[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]Between $1 and $1.5 million is the amount most Americans will need to have saved for retirement. Taking into account that the average soldier in the United States isn’t making a ton of money, then setting up a retirement plan – and setting it up early – is a very necessary endeavor.
As retired lieutenant colonel in the U.S. Army Reserves and investment advisor with Southern Capital Services, Eric Nager, put it: “As an investment advisor we see all too often the consequences of those who have not saved often and early enough to build up for retirement.”
Whether transition into civilian space is your plan, or you’re looking to re-enlist until retirement age, it’s best to plan for your retirement today.
Here are a few tactics you can do right now to begin planning for your retirement tomorrow.
Cease Spending, Start Saving
- Also Read: 3 Reasons Certain Federal Employees Can Retire Years Earlier Than Their Peers Without Penalties
- Also Read: CSRS Retirement in 2024: Are You Making the Most of What This Classic Plan Has to Offer?
- Also Read: Roth IRA Basics for Beginners: What’s There to Learn?
20-year U.S. Navy veteran Eric Jorgensen, who is also a director of financial planning at Maryland-based Turning Point Financial pointed out that there are many enlisted military members that join straight from high school and then have little to no experience when it comes to a budget or tracking their spending. Many of his coworkers overspent as a result of this, so it’s good to get a hold on your habits when you’re spending and to begin planning for the long-term now.
Taking Advantage of Benefits
There are a lot of benefits that aren’t available to civilians but may be available to you as a service member. If you’re a veteran or currently enlisted, it makes sense to try and familiarize yourself with what benefits may be offered.
For example, the Servicemembers Civil Relief Act can stop evictions and prevent repossessions, as well as several other several financial protections for those who are deployed.
Department of Veterans Affairs offers home loans, tuition assistance, and high-interest savings accounts while members are deployed. And things like the Department of Defense’s Savings Deposit Program (a savings account offering interest rates up to 10%.) is another example of federal programs designed to aid you.
Military Retirement Plans
The military has available savings and retirement plans options that soldiers can choose to utilize, just like those in the private sector.
The Thrift Savings Plan (the military’s version of a 401(k)) is the main plan.
As of the beginning of 2018, the traditional military pension system has been reorganized into the new Blended Retirement System, which blends the old pension system with the BRS, which then add a contribution requirement to the old pension system.
Beyond Enlistment
Early-to-mid 20s is when many service members will leave the military, meaning there is a lot of time still before they reach retirement age. A lot of soldiers will need to get jobs outside of the military.
Your financial needs past your enlistment is what you should be considering the most. You’re undoubtedly going to need to continue earning money for retirement, even if you’re eligible for the military’s pension plan. $200,000 is roughly the net value of a pension for an enlisted soldier and $700,000 for an officer. This isn’t enough to cover until you reach the average expected retirement age.
Like civilians, service members can maximize their earnings by saving early and investing often.
And in conjunction with your TSP, a contribution to an IRA may also be a smart move. Money there can accrue tax-deferred, which will give you another nest-egg for many decades to come.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”36174″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]
