How to Retire Early (especially if you’re a Veteran)

True story: When I was a young E-4 (Petty Officer 3rd Class) I found a loophole in my first credit “NEX” card. For the readers who wished they joined a real branch of service, i.e. the navy, the NEX card was for our base exchange.

The loophole? I could buy something on credit (I think my credit line was $800!) and return it new in the package for cash the same day! Instant Pay Day loan on the NEX! Woohoo!

The problem in America is that good education about personal finance is not provided. That is a shame because there are a lot of predatory loan companies (insert Pay day loan company here). Buy a car? Just finance it! You end up paying three-four times more what the car would cost if you had just paid cash and bought it used instead.

My oldest son runs this real estate investment property for the family; I started teaching him when he was 17. We’re in self-storage and he’s done it all for us: business filings, running our Quickbooks (look it up), providing customer service, building websites, performing SEO, switching customers from mailing checks to online payments, and more.

I am really proud of him. I remember him saying to me when he first started, “Why don’t they teach us this in school, Dad? It’s so valuable!” I also ask myself the same question.

After reading “Rich Dad,” I started taking an interest in personal finance. I mainly wanted to get better at managing my own money and to use real estate as my long-term retirement plan. I’ll explain in a bit.

Millenial Disclaimer: The opinions expressed in this article are mine only and based on my own experiences and not meant as financial advice. I’d advise you to make your own decisions!

Whew! Got that out of the way.

Where was I? Oh yeah, I’d finally taken an interest in better managing my money, when I started reading about it. I also noticed a friend of mine at my first duty station. Let’s call him “Red.” He drove a shitty car but always had his act together with investment. He saved most of what he made rather than buy a bunch of crap he wouldn’t need.

Red taught me the following: “don’t buy it unless you can pay cash for it.” This was rudimentary advice but got me thinking that I’d rather drive a crappy car and own a house than the opposite.

I’m going to pass on some tips, based on my personal experience, which will help you retire when you get out of the military.

First, educate yourself. Congrats, you’re off to a good start just by reading this! It doesn’t take much, but you have to read a few books to educate yourself and get a financial vocabulary.

I still remember being so intimidated by terms I didn’t understand and was (at the time) too embarrassed to ask. Like ROI, net income, gross margin, stock split, amortization schedule, and on and so forth…

One of the best “first books” to read is “Rich Dad, Poor Dad” by Robert Kiyosaki. It provides not only a great financial philosophy but also offers some real practical advice on buying real estate as an investment.

It’s why I lived in a four-bedroom apartment building as an E-6 — only I owned the building. It was one block to the beach in Ocean Beach, San Diego… man I still love that property. I contributed $50 towards the mortgage and had renters paying the rest. Try and find off base housing near the beach for $50 a month today!

Investing in real estate has always been part of my long-term retirement strategy. I don’t know the stock market that well, other than how it functions (mostly emotionally-driven or nudge directions by much bigger players). Over the long-term, you would expect to get 10 percent returns and as you reach retirement age you need to start pulling out of the market into more stable positions.

Personally, real estate interests me and I like that it’s tangible: I can touch it without relying on financial institutions that continue to have a slew of problems in the technology age. I still have a way to go but my portfolio is growing.

So how am I using my real estate to retire? Simply put, I buy income-generating property and grow that passive income to a level I can quit my day job.

First, you need to figure out how much is enough. So many people want to “be rich,” but have no idea what rich is. When you actually run the numbers against your desired lifestyle you realize what rich is.

I define rich as having enough for what you need without having to work. More than five or 10 million USD is really not needed since time is finite. It’s why Warren and Bill are giving away so much of their personal wealth: they couldn’t spend it all if they tried.

A simple exercise

Make a monthly budget of what you’d want to spend in retirement (these are house, travel, eating out, etc..). Then multiply it by 12 for the amount of yearly income you need. Afterward, subtract your military retirement pay and that’s your delta. (If you’re lucky you’ve got it covered already.)

Let’s say that your retirement goal is $100,000 in annual income (Don’t need 100k? Then just half it or half it again!)

Military benefits $30,000 annually.

Delta=$70,000 or roughly $5,800 a month. (Don’t sweat it, it’s doable!)

Now you know how much you need. Then figure out how to get there with a passive investment vehicle.

Some examples:

• Stocks and Bonds (you’ll need at least investment in the low seven figures to produce enough passive income.)
• Real Estate rentals
• Alternative investing (crypto, day trade, fantasy sports)
• Buy a Business. Become an absentee owner of a business that produces owner income (some great buys out there that the SBA will finance for you).

I chose self-storage because it’s recession-proof, people don’t freak out when you raise the rent 10 percent (for a $50 a month unit that’s only a $5 increase), and the risk is spread out among many tenants/units.

Example: a four-unit property that has a high turnover may result in a cash flow problem for an owner that has a mortgage payment to make.

Note, it’s never been a better time to find and buy a property that needs a little TLC. Just remember the number one rule: Location. I’d rather have a fixer in a nice area than the opposite. Good locations always draw tenants. Remember that beach apartment building I owned from above? I had a waitlist of tenants! They’d even slip notes under the fence.

The property my son manages for us as his College job? I split monthly profits with him but he does everything. He’s increased our occupancy by almost 20 percent. He has taken an interest in it which I’m grateful for because I could see his eyes brighten up the first time he realized we captured a new tenant while he was sleeping. That’s the magic of passive income.

Some additional thoughts: We really don’t need many things in life to make us happy. I started selling off my extra shit four years ago when I realized that we can create our own cage by owning too many “things.”

That big house needs someone to maintain it, cut the grass, etc… Boats, second homes, jet skis, planes, club memberships… It all starts to add up and consume us by having to manage it. Hire someone? Well, you have to manage them too!

My only guilty pleasure, but also my main passion, is airplanes. I fly experimental warbirds and RVs because they’re super fun and relatively inexpensive. They roughly the cost as much as a nice sports car. I also justify this by the fact that I haven’t owned a car or truck in six years. Just an airplane!

So Where to live during retirement? 

Personally I like paying as little tax as possible. I don’t mind paying, I just don’t want to pay so much to a state like California that it eats into my passive income or retirement goals.

I also want great access to healthcare, fast internet (so I can stream my NHL games), good food, activities I enjoy, and a place where friends would want to visit. That ranch in the middle of nowhere is going to be a hard sell for friends to come to visit!

Some great income and tax-free states or U.S. territories are Wyoming, Texas, Florida, Nevada, the U.S. Virgin Islands, and — my personal choice — Puerto Rico. I love Puerto Rico for the weather, great outdoor activities, and incredibly low cost of living. You can get a beachfront condo for under $300,000.

As another option, especially with the internet, you can choose to live abroad as an expat. This is a great option but for me, doesn’t work because I wanted to be close to family, friends, and my kids. Some incredible countries with good healthcare and amazingly low cost of living are Thailand, the Philippines, Mexico, Argentina, the Dominican Republic, Spain, Portugal, and Greece. There are more but you get the idea.

Summary

Some more recommended reading: “Think and Grow Rich,” “All the Rich Dad books,” “Getting Things Done,” “Total Focus” (shameless plug but also details some good lessons learned from my own failure to focus after leaving the SEALs), “4 Hour Work Week” (I like Tim for his vulnerability and neurotic research), and “Tools of Titans.”

These are a few that came to mind quickly.

I hope you found this article useful, especially its financial exercise. I am glad to answer questions in the comments below for the first week the article runs. Also, if you found this helpful please share it around.

Go forth and do it!

Brandon