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In 1991 Billy and Akaisha Kaderli retired at the age of 38. Now, into their 3rd decade of this financially independent lifestyle, they invite you to take advantage of their wisdom and experience.

Doug Nordman, Military Early Retiree
Billy & Akaisha Kaderli

Early Retirees are a rare breed. And no two pathways to financial independence are identical. Because of our marked independence and choice of this unique lifestyle, we often stand out from the crowd. Finding like-minded people used to be a challenge. Now, with the recent rise of public forums on the internet, we are able to connect to each other’s treasure of information, experience and perspectives.

For a selection of financial and lifestyle forums worth looking into, check out our Preferred Links Page.

As a moderator on Dory's Early Retirement Board, Doug, a.k.a., Nords, brings a useful and mostly sane perspective because he is retired from the military. Among his passions are surfing, martial arts and his family. He generously shares his Early Retirement wisdom and humor with fellow ER wannabes on the forum.

We caught up with Doug, who lives in Hawaii, and asked him for his insight and answers to the following questions:

Doug accepting Letter of Appreciation

1. How long was your career in the military and what were your duties?

Twenty-four years from 1978 to 2002 -- four at the U.S. Naval Academy and another 20 in the Navy's submarine force. I served on USS JAMES MONROE in the 1980s (nuclear engineering & communications divisions) and on USS NEW YORK CITY in the 1990s (weapons officer). In between I attended the Naval Postgraduate School in Monterey, CA., serving on the staff of the Commander Pacific Submarine forces (SUBPAC) and at training commands. I wrapped up my career at the engineering department of the Naval Submarine Training Center Pacific in Pearl Harbor on Ford Island.

2. What made you consider Early Retirement rather than continuing on in the military or starting a second career?

My spouse and I started our family while I was stationed at SUBPAC. I was surprised when the staff job made it very clear that family priorities were going to conflict with our careers. That struggle dragged on for nearly a decade and didn't really get better until I'd retired. This motivated us early in our careers to gain the financial independence to have more family time.

I discovered Early Retirement when I was looking for a job. The military provides a wide range of transition assistance for its veterans. A couple of years before retirement I started working through the Navy's self-assessment and career-interest software. I was having a tough time discovering my dream avocation and the surveys all said that I'd make an excellent nuclear engineer or training manager. (No kidding.) I was griping about this one day to my father when he asked "The Navy pays you a pension, right? Do you need to keep working, or have you saved enough money?" I suddenly realized that I didn't know any veterans who'd retired right out of the military -- they'd all started second careers. It was an epiphany.

3. How long have you been retired and how do you spend your time now?

I retired in June, 2002. It's hard to believe that it's been almost five years -- it seems like it was just last month.

We're parenting a teenager now, which sometimes seems like another full-time job with its constant stress and low pay -- a chauffeur with a wallet. My spouse and I enjoy home improvement and we've worked on a number of landscaping and house projects. I read a tremendous amount about history, finances, and business. (Was this stuff being taught in my high school?!?) I'm intensely curious -- researching and writing probably fill two or three hours every day. We also practice tae kwon do three evenings a week and I try to surf at least twice a week. I have such a long "To Do" list that it's hard to remember how we ever found the time to go to work.

4. Did you find your transition to ER easy? What were some of your challenges?

It was nearly painless but not without its surprises. The first surprise was recovering from chronic fatigue. I must've napped an hour or two every day for a month. I no longer have fatigue headaches, fall asleep at 10 AM or wake up in a panic. I wonder how I survived two decades of adrenaline crises and caffeine infusions.

Another surprise was having to learn how to say "No thanks." Even though I'm responsible for my own entertainment I can still over schedule myself. I'll often hear "Hey, you're the retired guy, can you help us with...?" I'm happy to volunteer a little but there are far more opportunities than time.

A very pleasant surprise was realizing that ER is my avocation. I don't rush from task to task anymore and I've learned to enjoy a rainbow or to savor our kid's successes. I don't get upset at schedule disruptions and now I have the time to make friends with people who used to remain strangers. I have far more interests to explore than I'll ever manage to fulfill.

The transition was a lot more difficult than it needed to be because I didn't find a way to educate myself about ER until after I'd retired. The military's transition programs are designed to start a second career -- no one wants to see homeless veterans -- and there's no discussion of early retirement. You can learn just about anything in the military from your shipmates, but those retired guys always disappeared after their ceremony and were never around to answer your questions. Most of them had started second careers anyway, and the occasional early-retiree story seemed like an urban legend.

Last year I was expressing that frustration on the Early-Retirement.org discussion board and a poster commented "Nords, you should write a book." So now The Military Guide to Financial Independence and Retiring Early (FIRE!) is on my 2007 "to do" list.

 

5. How has your wife and family adjusted to you being around all the time?

I've heard many stories of painful transitions. Sometimes a veteran ended up spending "too much" time with family while they were trying to find a job or launch their own businesses from home. Their schedule disruptions, frustrations, and fears ended up making everyone unhappy. Others had their egos and lives totally submerged in their military careers and couldn't figure out what to do with themselves once in retirement.  They expected their families to provide the answers.

