It’s funny. I have been in the US Marine Corps for over 22 years, yet I rarely write about my experiences. Maybe after so many years, it is easier to focus on new shiny objects, like passive income from rents, royalties, and dividends.
However, that means that I forget to talk about the mother of all passive income, the US military pension. You see, in the US military, if you do 20 years of service, you can retire after those years with a retirement that begins immediately upon completion.
So, if you begin at 18 years old (like I did), you can do 20 years and walk away with a 40% retirement pension (50% for us old-timers) at age 38. This money may not be enough to sustain you for a full day-to-day living, but it is life-changing money.
Cash Flow 102: Creating Passive Income for Retirement
Even though the new military pension pays 40% of your salary upon 20 years, there is still a 401K element to sweeten the pot. The military will now match your 401K (called Thrift Savings Plan) up to 5%. So, if the servicemember begins saving at age 18, they can amass a nice chunk of change for those 20 years. But, of course, the hard part would be getting 18-years-olds to save and invest.
Life-changing money. Okay, let’s make some assumptions so we can continue the planning process. My oldest son is currently 14, turning 15 years old, and is thinking of joining one of the service branches. These would be some of the numbers I would have him consider.
If he left at age 18 and retired at age 38, let’s say his pension would be $3,000/month. Let’s also assume that he walked away with $300,000 in TSP savings. This is life-changing money because of the options that this opened up for the rest of his life.
Work another job. At age 38, he could work another job and stack the new money on top of his pension. His pension would allow him to choose a career that interests him, no matter how much it paid him.
Start a business. Many veterans decide to start a full-time business because they have the security of knowing that they can survive while the business grows.
Pursue passive income sources. This is where you use your pension as a base of income and pursue other avenues of income like dividends, crypto, business, rents, etc., to fund your lifestyle.
Cash Flow 103: Choose Your Wealth Generator
Move to a low-cost area Stateside. There are many low-cost areas in the US States where you can have an extraordinary life for $3,000/month—especially if you house-hack.
Move overseas. There are many countries where you can live like a King and Queen for $3,000/month. You just want to ensure they are somewhat safe.
Using the military pension as your financial base is the true magic of this passive source of income. With it, you can pursue many other ventures with the safety and security that many people will never have.
Combination of all of the above. I am taking a combination of all of the above as I head into retirement. I am already over 22 years, and the longer I stay in, the larger my military pension grows. In the meantime, I can begin developing my passive income sources to ensure they are large enough to fund a friendly lifestyle for my wife, me, and our kids. But, first, let’s take a look at my overall game plan.
$30,000/month Cash Flow Retirement
Military Retirement. If I continue until I reach 30 years, My retirement may hit $8,000-$9,000/month. Remember, we older guys have a higher defined pension without any TSP matching from the government. At 30 years, my pension would be 75% of my salary plus any disability I may have acquired from sustained injuries.
New Job. I don’t plan on working a new job; however, it isn’t a bad idea to have earned income. You see, you can’t contribute to a Roth IRA unless you have earned income. I plan to continue to work as an online adjunct faculty teacher for a military science class. The work is not time-intensive, and it allows me freedom of time and movement.
Low-Cost Area. My wife and I have already moved to a low-cost area and secured homes for a cheap monthly mortgage. This allows us to protect ourselves against inflation and market fluctuations. Our homes cost $1,100 and $1,500/monthly, and they are some very nice properties. With a large military pension, we are already guaranteed a nice life. Oh, did I mention someone else pays both of our mortgages entirely? Just saying.
Move Overseas. Yes, this is in the plan as well. We want to spend a considerable amount of time in the country of Turkey. There, they allow you to buy property as well. Once I retire, we will be able to buy a small apartment, or two, to build an empire over there. The cost of living is a shadow of what it is in America.
Start a business. I do not have a plan to start a full-time, job replacement-style business. I can reach the same amount of income, but passively.
Use the Military as Your Wealth Generator
Passive Income! Whew, as you can see. My wife and I are already set from our military pension alone. So why keep going and building more passive income sources. The only negative about a military pension is that it cannot be passed down to your children.
This fact means that I need to convert all of my military pension into passive income sources, thus leaving my kids and grandkids well off. I also want to teach them about these income sources to ensure that they can recreate the magic. That is why I write articles like The Magic of Passive Income, The Magic of Dividends, The Magic of Rents, and The Magic of Royalties. I am leaving breadcrumbs for my kids and everyone else to follow in my footsteps.
Dividends. Our dividend portfolio is nearing $200,000, and we should reach that amount by the end of the year. The idea is to keep growing our dividends until the end. Dividends have been a complete joy to grow, and each month they bring a smile to my face.
We Make $50/day in Passive Income
Rents. Ah rents, don’t have the same joy as dividends because they are so steady. However, when it is time to spend them, they are life-changing. I still cannot forget the time our family was sitting in our backyard, and one of our roommates walked up and gave me $800 cold-hard cash. Right then, I knew the power of passive income.
Royalties. Whew, royalties are outstanding because of the knowledge and education you need to earn them. When you start building up this income stream, you know nothing about anything. Then you start learning and improving. I am on pace to reach over $60 in passive income from books. I earned $3 in my first month (five months ago). As your knowledge compounds, your pay compounds. I love it, and it can be very addicting to get your royalties off the ground.
Business Automation. I haven’t had a chance to start these yet because I am serving in Japan. However, that is a good thing because I can flesh out my book business. I have many business ideas, including a passive Airbnb business, an herb garden, a rental car business, or a property management business.
In the end, all of these other income streams will stack quite nicely on top of my military pension. So this begs the question, “Is Doing 20 Years in the Military Right For You?”
Happy Cash Flow Retirement
As I mentioned in my quest for royalties, the person you become in the military is a far cry from the person you entered. However, the situations that the military puts you in are life-changing, and you will return to a far braver person than before.
If you are a parent, the military may be suitable for your child. I know giving up your child to a life of service is scary, but it is even more dangerous watching your child drift directionless through the world. As I wrote in “Mentorship is Dead,” we are the best mentors for our children. At least in the military, they have an opportunity to find someone to assist them throughout their career.
Please read the Military Success 101 Series for more information on my time in the Marines. It may help your child make some decisions they may be struggling with. You can always reach me through my blog if you have any other questions! Good Luck.
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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