Retirement isn’t an “if” question, it is a “when” question. As an 18-year-old stepping off the bus for basic training in Fort Dix, New Jersey, the last thing on my mind was retirement! But to tell you the truth, if I had just followed a few simple retirement rules I could have secured my retirement years sooner. Working with a CERTIFIED FINANCIAL PLANNER™ professional can allow you to take full advantage of the many benefits available for active-duty service members and veterans.
Here are four simple retirement rules that I have no doubt will help you be successful in securing your retirement:
- The sooner you start, the better. It doesn’t take a million to have a million. The longer your money can compound, the better your chances of securing your retirement. Imagine if, at 21 years old, you started putting $150 a month in your Thrift Savings Plan or some other employer retirement account for the next 20 years. If your retirement money was able to compound at 10% annually, at age 65 you would have more than one million dollars! Now, keep in mind that past performance doesn’t represent future returns of any investment product, but that example of the mathematical compounding principle should serve as a wake-up call to start saving for retirement now.
- Something is always better than nothing. We can all make excuses why we can’t put money away now to secure our retirement, but whatever your excuse is, I am asking you to put something toward retirement now. By saving something now, you will have something in retirement later, and if you put nothing toward retirement now, you will have nothing in retirement later. I have always said that the hardest weight you must push every morning is the front door to the gym. In other words, the hardest part of anything you do in life is starting. So instead of making an excuse, make changes by spending less money and saving more toward your retirement. Take the money from your next promotion or raise, your COLA (cost of living adjustment) and/or bonuses, and instead of spending the extra money, put it toward retirement, because the more you save now, the more you can have later.
- Eliminate debt. Debt will put your retirement health at risk. This includes credit card balances, car loans, mortgages, and student loans. The more debt you have in retirement, the greater the chances you will run out of money. One of your top priorities when it comes to securing your retirement is to have little to no debt. Your money will stretch a lot longer if you are not spending it on a new car payment, multiple credit cards or a large house note. You will always be better off earning interest on your money rather than paying interest to someone else. So, make a plan with your financial planner now to reduce your debt by eliminating or at least reducing wasteful spending and using that money for securing your retirement.
- There is no “I” in teamwork. Just as in the military, it takes teamwork to accomplish the mission of securing your retirement. As a member of the military, you have some unique financial needs, but keep in mind you also have access to special financial benefits and savings opportunities. Take time to consult with a CERTIFIED FINANCIAL PLANNER™ professional to ensure you are taking advantage of all your benefits. No matter if you need help with budgeting, getting out of debt or, even more important, saving for your retirement, you can find a CFP® professional near you by visiting www.letsmakeaplan.org.