Ours, however, was painless! My wife and I are a team and we've always enjoyed each other's company, whether it's reading for a couple of hours together in the recliner or doing our own thing at opposite ends of the house. The cooking and chores are split down the middle, although I do most of the repairs and she owns the decorating. She still works part-time in the Navy Reserve so she keenly appreciates the domestic support. In ER we don't feel like we have to cram our quality time into nights and weekends. Mornings and early afternoons are wonderful.

Our kid doesn't care where we go or what we do as long as we're ready to fulfill her slightest transportation and financial "needs". (Good luck with that.) Like all teens she's thrilled to spend more time with me but embarrassed to be seen with her parents in public. Unlike many teens, she keenly appreciates the payoff of living below one's means and investing for financial independence. She hopes that she can find her own avocation but she wants to choose whether or not she works for the rest of her life. In return I try not to drive past her at the morning school bus stop with the surfboard strapped to the roof.

6. Our military have difficult jobs. It puts profound stress on their family systems especially if both parents are deployed in separate locations. Few of us civilians have had experience with this type of pressure. How did you manage this?

Like most new parents, we were blissfully ignorant. The military has made a huge effort to educate the families and to support them through deployments, but it's probably as difficult today as it was during the Cold War. Some of that pain of being apart can be eased by modern communications technology. Email, internet chat, and video teleconferences does go a lot farther than a pile of old letters and a monthly $75 overseas phone call.

Even on shore duty, flexible childcare was crucial. Grandparents (both sets!) were a huge relief. The military childcare centers of the 1990s were considered to be the best in the nation but it was still difficult to get as much family time as we wanted. Some parents hire live-in nannies. Today we have more dual-military parents than ever before and the military is slowly accommodating their families and deployments, but there's a long way to go and the mission still comes first. Usually one parent finds it best to leave the service.

7) Putting your life on the line to protect our nation earns you many benefits, however. Can you tell us about a few?

Here are some of the military's financial advantages:

- tax-free pay in combat zones (a year-long Iraq deployment)

- tax-free housing & food allowances

- tax-free cost-of-living-allowances overseas

- subsidized base housing or a housing allowance

- more housing for married/families

- low-cost mortgages from the Veteran's Administration

- free medical care

- cheap dental insurance

- cheap life insurance

- GI Bill & other subsidized/free education & job-training opportunities

- employment preferences for spouses

- civil-service employment preference and credit for military service

- Thrift Savings Plan (up to $40K/year contributions)

- Survivor's benefits in exchange for a slight reduction in pension.

The veterans are probably reading that list, shaking their heads, and thinking "Yeah, but I really paid for those." The benefits are only useful when you're alive to enjoy them. If you've never been in the military, remember that those good deals come with another price. Every veteran may eventually have to execute the military's missions of breaking things and killing people. No one should join the service just for the money and benefits.

Doug showing his martial art skills to the judges

His hard work paid off with 1st Place.

8) Do you find that these benefits ease the case for early retirement for military members or hinders them?

Tremendously easier. An early retiree's biggest challenges are decades of inflation and affordable healthcare insurance. The military pension includes an annual adjustment indexed to the rate of inflation, and TRICARE is one of the nation's most affordable healthcare systems.

So why aren't there more military early retirees? I wish I knew. There's not much research on the subject, but a survey by Russ Graves (a retired Air Force officer) indicated that over 85% of senior officers immediately started a second career after retiring from the military. This is despite pensions ranging from $35,000/year up to six figures.

Maybe the military profession encourages a mindset of lifetime service. Maybe a career of harsh conditions and overtime leads naturally to a second career. Maybe veterans haven't learned how to save money or they don't know how much to save for retirement, so they start a second career because they don't know that other options exist. I'd love to hear from others who've made the transition.

Doug Practicing his ER Skills onboard the USS NEW YORK CITY Nuclear Submarine

9. Do you get special travel opportunities too?

Absolutely. Retirees have a low priority for space-available travel on military aircraft, but we have flexibility to enjoy any destination while we wait for more travel space to open up. Many timeshares and resorts make last-minute deals available to military retirees -- one poster on the E-R.org spends 15-20 weeks/year at vacation condos on short notice. (Veterans know how to move fast and travel light.) My sea duty really pays off in Hawaii when the inter-island cruise ships have a no-show -- I can be packed and on the pier in a couple of hours.

10. How is your portfolio invested and do you receive a military pension?

My military pension is ~$36,000/year, which pays for our Hawaii mortgage, the groceries, and most of the bills. My spouse's Reserve duty has brought in as much as $15K/year but last year she earned only $3700. She'll draw her Reserve pension in another 15 years and we'll be eligible for Social Security at age 62. Our withdrawal rate varies but we can usually project our income and our expenses and adjust as necessary.

Because we can trust my pension and our future income streams, and because we may have to cope with five or six decades of inflation, we've decided to invest in equities -- the only asset that's beaten inflation over the last century. Over 90% of our early retirement portfolio is in exchange-traded funds, a mutual fund, and several stocks with a tilt toward international, small-caps, and value. It can be quite volatile -- it dropped over 40% for a brief time in 2001 -- but we'd been through the October 1987 stock market drop and we knew we could still sleep well at night. We dampen some of that volatility by keeping two years' expenses in cash. We don't own any bonds.

