Dear Angel,
My cousin and I are the same age. However, he is enlisted in the US Army, and I worked in the private sector for the past 30 years. He is close to retirement, and I am hoping to be as well but may need a few more years. It seems my cousin and his wife have done a better job planning for retirement account withdrawals, health expenses, and other retirement scenarios than most people I know. Is it true that military families are generally better prepared for retirement than civilian ones? How can we catch up?
Thanks for your help!
Mill A. Terry
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Dear Mill,
You are correct. Many of our service members and their families are in a better financial position and exhibit more confidence in their retirement prospects compared to their nonmilitary counterparts. This is according to a recent study by the Employee Benefit Research Institute and Greenwald Research.
The study suggests that military households are in a stronger financial position to retire when it comes to several things:
- Military households are more likely to have substantial financial assets and are less troubled by debt.
- Nearly 50 percent of military households reported having $250,000 or more in financial assets, compared to 40 percent of nonmilitary households.
- Fifty-five percent of military households indicated that debt is not a problem, in contrast to 46 percent of nonmilitary households.
- Military households are more proactive in their retirement planning with 52 percent considering how much money to withdraw from their retirement savings, compared to 42 percent of nonmilitary households.
- The gap also extends to other aspects of retirement, including:
- how they’ll spend their time in retirement (68 percent of military households vs. 58 percent of nonmilitary homes),
- estimating health expenses in retirement (50 percent vs. 41 percent),
- estimating monthly income needs (63 percent vs. 54 percent), and
- having contingencies for emergencies (47 percent).
- Nearly nine-tenths (89 percent) of military households above the $75,000 income threshold feel optimistic that as far as their finances are concerned, they’ll live comfortably in retirement – significantly more than the 81 percent of nonmilitary households in the same income bracket.
- For those taking home between $35,000 and $74,999, 72 percent of military and 61 percent of nonmilitary households reported a financially confident outlook for their retirement.
- Most military households, 90 percent, didn’t feel that military service hindered their ability to save for retirement. However, they may face a more challenging path to retirement, with 71 percent saying they separated from the service before reaching military retirement and 6 percent retiring for medical reasons.
“While individuals in military households appear to be better prepared and more confident in their retirement prospects, many seem to navigate at least one significant change in their careers,” according to Lisa Greenwald, CEO of Greenwald Research. She said, “The transition [from military service] requires knowing what to do with their retirement savings, past and future, as they switch careers.”
Some Studies Don’t Agree with These Findings
The findings from the above study are in contrast with other research by the National Foundation for Credit Counseling, which found that active duty military personnel and their loved ones are more likely to struggle with their finances. The study indicates that some military households may incur more financial challenges. Behavior that may be indicative of financial stress can include missing credit card payments or switching debt between cards. According to this study, four in ten military personnel and their spouses said that they would benefit from professional financial advice and retirement planning to address any financial concerns.
Everyone Can Benefit from Retirement Planning
Whether you are military or civilian, retirement planning is a must! Be sure to contact Mr. Farr for retirement planning, Estate Planning, and long-term care planning.
Hope this helps!
Angel
About Renee Eder
