Military Spouse Magazine

OCT 2018

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This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER TM in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements. The trademarks, logos and names of other companies, products and services are the property of their respective owners. USAA means United Services Automobile Association and its affiliates. S P O N S O R E D B Y U S A A G O O D A D V I C E Scary Stats Does retirement have you spooked? By JJ Montanaro, Certified Financial Planner™ at USAA W IT H HA L LOW E E N AT HA N D, L ET'S TA K E A MOM E N T TO U N V E IL SOM E SCA RY R ETI R E M E N T STATS. My hope? That you'll be spooked into making positive money moves before your future sneaks up on you. * "How America Saves", Vanguard Defined Contribution Plan Data, June 2018 THE SCARY TRUTH By the end of June 2018, only 13.5 percent of eligible servicemen and women had opted in to the new Blended Retire- ment System, according to the Military Times. If you're spooked: You have until the end of 2018 to decide whether to opt in. My view has always been that the decision is less about number crunching and more about how you envision your career: If you plan on—and believe it's likely to happen—serving at least 20 years, sticking with the legacy system probably makes sense. However, my guess is that a pretty big chunk of the 1.4 million who haven't opted in probably won't go the distance and might be better served in BRS. The same article reported that 1 in 10 who opted in were not putting money in the Thrift Savings Plan, thus giving up "free money" in the form of matching contributions. THE SCARY TRUTH Each year for the last couple of decades, the Employee Benefit Research Institute has conducted what they call a Retire- ment Confidence survey. In 2018, only 17 percent of respondents were "very confident" that they would have enough money to "live comfortably throughout their retirement years." If you're spooked: Start saving for retirement today. It doesn't take a lot to get the ball rolling. At USAA, you can start investing with as little as a $50/ month automatic invest- ment. With the TSP, you can contribute 1 percent by signing up at myPay. THE SCARY TRUTH At this time last year, tongue-in-cheek, I applauded the "skyrocket- ing" 5 percent savings rate tracked by the Bureau of Economic Analysis. It's gotten worse, with the most recent numbers tracking at 3.5 percent. Retirement is just one savings goal, but there are probably a lot of others, and 3.5 percent is not likely to get the job done. If you're spooked: Yes, start saving today. THE SCARY TRUTH According to the Boston College Center for Retire- ment Research's January 2018 National Retirement Risk Index, 50 percent of working households are at risk of a reduction of lifestyle when they retire. (Of course, there are a lot of assumptions and projections utilized to come to this number.) If you're spooked: Map out your own retirement plan. What will it take to live the life you want to lead and do what you want to do? There are plenty of online tools and calculators like the ones at usaa. com/goals to help you out. Start planning today. THE SCARY TRUTH Speaking of maintaining your lifestyle in retire- ment, how far would $1,409 take you? That's the average Social Security retirement benefit in 2018. You'll probably need a lot more. If you're spooked: Don't rely on Social Security alone to fund your retirement. Be sure your plan includes multiple sources of income. Pensions, employer retirement plans, IRAs, annuities, real estate and non-retirement stocks, bonds, mutual funds and exchange traded funds are all options to build on and not rely upon Social Security. THE SCARY TRUTH Employer retirement plans like the 401(k), or the military's Thrift Savings Plan, are a mainstay for retirement saving. A re- cent report * pegged the average account balance of participants at $103,866. If you're spooked: That could be a pretty impressive number if you're 28, not so much if you're 58. Find out where you stand today. If you're just starting out, focus on good retirement savings habits, if you're further down the road, it's time to identify your savings goal…my guess is it's substantially more than $100K. Spooked into action? I hope so! H Photo by Leslie Diamond 34 MILITARYSPOUSE.COM / OCTOBER 2018

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