Believe me, none of us are financial planners, nor are we independently wealthy. But as we thought about future retirees' worries over money, we knew we had something to share from the other side. After 11, 17 and 22 years of retirement respectively, we've learned what works and what doesn't.
This isn't about your military retirement, saving into the Thrift Savings Plan now, or using your military years to save extra money for retirement (although that's not a bad idea). You've already thought about that stuff. Here is what we want you to know about retirement cash that you may not have considered.
What 3 Retirees Want You to Know About Money
The truth about SBP -- use it. The Survivors Benefit Plan (SBP) is a plan your service member can buy into when he retirees. He pays money into it and, should he die before you, you'll have an income for life as a result. You can be insured up to 55 percent of his retirement income or any lesser amount you choose. You never see the money, you can't borrow against it and you generally forget that it's there until you make a claim. There's only one downside: if you pass away first, the retiree has "lost" all of his payments. And know this: if your retiree asks you to decline full coverage, you need to ask if they have a better plan. Will they follow through? It takes your notarized signature to decline less than the SBP full insurable amount."
Need more SBP information? Go here.
Don't ignore the 401K. Hopefully your post-military life employer is matching a percentage of your savings up to a certain percentage of your salary. The upside to a 401k is that you don't pay taxes on it now. The downside is that you will pay taxes on it later -- hopefully when you retiree and are in a lower tax bracket. Here's what we want you to know: you cannot afford to save nothing if your employer is matching. They're giving you money. Even $50 a paycheck plus a 50 percent employer match adds up to $1950 per year.
Social Security may be obnoxious now, but it's a pretty good deal. We have no room for a debate on the health of this program in this small post. You should do the research and educate yourself. You may be pleasantly surprised, or not, if you were planning on drawing SS at 62-years-old. We suggest when you retire, you find a job that you can do for a long time and keep it until they lock the door and tell you not to come back.
Social Security is based on your earnings over a 35-year period. If you work fewer than 35 years, you will be credited with zeros and your new civilian job is a good chance to replace those low earnings you had at the beginning of your career. Log onto the Social Security website to determine what your earnings will be based on current rates. If you draw your Social Security at age 62, you will get approximately 66 percent of your full age 67 retirement benefit. If you can wait until you’re 70, it will be 132 percent. And remember, the longer you work, the larger the benefit for both you and your spouse.
The three of us aren't ready to hang it up yet. We’re proud of our contributions and to our surprise, still have plenty of energy. Work really does keep us young.
And no one ever tells you that.
We are three military retirees who were enlisted our entire careers. We are now government contractors based in Northern Virginia.
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