on base percentage.
 
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Spekkio

He bowls overhand.
Somewhere you moved away from a practical discussion.

You were getting on my case because you could 'beat' 3.5%. Sure. But you can't do so in a way that you can afford to pay for food, clothes, and a home for a family of 5 on $52,000 in a decently populated area? Nope, you'd have to supplement that income with another job. That's not important to you. It's important to me. I will probably still work anyway, but it will be in a location of my choosing instead of one I have to take to meet ends meet.

If you want to make that $20,000 back on a 4% average return that is 50/50, you need $500,000 invested. Do I have $500,000 invested? No, I do not. Could I have $500,000 invested by the time I retire? No, I cannot put 35% of my pay into the stock market.

Quite frankly, I don't care too much about the value of my home. It provides me shelter, not money. Its value to you is irrelevant to my need for shelter. And I'm smart enough not to buy one in the crime filled dredges of a city, so I don't anticipate I'm going to get run out by gang violence anytime soon.
 
This thread has been enlightening. If anyone is just picking it up (whether from Rufio's signature links or from the recent posts bar) it is definitely worth reading through.
 

Randy Daytona

Cold War Relic
pilot
Super Moderator
As said above, this is a very good thread and I hope our junior people read through it. On a related subject, in today's top articles from The Atlantic was this:

The Crushingly Expensive Mistake Killing Your Retirement
https://www.theatlantic.com/busines...nsive-mistake-killing-your-retirement/283866/

Likewise, PBS's Frontline did a similar show that was very good.

https://www.pbs.org/wgbh/frontline/film/retirement-gamble/

The only other thing I would add is to consider having some rental properties for additional income to spreadload risk.
 

Pags

Well-Known Member
pilot
As said above, this is a very good thread and I hope our junior people read through it. On a related subject, in today's top articles from The Atlantic was this:

The Crushingly Expensive Mistake Killing Your Retirement
https://www.theatlantic.com/busines...nsive-mistake-killing-your-retirement/283866/

Likewise, PBS's Frontline did a similar show that was very good.

https://www.pbs.org/wgbh/frontline/film/retirement-gamble/

The only other thing I would add is to consider having some rental properties for additional income to spreadload risk.
Sounds like vanguard PR masquerading as news.