Military Officer - March 2009 - (Page 48) financialforum Retirement Ready Despite the meltdown of the U.S. economy, all is not lost in securing your finances for retirement. Phil Dyer, CFP, offers some tips to help you prepare in these uncertain times. F Tips For Your Retirement I To get more advice on how to plan for retirement, check out the Spring Retirement Guide beginning on page 53. or those keeping score, the retirement “game” is changing drastically. Many saw their 401(k) plans turn into 201(k) plans as the 2008 market meltdown caused a 30-percent to 40-percent drop in value. Only about 10 percent of today’s nongovernment workers are covered by a traditional defined benefit pension plan, and the percentage of retirement needs covered by Social Security is expected to fall from about 42 percent today to 30 percent by 2030 as rising Medicare premiums take their toll. Throw in that the average worker near age 55 only has about $50,000 in retirement savings, according to the Employee Benefit Research Institute, and the retirement tableaux for baby boomers and generations following looks pretty bleak. All is not lost, however. Consider these tips for various stages of life: Active duty: Don’t rely on just your military retired pay to support you in retirement. Take advantage of a Thrift Savings Plan and Roth IRAs to build retirement assets while you are on active duty, and let the power of compound interest work its magic. If you are at the mid-career point, think long and hard about abandoning the military for the private sector. The value of the COLA-adjusted military retired pay income stream is huge. A retiree receiving $60,000 in military retired pay at age 65 would need an investment portfolio of $1.5 million to provide the same benefit (assuming a 4-percent withdrawal rate). Second career: With private-sector pen- sions rapidly drying up, don’t ignore supplemental retirement savings. Max out your employer-sponsored plan [401(k), 403(b), 457(k)], and consider using the Roth 401(k) option — if offered by your employer — for at least part of your retirement savings to start building a tax-free retirement income stream. (I regularly see military retirees whose income from all sources is greater in retirement than it was in their working years, so Roth funds can be very helpful.) Fully retired: With at least two COLAadjusted sources of guaranteed income (Social Security and military retired pay), you should be in relatively good shape. If you had subsequent federal service or worked for a private-sector company with a pension, then you probably are in really good shape and might be in a position to assist children or grandchildren with their own retirement savings. Why not offer to match them — dollar for dollar — on anything they put into a Roth IRA or their company-sponsored retirement plan? Remember, absent the Survivor Benefit Plan (SBP), your military retired pay stops when you die, so fully evaluate your SBP decision when it comes time to retire so you can plan adequately for your spouse. MO — Former Army Capt. Phil Dyer, CFP®, is deputy director, Benefits Information and Financial Education. To find a financial planner near you, contact Garrett Planning Network at (866) MOAA-GPN (662-2476) or www.moaa .org/garrett, or visit www.moaa.org/financial center for other resources. PHOTO: SEAN SHANAHAN 48 MILITARY OFFICER MARCH 2009 http://www.moaa.org/garrett http://www.moaa.org/garrett http://www.moaa.org/financialcenter http://www.moaa.org/financialcenter
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.