Time for a Military Saves Week pep talk. YOU CAN DO IT! We're talking about saving meaningful money toward your retirement.
Whether you are in your 20s and haven't thought about retiring, or in your 60s with retirement staring you in the face, saving for "life after work" is one thing every working American needs to do. The fact is, employer-funded pensions are rare and Social Security retirement benefits will replace only about 40 percent of the average worker's salary. That means the primary responsibility for paying for retirement rests with each of us.
Of course, everyday life can get in the way. Running a household, celebrating joyous occasions, and covering unexpected pitfalls can challenge your budget and drain your savings. How do you keep your retirement savings on track?
That's where the Saver's Pledge, a key component of Military Saves Week, can help. By making a personal commitment to save for something specific—like retirement—and by writing down an amount and a plan to accomplish your savings goal, YOU take charge of your savings. It's a way to compartmentalize, and prioritize, your savings, so it doesn't go somewhere else.
By making a personal
commitment to save
by writing down an
amount and a plan to
accomplish your savings
goal—YOU take charge.
Below are four ways to help achieve a secure retirement.
- Participate in a retirement savings plan at work, if offered. Members of the armed services can participate in the Thrift Savings Plan (TSP). If your Date of Initial Entry into Military Service is on or after January 1, 2018, you are automatically enrolled in the TSP at a contribution level of 3 percent of basic pay. Consider saving more: the IRS allows you to save $19,500 in 2020, plus an additional $6,500 if you are 50 years old or older.
- Even if you can't save the max in your retirement plan, save to the match. For service members, each member is entitled to receive a matching contribution on the first 5 percent of basic pay he or she contributes to the TSP each pay period. If you save less than the match, you are leaving "free" money on the table.
- Contribute to a traditional or Roth IRA, if you qualify. There is still time to do so. For the 2019 tax year, you can make an IRA contribution any time before April 16, 2020. You can also save money through an IRA for your non-working spouse.
- Claim the Earned Income Tax Credit, if you can. The credit could be worth more than $6,600 for qualified, low-to-moderate income workers, and could be part of your retirement savings strategy.
For more details on these options or if you need help calculating how much you will need for retirement, check out the FINRA Foundation's information about military retirement.