The DoD Offers New Retirement Advice


The Department of Defense (DOD) recently unveiled a new Blended Retirement System (BRS) to take effect in 2018. This means that many service members will now have to choose between retiring under their current plan and switching to the newer one. To make the decision as easy as possible, the DOD is now offering a comparison calculator-here’s how it works.


Blended Retirement System:  An Overview

The new system combines the existing retirement pay for those with 20 or more years of service along with the Thrift Savings Plan or TSP, which is similar to a 401(k) plan. Currently, service members must voluntarily elect to enroll in and make contributions to TSP. Beginning January 1, 2018, all military members will automatically be enrolled. The minimum amount they must contribute will be 3% of their base pay.

While enrollment is automatic, participants may stop their contributions at any time. They may also make withdrawals or even obtain a loan against their existing TSP balance.


Current Members can Choose

Those who already have fewer than 12 years of active service on January 1, 2018 will have the option of remaining under the old program or switching to the new one. Likewise, Reserve and National Guard soldiers with fewer than 4,320 retirement points will also be eligible to choose. The election period runs throughout calendar year 2018. Any changes made are permanent, and may not be revoked.


Key Changes

The new retirement system also provides for other key changes, including:

  • The fact that retired pay will now be calculated at 2% times the number of years of service.  In other words, someone who retires after 20 years would receive 40% of their final base pay.
  • The ability to choose either a lump-sum benefit or receive full retirement pay. A lump sum payment will reduce your monthly retirement checks until age 67.
  • Automatic contributions of 1% to an individual’s TSP, with a matching contribution of 5% after two years of service.


Training Tools and Calculators

Deciding which plan to choose can be overwhelming for many. For this reason, the DOD is providing online training tools and comparison calculators to help facilitate the process. Using a Common Access Card (CAC), service members can log into Joint Knowledge Online (JKP) and take the online training course. That website also contains a comparison calculator that can help users determine which plan might be best for them. A separate training program and calculator is available for Reserve and National Guard members.

The Department of Defense does not recommend one particular plan over the other. Instead, they advise individuals to consult a financial planner or retirement specialist. Those on active duty may also obtain free advice from their installation’s Military and Family Support Center.

Many seeking military retirement will soon have some very important decisions to make. Fortunately, the Department of Defense has provided plenty of information in order to alleviate as much confusion about the new plan as possible. Those who must choose should start studying the new plan and weighing all of their options right now.

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Retirement Savings Facts you Should Know About


Retirement is something that all of us (hopefully) will enjoy at some point. As such, everyone should have a plan in place for saving toward retirement. To better understand how to plan for that milestone, here are some retirement savings facts you should know about.


Age Plays a Factor

Women who retire at age 65 will on average need enough savings to last them another 20.6 years. Men require slightly fewer funds-just enough for the next 18 years or so.

Future generations might not need to stretch their retirement funds quite as long. Full retirement age is currently 66; however, it will increase to age 67 for those born in 1960 or later.

Seniors must account for health care costs regardless of their life expectancy or when they begin drawing funds. The average 65-year-old retired couple should plan to spend an additional $275,000 on health care. This does not account for the cost of a nursing home or other long-term health facility.


Disappearing Pension Plans

At one time, corporate pension plans were very common. Even so, information derived by USA Today from the Employee Benefit Research Institute shows that such plans might be disappearing. Currently, only 13% of workers in the private sector are contributing to a pension plan. That is a significant drop from 1979, when 38% of private-sector employees participated in a pension plan.

Some economists claim that fewer people now have access to an employer-sponsored 401(k) or similar retirement plan. Among low-income households, only 35% have access as compared to around 80% of all high-income households.


Income from Many Sources

Retirees these days are not relying solely on Social Security income alone. Over one-third (34%) are still in the workforce or are self-employed. Another 20% are drawing from pension or savings plans, while 9% have assets from income.

Fidelity advises clients to replace 45% of their pretax earnings with savings. Along with Social Security, this should be sufficient for anyone earning between $50,000 and $300,000 annually. To maintain one’s lifestyle, Fidelity claims it is only necessary to replace between 55% and 80% of annual earnings.


Millenials are Better Prepared

Surprisingly enough, millennials are preparing themselves for retirement quite well despite having unprecedented amounts of student loan debt.  A survey performed by Bankrate shows that 60% of all millennials have cut spending in an effort to save more money. Concerns about their job security and the economy were thought to have influenced savings as well.

The increased savings means that millennials now have more money saved than their parents did at the same age. In 2016, families with a head of household younger than 35 had an average of $12,300 in savings. In 1989, that same family would have had only $7,500 in savings (after adjusting figures to account for inflation.)

