Retirement Concerns Among Military Personnel



Selective service, also known as The Draft, ended in 1973, making the U.S. military an entirely volunteer workforce. Although the Department of Defense promotes itself to citizens encouraging enlistment, there have been very few times when there was a great need for additional military personnel.

The perks of military service provide impetus to get a sufficient enlistment of Americans. Among those perks is a solid retirement package for anyone who serves for 20 years, thus effectively making military service their career.

But, like with so many other Americans with solid retirement programs, retirement remains a concern for military personnel. Even some of the wealthiest Americans worry about having enough assets for retirement, and although the military pays sufficiently, it does not necessarily turn service members into instant Millionaires.

Spectrems retirement plan for military personnel? Anyone who serves for 20 years or more in active duty are eligible to participate in the Department of Defense pension fund. From the moment of retirement after 20 years, service personnel receive 50 percent of their base pay plus a cost of living increase every year above that amount for every year of service beyond 20.

For the Spectrem study, military personnel with at least $100,000 in net worth were asked to discuss their attitudes and behaviors regarding investment decisions. The survey included questions about their retirement planning, and found that the military pension provides some level of comfort for military personnel but does not relieve all retirement tension.

The study compared people with their own military background as well as those who have a spouse in the military or have a child who has served in the military. All of those groups were compared to investors without any military experience in their family.

While a majority of investors fully expect to have sufficient income to live comfortably through retirement, 91 percent of those investors who have a child in the military report that positive expectation. There are positive financial ramifications to having a child in the military, including financial benefits related to college costs and the retirement plan which their child has in place from their military service. Those factors and others can lead the parent of a military service member to benefit personally from the service of their offspring.

By comparison, only 76 percent of investors who themselves have been in the military report that they fully expect to have sufficient income in retirement.

This is a question to ask of your clients with military service in their family; are they comfortable with their financial position in anticipation of retirement? The specifics of the financial backing of Department of Defense programs is a detail that advisors should go over with their current and former service member clients.

When investors were asked if they are worried about being able to retire when they want to, only 27 percent of service members reported that concern. That compares favorably to the 39 percent of investors who have no military service in their family.

s country can obviously go beyond the emotional component. Advisors need to know how military service benefits their clients and need to make certain those clients are taking full advantage of the financial support they are due from their time in the military.



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