An estimated 2.21 military personnel are expected to retire between 2017 to 2027. This figure represents those who are forecasted to leave the service due to regular or reserve retirement, temporary or permanent disability and temporary early retirement (Statista). Leaving the military is a daunting prospect for many not only because of going back to civilian life and adjusting to a different culture but also in terms of financial readiness. For military families, it encourages serious planning for life after retirement to have adequate pension funds, investments, and savings.
Developing Multiple Streams of Retirement Income
The Blend Retirement System (BRS) took effect in January 2018. Under the scheme, those who have devoted 20 years of service will get 50% of their last salary base in the last 36 months. Should you decide to stay on beyond 20, an increase of 2.5% is added to your pension paycheck. The BRS allows you to choose a pension only or A Thrift Savings Plan (TSP) or both at a reduced pension. For those who served the military less than 12 years, getting into BRS is still a lucrative deal allowing you to save more for retirement.
The TSP is a retirement saving plan that allows federal employees and military personnel to contribute to their retirement. Other methods of saving for retirement include traditional IRA and Roth IRA. It is important though to research the best IRA companies to invest in. Tax brokerage accounts are other forms of retirement income. Unlike IRAs and other accounts, there’s no penalty for early withdrawal and there are no limits to the amounts you can invest.
Adjusting to the Civilian Life May Not Be Breezy
The life of a civilian is different from that of military people requiring adjustments on your part. If you don’t have a home, you need to find one even if it’s only temporary. A school for the kids is also a priority. Paperwork will be overwhelming on top of coping with a new environment and community. At this point, it should not be forgotten that there are still many benefits that a retired military can avail. Shopping discounts and commissary privileges all add up helping you save money. Plus, dental and medical costs are very affordable. There are also discounts for travel (Space System A) and access to base facilities. More importantly, there are support services in any state where you will settle to help you integrate seamlessly into civilian life.
If you are having trouble paying your bills during retirement you may need an additional source of income. A reverse mortgage can provide you with that income by allowing you to convert a percentage of the value of your home into cash. The cash will then be given to you by your reverse mortgage lender in predetermined increments. An estimate of the size of those increments can be established through an online mortgage-calculator app. If you select monthly installments you will receive cash payments until the spendable equity has been exhausted. Throughout that process you will still own the home, so the missing equity will not matter. However, if you ever choose to leave the home or pass away the lender can recover remaining money owed through the sale of the home. Additional funds remaining will go to your family.
When planning properly for retirement after a military service, multiple streams of investments/savings are going to pay off dividends. In addition, the perks of being in the military continue whether getting discounts at shops or benefiting from free stays at the barracks. For these men and women who have sacrificed their lives for the country, they deserve nothing less than to retire with grace and dignity.