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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
About the Authors
Billy and Akaisha Kaderli are
recognized retirement experts and internationally published authors on
topics of finance, medical tourism and world travel. With the wealth of
information they share on their award winning 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 available on their website
bookstore or
on Amazon.com.
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