This is a slightly different post, but I thought of a conversation I had with a friend about 5 years ago. He said, and he couldn’t reveal much due to his position as a financial manager, this of a man who was nearing his 20 year mark:
“He could retire today and not work another day in his life, unless he wanted something fun to do.”
I knew the man he was speaking about. He was a USNA graduate, and had begun with small investments upon commissioning. The service is pretty good about providing regualr pay raises for both longevity and also the promotions. What this man did not do was hollar “COOL!” and then jack up his outpouring of dollars to coincide with his upped income. What he did do was put some of the increase into his investments. They never missed it, so it was easy to just put it away for the future.
He, his wife and two children lived in a nice neighborhood, not one of the very expensive ones. They had nice, but not brand new cars. Back in 1998, when this discussion was held, his 20 years of discipline had by then amassed about $2M in the personal retirement fund. Granted, the market took a downturn back then, but it has recovered, and he was only 42 years old, with plenty of marketable skills from his 20 years of increasing responsibility.
There are many people out there to help you create a plan for your futur. As soon as you get a chance, find one and begin stashing something for you future. Even if you don’t make the service a career, the discipline of the investing will be a great habit to get into. If you do plan on staying through retirement, and things go south, then you’ll have a solution to a potential problem already in place.
Short antecdotes to make my point:
1) Before DOPMA was passed in 1982, if you made O-4, you were guaranteed 20 years and therefore retirement. With DOPMA, statutory limits of 16 years of active service were imposed on O-4s. You then had to make O-5 to get your 20. For most people, that wasn’t an issue, but for some it was. That certainly became a wrinkle for some families to deal with.
2) With the collapse of the Soviet Union, the downsizing began. President Bush (41) began the drawdown and President Clinton accelerated it dramatically. With a force buildup heading for a 600 ship Navy, many of us had the pleasure of being told to retire at 20 years. It happened to both senior officers and enlisted people. That, too, were wrinkles for many, and far more dramatic in the number of families it affected than the DOPMA changes.
I suspect there will be many suggestions coming from the “bean counters” to alter the military retirement system, in order to squeeze a few bucks more out of that budget line, to spend elsewhere. A good plan to invest on your own behalf is a shield against the vagaries of lawmakers and the general populace.
And the best part is: If nothing strange or “out of the box” happens on your way to the future, at some point, the moves from the mandatory safety net personal budget line, to the personal entertainment line.
Thanks to Mudville Gazette for the Open Post!