By Zack Taylor, Associate
Since the creation of the typical 401(k) in the late 1970’s, pensions have been on the decline in the private sector of the workforce. While they still exist today, many are offered through the public sector with government positions. One of the best of these pensions still available is offered by the U.S military, enabling someone to receive benefits as early as the age of 37. That is relatively young for retirement in the eyes of the average American. Would those benefits be enough for a complete and comfortable retirement? According to U.S News, the average military pension equates to around $30,000 – $35,000 per year for a typical enlisted person and around $60,000 – $70,000 for the typical officer. While some may be able to fully live off these incomes, others may find it difficult to survive given their lifestyle. In the following paragraphs we will consider some options for generating additional income or making lifestyle adjustments to live within the means of this retirement income.
Evaluate Expenses
One of the first things retired military members can do to ensure they can live on a fixed amount of income is evaluate their monthly spending. Oftentimes individuals can live on any amount of fixed income coming in if they are willing to adjust their lifestyle. If your desire is to be fully retired, start by taking a close look at your expenses to identify areas where you can cut back or reduce costs. This might involve creating a budget, tracking your spending, reducing monthly debt obligations, and prioritizing essential expenses over non-essential ones.
Continued Employment
If being completely retired at such a young age isn’t something you find attractive, consider looking for part-time or full-time job opportunities to supplement your retirement income. You might want to work in fields related to your military experience that would pay higher incomes or explore new career paths based on your skills and interests. This is a great time to find work that you would love doing every day because the income is more so supplemental. Take time to think about what will truly add value to your life and strive for a secondary career that brings meaning.
Furthering Education
Many veterans have the desire to continue their education by means of trade schools or traditional college. Unlike the average American who must pay out of pocket to attend higher education, veterans can utilize their GI Bill benefits to get paid to expand their knowledge. The GI Bill provides a monthly housing stipend to beneficiaries based on the school’s location. Specific housing allowance stipends can be found at https://www.va.gov/education/gi-bill-comparison-tool/ to see how much you would be eligible to receive in your given area. In addition to this income, veterans are eligible to apply for FASFA, scholarships, and grants while attending school. Because tuition is fully covered with the GI Bill, if awarded, these funds will be paid directly to the applicant to cover their cost of living and be used as additional income. Taking advantage of this benefit not only allows someone to further their education but can be a great source of additional income to their pension from the military.
Utilize Veteran Benefits
Many veterans may be eligible for various benefits and services provided by the Department of Veterans Affairs. The benefits can include disability compensation, healthcare services, education and training assistance, housing assistance, state specific benefits and more. Taking advantage of these benefits can produce additional monthly income and reduce outgoing expenses, specifically in healthcare costs. While benefiting from disability compensation can be a rigorous and confusing process, there are resources available to help with the initial and appeals process. Local veterans service officers (VSO’s) are available for free consultations and companies like “VA Claims Insider” are available to help with this benefit specifically. While not every veteran will qualify for each of these benefits, taking the time to research if you are could drastically change your ability to retire sooner rather than later.
Invest! Invest! Invest!
Whether it’s through an employer sponsored retirement plan, IRA, or taxable brokerage account, continuing to invest, and set money aside to grow is a great option to create income in retirement. Remember, to set money aside into an IRA, you must have had earned income for the year. Neither VA benefits nor military pension count as earned income so a different source would be required to be able to contribute to this type of account. If this is a problem, brokerage accounts are also a good way to start building wealth to draw off in retirement. If you have questions about your specific situation, reach out to our office and we will be able to help guide you to the proper steps forward.
Conclusion
A huge benefit to the pension retired service members receive is freedom of their time and being able to pursue what truly matters to them. While it may not be enough to fully retire on for some, others will find it’s plenty. However, pursuing the avenues described above will bring more income/reduce expenses leading to the option for an increased lifestyle and a more enjoyable retirement.
