Preparing to Retire from the Military the Right Way
There is a reason that the United States Army makes you start taking classes and work on your resume a year before you retire. You need that year. There’s a lot to do to get ready. If you want to start your retirement off on the right foot, then you’ll need to consider a few things before you get out.
Now is the time to start getting your financial house in order for retirement. Don’t wait until the day you take your uniform off. If you do, you’ll find yourself playing catch up.
Know what your retirement will look like
I don’t think that my parents like the retirement that they ended up having. It’s not what they envisioned after all of those years of saving and investing. They thought they would sail around the world, but they only ended up docked at a marina.
Have you seriously thought about what life after the military will look like for you and your family? Do you have to go back to work somewhere else? If you don’t continue working at another job, what will you do with your free time?
Many people envision a life of leisure in retirement, sipping piña coladas on the beach or writing the next great American novel. But, reality is often very different than the vision we have in our heads.
You might want to consider using some leave to take a mini-retirement. Members of the military receive 30 vacation days per year. Why not use some of those days and test drive your retirement plan?
Will you find that you hate life after the 14th day writing your novel at Starbucks? You’ll be surprised what you find about a retirement dream after you’ve actually lived it a few weeks. It may not be the dream you wanted all along.
Start building your retirement budget
One of the most important things that you can do to prepare for retirement is to create or update your budget. How will you and your family survive financially with only your pension? Will you have to start tapping into your retirement funds immediately after retirement? Will you have to get a new job, at least part-time, to make ends meet?
Your family probably has a monthly written budget that you use. But, you will need to make serious adjustments to that budget when you hang up the uniform and retire. The biggest adjustment is the reduction in your income. You’ll lose your housing, subsistence, clothing, and other allowances. And, retirement will reduce your take home pay, of course.
While the loss of income will have the biggest effect on your monthly budget, you may find the need to add other expenses to add to your budget too that you didn’t have before like the Survivor Benefit Plan (SBP), paying health insurance premiums, and paying copays.
A lot of things change after you hit retirement. Of course, the biggest change is the drop in income for you and your family. But, with careful budgeting and prior planning, you can ensure that you’re financially sound with a retirement budget.
There are a lot of things that you should consider in advance if you want to start off your retirement right. You need to start planning for your retirement almost a year in advance to ensure that you have your financial house in order and are ready for the retirement of your dreams. Don’t wait until the first day after you take the uniform off to seriously plan your retirement. If you do, you could find yourself playing catch up for months to come, or worse, trapped living a retirement that you hate.
About the blogger
Hank Coleman is a Major currently on active duty in the U.S. Army and a freelance writer who focuses on personal finance, investing, and retirement. Hank holds a Master’s Degree in Finance and runs the popular personal finance blog, Money Q&A. His writing has been featured on sites such as AOL, The Motley Fool, Military.com, Seeking Alpha, and many others. You can also follow him on Twitter @MoneyQandA.