There’s no better time to begin retirement planning than right now. Use the facts listed here along with information from your financial planner or retirement specialist to come up with a plan that is just right for you.

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How to Talk about Retirement with your Parents


Just because you are all grown up does not mean that talking with your parents about certain subjects is not uncomfortable. In fact, conversations about retirement and finances in particular might make you uneasy for a number of reasons. That doesn’t mean you should avoid having those conversations, but it does mean you should put a little thought and effort into them. When you do, keep the following things in mind in order to make the process less stressful.


Talk about Their Dreams First

Talking too much about finances might give the impression that all you are interested in is money. For this reason, we recommend asking more general questions first. One of the first things you should know is what your mom or dad’s dreams are after retirement. This will help you to know what type of income your parents should expect to have once they quit working.

After learning their goals, find out what plans your parents have for achieving their dreams. In doing so, you may find that your folks have made very little preparation, in which case you can try to steer them onto the right path. You could also identify any gaps in planning that could better be addressed now rather than later.


Ask Them: Are you Carrying any Debt?

Too much debt is one thing that can quickly derail one’s retirement plans. You may believe your parents are debt free, when they actually may have unpaid balances on credit cards or personal loans that you were unaware of. In that case, encourage mom and dad to come up with a plan for paying off that debt.

Do not chastise them for making poor decisions or for trying to conceal the amount of debt they have from you. Instead, show them the same courtesy you would expect if you were in the same situation.


Other Questions to Ask

By now, you should be ready to move on toward more intimate questions about retirement. Some things you may want to ask during this phase include:

  • Have you compared health insurance options or considered a health savings account?
  • Do you know the different Social Security options that are available to you?
  • How are your funds invested? Is your stock portfolio diversified?
  • At what age will you be fully vested in your pension or 401(k) plan?
  • Do you have a will? When was the last time it was updated? Where is the physical document located?

During your talk, you may find that there are certain topics your parents are unwilling to answer. If so, do not press them for information or become too demanding. Keep an open line of communication, and eventually you will find the answers you are looking for.


Don’t Put off Talking

Talking with your parents about retirement is never easy, yet is a conversation that needs to happen. Use the above advice to help guide you, and you will be in a better position to assist your parents in achieving their life long retirement dreams.

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How Much to Save to Retire by 50



For many people, the idea of retiring at age 65 is overwhelming enough, let alone the prospect of retiring at age 50. That doesn’t mean that retirement when you are only a half-century old isn’t possible, particularly if you start planning early. Just how much money will you need in order to retire a full 15 years early? Here is a guideline.


Shoot for $1 Million in Savings

The financial website Nerd Wallet estimates that the average person will need approximately $1 million in savings if he or she is to retire at age 50. They also provide some calculations designed to help you determine how much to save. Of course, the earlier you begin saving money the better. Ideally, you should begin in your early 20s, and invest your funds in such a way that you earn at least a six percent return.

Follow those guidelines, and you will need to put back 34.6% of your income if you earn $40,000 per year. You’ll need to save slightly less than ¼ of your paycheck if you make $60,000 annually. If you are able to draw six figures, the amount you must save decreases to under 14%.


Ideas for Saving Money

The idea of saving one million dollars in a 28-year timespan may seem overwhelming, yet doing so is entirely possible. In fact, some people have been able to save enough money that they were able to retire before age 40. A few of the ways early retirees are saving money are to:

  • Make savings automatic. When you have a certain amount automatically set aside every month, you are more likely to develop a pattern of saving. Not only that, but you will likely not miss what you do not see.
  • Create more “made from scratch” meals at home and eat out less often. Not only is this healthier for your wallet, but it is also better for your waistline.
  • Stay in your starter home longer, and double up on payments so you can become mortgage free sooner.
  • Cut back on transportation costs whenever possible. If your vehicle is paid for, hold onto it as long as you can. Walk, bike, or take public transportation to work at least one or two days each week. Look for opportunities to carpool or combine errands to prevent too much running around.
  • Eliminate non-essentials such as cable television, convenience store snacks, and going to the movies.


Tracking Spending

Tracking your spending habits will enable you to identify ways in which you can cut back. It will also help you adjust to living a minimalist lifestyle-something you should definitely consider if one of your goals is to retire at age 50. Keep a spending journal, and within the first month you should discover areas where you could trim your monthly budget.

Is it really possible to retire well before you are eligible for Social Security? The answer is “yes”, provided you make a few lifestyle changes now. The sooner you begin saving money, the faster you will be able to reach your goal of retirement.

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