If you want to make the dream of real military retirement come true, one of the first things you will need to do is prepare a retirement budget. There are lots of budget spreadsheets and programs available and you can get many of them for free.
The form I’ve used for years can be downloaded at this link: Milretirement budget. Another easy budget form is the “Quick Start Budget” found at Dave Ramsey’s site. The forms from Dave Ramsey are made for a current budget, but you could easily use them for your planned retirement budget.
Are you married? If so, make sure you have a thorough discussion with your spouse regarding your goals. Hopefully they are one and the same. Now is the time to plug them into the process. Get them to work this budgeting piece with you. Even if they don’t want to “work all the numbers”, they need to be involved and approve of the final outcomes. Keep them involved, too. Any lifestyle change should be made with both of you in agreement. Otherwise, it is quite possible that any money you save for retirement might end up as alimony! The stakes are high…but so are the rewards.visit http://www.military.com/benefits/military-pay/the-military-retirement-system.html to get an overview of military retirement procedure.
Make sure you are including all those categories that are particular to your situation. Do you have other income sources? Do you have any expenses unique to your family or personal situation? Did you remember SBP, dental insurance, and Tricare payments, as well as other payments you may not have to make while you are currently in the uniform? In other words, make the budget YOUR budget and don’t be confined to the categories any guide, workbook, or (dare I say it?) blog recommends. Another piece of advice on this is to make sure your initial budget isn’t TOO detailed. Although that may be counter-intuitive, I think the big picture can help you see that this goal is attainable.Click here to read an informative post about planning for your retirement.
This needs to be a flexible solution. One thing you won’t be able to predict is how the costs of these categories will fluctuate in the future. Because of that, I recommend you review this budget often. Probably every month or so would be a good idea. This will ensure you are looking at things realistically.
Just the process of putting this on paper will help you identify areas where you can cut down or just cut back. As some things increase in price, I have found creative ways to save money on other things, ultimately finding an equilibrium in the budget.
How about debt? I plan on a separate post to address this ball and chain of our modern society, but right now, just consider how much of your budget is attributed to payments on debt. I am referring to all types of debt…credit card debt, student loans, car loans, and even mortgages. How much of your retirement budget consist of those things? Now take all of those things out of your budget…and recalculate your number. Would retirement seem attainable if you didn’t have those obligations?
Hopefully, this budget will make it more clear about how much money you need to make real military retirement possible. So, how does that stack up with what you can expect to earn during your retirement? If you are already living so frugally that the retirement income will beat your expenses…Congratulations! All you may need is a mental re-calibration to understand you don’t need a second job. But for the rest of us, this difference will give us a working goal for the minimum we need to make our dreams a reality.
Just as importantly, how does that retirement budget number stack up with what you are spending now? Did you see some inefficiencies? What if you had no debt and you lived on that retirement budget RIGHT NOW? You could save or invest the difference! If you did, what kind of difference would that make in reaching your retirement goal?
All these numbers need to be realistic. You’re only cheating yourself if they aren’t. It’s easy to lie to yourself though…you may not want to admit what you are spending your money on to anyone, even yourself. One way to be sure that you truly have a handle on how much you are spending is to look at it on a daily basis. Keep another spreadsheet. (Can you tell I like spreadsheets? You should see my computer desktop!) Calculate every dime you spend each day for a couple of months. Now divide and get a daily average. Check that against your projected retirement income. Divide your monthly retirement pay by 31 for a daily average. What’s the difference? Looking at it this way can make your daily Starbucks or lunch at the local bistro look a little more damaging that they might otherwise.
Just the act of understanding where you are right now and where you want to be is the first step on this journey. You can achieve this. I am well on my way and only a little over a year from making this a reality. I’ve come from the bottom of the financial scale. In the early 1990s I was told by a base financial counselor that my situation was “hopeless”…that’s the word they used. And they suggested bankruptcy…which would have seriously jeopardized my military career. Years later, I really wish I could meet that guy. We would definitely have an interesting conversation. I’m sure their job as a financial counselor was a second career for them…right
What is Real Military Retirement?
Simply put, real military retirement is the state of actually retiring after spending 20 or more years in the military. That means, no second job. That also means hanging up the uniform without sacrificing a decent living standard. That means without eating ramen noodles for the rest of your life…unless of course you really, really like ramen noodles. But the goal is not to live lavishly either. If you are looking for a way to be a millionaire, this probably isn’t the site that will tell you that.
“Is this possible?” you might ask. I think it is not only possible, but it’s very doable. I’m not saying it’s easy, though. You have to put forth a focused effort toward reaching your goal, but it’s worth it. The idea of real military retirement really goes against conventional wisdom. A military member might be in their late 30s or early 40s at this point and have plenty of good years ahead of them. But I’m all about challenging convention…especially in light of common sense. Why not spend these years enjoying your family and a retirement lifestyle of your choosing rather than working another 20 years just to reach “retirement age?’
I am the “Old Chief” that runs this site. I am planning on retirement in October 2014 after about 25 years of service. I’ll also be your human guinea pig for this grand experiment. As a side effect of that role, you will get to read about many of my personal opinions on a wide range of topics. Some of these might drift off topic slightly, but I hope you will find all my posts informative in some way and amusing in others. I don’t pretend to be a financial expert, so please don’t take all I say as expert testimony. As a matter of fact, I plan to learn along the way…and I value any comments thrown my way. I hope you learn as much from my journey, both the good and the bad that occurs along the way. So I invite you all to follow me as I reach for real military retirement.