Riddle me this. If one takes their pension (very annuity-esque), and turns around, runs their money thru the contraption known as the stock market, and then turns around and buys another annuity, what is gained? Personally, $1500 is plenty to cover my base expenses, and I'm almost certain I make significantly more than an e7. Of course, this assumes one has a paid off house, living below their current means, etc. File me under the camp of a person with a military pension probably never needing an SPIA.

To the OP, don't count your chickens before your eggs have hatched. Each year you go, the more likely you are to be forced out. Being enlisted, you probably offer nothing that can't be replaced. The military is very keen on the costs of your plan. My hope is you make your 20. I lurk @ e-r.org, and there are many military retirees there that can address you better there. You can also read the stories of people being pushed out a year or two early. Most of those makin their 20 were officers, usually nukes or some type of pilot.

Good luck.

Sir, I've been in the Air Force for 16 years and throughout my career I have NEVER seen anyone forced out past the ten year mark. I really don't think I have much concern of not getting my retirement benefits.

As far as my pension, I am looking for a place to put it for about 15-17 years. I really won't need it as I am pretty marketable (Security Clearance, Microsoft and CISCO, PMP certs, 20 years experience) and I'm sure I can find a job that pays more than an E-7 takes home (about $50K/year). Most of my colleagues that either separated or retired make between $65K & $80K starting.

What do you suggest I do with my pension between the ages of 38 and 55?

I have to agree with the statement about buying the annuity. I know it sounds like a good idea to have that stable income for the rest of your life, but you should run the numbers compared to a well balance portfolio for a person of your age. Also, why don't you stash some of your pension in a an IRA or Roth IRA. You didn't mention your TSP plan too. You should be stashing as much as possible at least the 5% to get the match.

I do have a TSP. I also have an IRA. I'd still contribute to those until I'm eligible to collect. I contribute to those now as well as stash $1000/ month in savings and we still live comfortably. I don't want to just retire and look at that $1800 a month pension as income and start spending it. I'd rather put it in a vehicle that can make me extra money until my retirement goal of 55.

Not sure I understand the riddle. I am not advocating an annuity essentially for the reason you stated. I'm just saying that if someone wants to buy an annuity and is interested in leaving something to heirs as well, there are ways of doing that.

I guess the key to the OP's plan is that he will have 17 years during which he will not spend the pension so he will save it. Then he'll need to decide at the end of that time whether to spend it on an annuity or let it throw off income.

I would almost always choose the "throw off income" path but I think the annuity path could be attractive given the right company, very low fees, and a high enough rate of return. But I'd be pretty demanding so I doubt any company could make it attractive enough for me.

You can start by reading here about someone who has had their 20 year plan derailed (AF even).

http://www.early-retirement.org/forums/ ... 56619.html

as far where to invest it while you slave away another 20 or so years, that is the question many PhD's have spent their careers trying to answer. You should first decide how much you need to retire. Then, you work backwards into a risk tolerance. Then, you pick an asset allocation. My normal smartass (and obvious) reply is, "a thing called the stock market."

But first, answer the question, how much per year do you need to sustain your ideal retirement? Perhaps your pension covers that, perhaps not. A lot of assumptions goes into this, but you need something to work towards.

I read the link you attached. That's unfortunate for that Capt. We were going through a force shaping over the past couple years. Officers get it the worst usually. He did get a decent severance. Our biggest change recently was not allowing E-5's to retire. They moved their High Year Tenure to 15 years. Me as an E-6 with 16 years in, I should be ok.

I am in agreement with you on the stock market. That was my original plan through a group of ETF's and Mutual Funds.

You're missing the point. It's fallacious to think this won't happen to you. My point is, prepare for the worse and hope for the best. If you're shown the door in 2 years, what then?

Onto other news, you still have no investing plan.

I love the new ways organizations come up with to justify jiggling the pieces around...

Reduction in force
RIFfed

but my all time favorite - made redundant!

My investment plan will be pretty simple; a few dividend ETF's and/or probably a Vanguard Target Retirement Fund.

That's not an investment plan. At best that makes for cocktail party talk. In which case, if I went to cocktail parties, I would find a different party if that is how people were talking.

http://www.bogleheads.org/wiki/Investme ... _Statement

Never underestimate the power of dollar-cost averaging. Each month set aside a certain amount of money from your paycheck into a Roth IRA account and buy shares of the S&P 500 index (such as SPY). This is a good option if you don't want to put too much active research into the retirement planning - some months when you buy shares the index will be cheaper while other months will be more expensive. You will never beat the index in this way, but the historical data that we have suggests that on a long enough timeline you earn what the market earns (9% annual average) if you reinvest the dividend paid out back into the index.

The benefit of a Roth IRA is that although you don't get to deduct your investments towards the account at the time of investment, dividends and capital gains are tax free as long as you leave the money in the account until you retire. Also when you withdraw money from the IRA once you retire, this money is not taxable by the government under current law.

Beating the stock market is a tough feat, so don't get tricked into thinking it is easy. I think dollar cost averaging and dividend paying stocks with solid financials trading close to book value is your best bet for a retirement strategy. Hope this helps - best wishes.

Thanks, this is what I planned initially aside from the IRA portion because the yearly max is too low for me to deposit the entire $1500/month. I already contribute close to the max now and will be maxing when I retire.

Do you think Index Funds w/ dividend reinvestment outside of an IRA would work also?