WASHINGTON, Oct. 16, 2013 – It’s never too soon to start saving for retirement, Barbara Thompson, the director of the Defense Department’s office of family policy and children and youth advised service members today.
Enlistees as young as 18 might not be thinking about saving for retirement or the importance of their Thrift Savings Plan, but that’s when they should, because retirement creeps up quickly, Thompson said.
“The vast majority of service members don’t go the full 20 years for military retirement, so they need to, from the very beginning, think about their futures,” she said. “When [service members] get out of the military, they will have something to show in a retirement plan they’ve had all along while serving.”
Sometimes “you have to start small, because that’s what you can afford, but the goal is to build up, so you’re saving more and more every year,” Thompson said.
The Thrift Savings Plan, Thompson said, offers two types of approaches: one that is tax-deferred until age 59-and-a-half when taxes on that money will be paid; and the Roth Thrift Savings Plan, in which taxes are paid up front.
“It’s an individual decision based on [service members’] circumstances, and I would highly suggest they utilize the financial resources that DOD provides,” Thompson said.
Saving for retirement is not only about financial readiness, it’s also critical for service members’ financial well-being, she said. And DOD offers numerous resources to help with retirement account guidance, Thompson added. Military OneSource has financial counselors who are available by phone, online or in person, she said. Its online calculations also show service members how their savings will develop over time.
Military installations offer personal financial managers at base family centers, Thompson added. The counselors are certified in financial counseling and can help families decide which of the two plans best meet their needs.
Banks and credit unions also offer financial education, and the Thrift Savings Plan website offers a wealth of information as well, Thompson said.
Regardless of the Thrift Savings Plan service members and families choose, they should periodically revisit their retirement accounts and stay informed by researching financial matters, Thompson said.
“It’s not now, it’s the future you need to be thinking of,” she said. “We’re seeing a trend in the United States [in which] people are reaching retirement age and they’re realizing they may not have enough [money] as they get into their 80s and 90s. You want to make sure all those years are covered so you don’t become a burden to your children or to society.”