A couple of years ago, I wrote that we were waiting for a million dollar email. I’m sure some of you don’t know the situation, so let me explain:
For nine years now, June has always been the month of “the wait.” The military promotion list has to come out legally by July 1st. In 2021, they waited until 6 PM on June 30th to release it. I don’t remember it from last year, but there’s a chance I blacked it out.
Every year the scores come out, and my wife isn’t on the list. They always offer advice on what benchmarks to make. One year they said she should get an MBA to add to her Pharm. D. IT took three years of distance learning, but she did it. Then it was “get another certification.” Then it was, “deploy more.” Then it was, “get more awards.” Last year it was “Show more leadership.” She had already been President of a 6000+ organization, and President Biden invited her to the White House. It was ridiculous.
I suspected that the real reason was that her job wasn’t deemed important enough. It’s listed as being for a level five officer (O-5), which she is. It’s hard to justify the promotion to O-6 money when you are in an O-5 position. She twice took O-6 positions, but upon transitioning to them, they downgraded them to O-5. Finally, she got the O-6 position at the beginning of 2022, but it was too late to count for the promotion that year – the paperwork had to be in by the end of the previous year. She still got very close to being promoted.
My attention was this year being the year. It sounds weird to say it after having thought that way for years and years. However, it felt like there was nothing else to ask for.
Then it came. And it didn’t feel like I thought it would.
To start, it wasn’t an email at all. It was a text or Facebook Message. My wife barely knew the person who sent the “Congrats on your promotion!” message. She wasn’t focused on the message. She was on work travel, and American Airlines canceled her flight back home due to the poor air quality from the Canadian wildfires. She was literally at the counter trying to get an alternative flight.
She texted me, but it was between 100 different messages that I had received. Dog boarding was a super busy time with drop-offs and pickups. The kids’ school also sent a billion messages about end-of-year stuff. I also had a headache from the poor air quality. However, the most significant thing was realizing that my wife wouldn’t be able to get home as expected. She had been traveling almost all of last month, and I was running on fumes.
So when she called me, all excited, I didn’t understand. I was King of the Grumps. I couldn’t quite turn my feelings around when I heard the news.
What Makes it a Million Dollar Promotion?
That’s the biggest question out there. So let’s run some numbers. Since military salaries are public (as they should be), and I told you she’s going from O-5 to O-6, you can run the numbers yourselves if you are super curious. I’ll save you the work.
First, her monthly base salary goes from $10,861.80 to $12,688.80. That’s $1827 more a month. She’ll have to work three more years to get the most from her pension. That sounds terrible after what I described above, but she can effectively quit the “promotion rat race.” Her regular work isn’t as difficult as returning to school for three years to get an MBA. She likes her regular work quite a bit. It was the promotion competition that was most difficult. Over these next two years, she’ll earn $304,531.20 (24 months times $12,688.80). In the third year, she’ll make $159,728.4 as she’ll get more money for having more years of experience. The sum is $464,259.6, but it will probably be more because the numbers are inflation-adjusted. There are also some minor other areas of her pay where she’ll make a little more money. Let’s estimate it at $500,000.
If my wife didn’t get the promotion, she’d probably retire and take her pension of $68,430 each year. Let’s estimate that as $200,000 and subtract it from the $500,000. So working with the promotion brings in $300,000 in salary more than quitting and taking the pension.
With the promotion and more time, she’ll get a pension of around $83,746 in three years. It gets a little complicated, but I wrote an article about what a pension is worth. I used a few different calculations, and it seemed to show her pension was worth around 2.3 million dollars. Some of the math is simple, projecting her life expectancy by the pension number. Running the numbers through the same calculation before her promotion gave a total pension value of around 2.5 million. She gets a bigger percentage of her base salary with more years of service.
With the promotion, her pension has a rough lifetime value of 3.1 million. That’s $600K more than before. If you add it to the $300K in salary, you get to 900k. We’re almost at the million dollars.
Our kids go to a private school. It’s exceptional and one of our true luxury “items.” It’s expensive, but they give us a 50% active military discount. For two kids, the sticker price would be $70,000. Yikes! It scares me to see that – it was a lot cheaper when the kids were younger. Over three years, that’s $210,000. With the military discount, we’ll “only” pay $105,000 – a savings of $105,000. If my wife retires, we wouldn’t get the active duty discount. I’m reasonably sure we wouldn’t pay the full sticker price either, but we have no way of knowing our actual costs. My hope would be in that kind of situation, the school would do something for a family who has been in the community for seven years now. However, they also have a mile-long waiting list, so they don’t need to discount the sticker price. For now, we don’t need to cross that bridge.
The $105k savings bridges the gap of 900k to one million dollars.
Of course, this isn’t the most rigorous mathematical analysis. It does give a view into how financial lives may change going forward. We’ve always lived below our means, saved, and invested. However, we’ve also gone on expensive Disney cruises. At the same time, I still enjoy eating instant Ramen.
Maybe the Barenaked Ladies had it right in their song, “If I Had a Million Dollars”:
We wouldn’t have to eat Kraft Dinner
But we would eat Kraft Dinner
Of course we would, we’d just eat more
And buy really expensive ketchups with it
That’s right, all the fanciest-, Dijon ketchup, mm, mm
Now we have to figure out what our version of fancy ketchup will be. A lot of FIRE bloggers go on travel, but we can’t do any more than what we’ve been doing between my wife still working and the kids’ school schedules. We have landscapers and a house cleaning service. It might be nice to have more helpers like that around the house.
I would like to do more online, but I have found it is more difficult to manage virtual assistants than do the work. I’m not sold that I provide much more value than most of the awesome content that is already out there. Also, with the rise of artificial intelligence, I feel like the value of content is further diminished.