Our child's college fund is also been aggressively invested but we've started to convert that into CD's as she enters high school. Of course she's also talking about joining the military, but that's a different issue!

 

11. What advice would you give a military family looking to retire early?

Save as much as you can and give compounding the time to work its magic. Max out your tax-deferred accounts (the Thrift Savings Plan and IRAs). Save even more in taxable accounts. Live below your means and save every pay raise. Dollar-cost-average every paycheck into equity index funds and keep putting it away for two decades.

Educate yourself. You may not "have the time" to manage your investments, but blissful ignorance (and financial advisors) will cost far more than the mistakes you'll make as you learn to manage your own investments. Talk to your command's financial advisor and learn from their handouts. Read online savings newsletters like the Dollar Stretcher. Ask questions and learn about ER from the Retire Early Home Page and Early-Retirement.org. And watch how the Kaderlis travel the world like ER professionals!

12. You own a home in Hawaii. I would think that Hawaii is an expensive place to live. How does that influence your spending?

Oahu real estate (the land) is tremendously expensive. It's not as bad as San Francisco or Manhattan but it's regularly in the top 10. We were lucky enough (after years of searching and visiting hundreds of listings) to find a desperate seller's bargain in a good community with a great school. Of course this "bargain" was in horrible shape, which started our hands-on education in home improvement. The best way to afford Hawaii real estate is through sweat equity.

Our spending matches our "locals" lifestyle. We buy local groceries, grow some of our fruit, and only occasionally eat Mainland cuisine. Potatoes and strawberries are very expensive here but rice and papaya are cheap. We prefer chicken or fish, not so much beef. Sam's Club, Costco, and Wal-Mart have restored competition in the last 20 years. We spend about $450/month on groceries for two adults and a teenager, and I suspect that a lot of it goes to feeding our teenager's friends. Also, we enjoy local Asian restaurants instead of national franchises.

Low Cost and Great Exercise, Let's Surf Dude!

Gas is between $2.30-$3/gallon but we don't drive as much as our Mainland friends, and Hawaii's weather encourages bicycling to work. We drive few enough miles each year that we actually spend less on gas in Hawaii ($115/month in 2006) than we did in California. Of course USAA car insurance is a bargain even in Hawaii.

Utilities are lower when a home and yard are designed for energy efficiency. Our windows exploit the trade winds and our attic roofs are actually insulated to reflect the heat. We use ceiling fans instead of air conditioning and we only have to close the windows in January and February. The state subsidizes the cost of installing a solar water heater so hot water is free after a few years' payback. Electricity costs 23 cents/KWHr but we use less than $100/month. We landscaped with native plants instead of growing a "traditional" grass yard, although our fruit trees use more water than we'd like. Water/sewer bills average about $70/month. TV and Internet services are about the same prices as Mainland cities.

Our entertainment is cheap. Used longboards cost as little as $200 and the waves are free. We love SCUBA diving and it's almost always good weather for a long walk. Camping is cheap and easy. Communities are full of weekend events and fundraisers. There's almost always a free show at Ala Moana Park or Aloha Tower Marketplace, and walking Waikiki is hours of free eye candy. Our biggest "entertainment" expense is tae kwon do lessons at $75/month. Hawaii libraries are very good and I only spend about $20/month on books.

Our clothing budget, especially since Early Retirement, is negligible. I wear surf shorts, t-shirts, and rubber slippers every day. I only wear pants, socks and shoes a couple times a year at formal affairs (or on the Mainland). We shop for most of our fashions at Goodwill or the Aloha Stadium Swap Meet.

Hawaii taxes its workers almost as heavily as some East Coast states, but it's one of the nation's most tax-friendly states for retirees. Most pensions are not taxed. 2006's property taxes were $2600, an all-time high and 25% over last year's due to a hot real estate market. Local excise tax is 4.5%.

13. Describe your best ride on the longboard.

My family retirement present was a surfing lesson. On the day I ER'd my wife, my daughter, and I went to White Plains Beach on Kalealoa (still my favorite beach) and learned to stand up. A year later my daughter had finally grown enough muscle and skill to paddle herself into a wave without a “Dad push”. So my favorite longboard ride was "our" best ride -- a father-daughter party wave that we took side by side all the way to the beach.

Thank you, Doug, for your service to our Nation. We appreciate your taking the time away from surfing and your busy retirement schedule to share your wisdom and experience with us. Good luck with your up-coming book. Doug can be reached at NordsNords@Gmail.com

To read more interviews with Expats, Early Retirees and Interesting Characters, click here

Editors note: Doug has published his long awaited book and now has a website and blog packed with useful information for our Military Service men and women. Click here to see The Military Guide

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About the Authors

Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance and world travel. With the wealth of information they share on their popular website RetireEarlyLifestyle.com, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurer’s Guide to Early Retirement and Your Retirement Dream IS Possible.

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