I'm following it quite closely but a lot of it doesn't apply to military guys i.e. free healthcare, and pension for life if you can stomach the 20
I'm in the legacy retirement system, and I have a Roth-TSP that I contribute 15% every month
Is there a military version of the personal finance prime directive?
byu/UncleSugarShitposter inMilitaryFinance
Posted by UncleSugarShitposter
5 Comments
It still 100% applies to military members. Nothing changes. Cool, you get free healthcare. Take out HSA from the prime directive and that’s it.
Seems like a good rule of thumb for military folks too.
Just bear in mind your tradeoffs are different. When you retire you have reliable inflation adjusted income and healthcare.
You probably have less assets than your peers in the civilian sector. But that pension acts like a pretty big asset.
I think it’s ok to save a little less on active duty and spend a little more and then make it up when you’re working after the military. But you definitely don’t want to limit your options by taking on debt.
The pension is not a guarantee, you should contribute to retirement just the same until you know you’ll get the pension *and* you’ve done the math to know how much you should invest to reach the retirement numbers you want.
Also, 15% is under the recommendation because it’s *only* your basic pay and doesn’t include BAH or BAS. So if you’re only doing 15%, you should up that to at least 20-25% (realistically, you need to look at your equivalent civilian pay, calculate 15% of that, and ensure the dollar amount you’re contributing matches that number).
As others have said it otherwise applies normally. Healthcare is irrelevant because civilians following that prime directive aren’t necessarily eligible for the healthcare accounts it talks about (like an HSA) anyway. So as a civilian would, you just go to the next step if something doesn’t apply to you.
It’s the same
Other than ignoring the HSA portion like others said it’s mostly the same. What it does affect is your planned expenditures in retirement and thus your goal numbers.
Other factors I consider:
– pension is taxable so with a dual-mil situation like ours we go heavy with Roth in order to minimize tax liability in retirement. Lots of other considerations here however.
– we do not plan at all for VA disability ratings or payments – if it happens it happens but those numbers are not included in planning factors.
– we consider the pensions our “bonds” so we are willing to be more aggressive with our portfolios and have a higher risk tolerance with investments overall.
– we have two kids who will each have full GI Bill benefits so we don’t put as much into 529s as some others do. This of course varies with your personal values for higher ed so again each situation is different.