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Throwback Thursday Classic Post – A Simple and Military Specific Summary of How to Save for Retirement
I’m a huge fam of Jim Lange. He’s a noted expert in financial management, saving for retirement, and estate planning. He’s written a number of books
He sends out a monthly newsletter that I get via snail mail, and it usually has a useful article in it. If you want it, you can get it here.
A previous edition had a section called “Jim’s Point-by-Point Summary of the Whole Retirement & Estate Planning Process.” It was simple but extremely useful. Below in bold are each of the points he lists for people who are still working, which is most of my readership. Let’s take each bolded point and militarize it for you so it is specific to those of us in the military.
Contribute at least the amount to your retirement plan that your employer is willing to match or partially match.
For those under the legacy retirement plan, this is not an option. For those under the new Blended Retirement System (BRS), you need to contribute 5% of your basic pay to the Thrift Savings Plan (TSP) to get the pull 5% DoD match:
You also need to make sure you contribute 5% every month and don’t fill the TSP too early. If you max it out in October, you won’t get a match in November or December.
If you can afford to, contribute the maximum allowed to your retirement plan even if your employer does not match.
This is $19,500 in 2021. You can do an extra $6,500 if you are 50 or over. You can even do more if you are in a combat zone.
Once you have maximized contributions to your plan at work, contribute the maximum you can to an IRA, even if you cannot take a tax deduction on it.
If you are able to fill your TSP account, next you’ll need to open an IRA at an investment firm. Vanguard is the obvious choice due to their across the board low investment fees and unique non-profit structure, but you can do this anywhere (Schwab, Fidelity, etc.).
If you make too much to contribute to a Roth IRA, you just use the back door Roth IRA option.
Consider your personal tax bracket when trying to decide if you should contribute to a Roth or a traditional IRA/retirement plan.
With a traditional plan, you take a tax deduction now and pay taxes later when you take the money out. With a Roth plan you pay the taxes now and the withdrawals are completely tax free.
The general principle is that if you are in a lower tax bracket now than when you are retired, you do the Roth. If you are in a higher tax bracket now, you use the traditional.
No one really knows what the future holds, though, making this decision tough. Here are some resources for you to check out when making this decision:
Traditional and Roth TSP Contributions
Roth vs. Traditional IRAs: A Comparison
Do not take loans against your retirement plan. Allow the tax-deferred or tax-free status of the account to maximize the growth of your money.
While the TSP allows loans, I refuse to link to any information about it. Once you put money away for retirement, you don’t borrow from it unless it is an ABSOLUTE EMERGENCY.
Period.
The Bottom Line
Here are the point-by-point summary of steps Jim Lange suggests you take if you are saving for retirement:
- Contribute at least the amount to your retirement plan that your employer is willing to match or partially match, which is 5% of basic pay in the BRS.
- If you can afford to, contribute the maximum allowed to your retirement plan even if your employer does not match, which is $19,500 in the TSP ($26,000 if you’re 50+).
- Once you have maximized contributions to your plan at work, contribute the maximum you can to an IRA, even if you cannot take a tax deduction on it. Use a back door Roth IRA if you need to.
- Consider your personal tax bracket when trying to decide if you should contribute to a Roth or a traditional IRA/retirement plan.
- Do not take loans against your retirement plan. Allow the tax-deferred or tax-free status of the account to maximize the growth of your money.
Medical Corps Collar Devices Needed for Midshipmen
It is tradition that USNA Midshipmen entering the Medical Corps get MC collar devices used by a Navy physician. The Corps Chief’s Office needs 12 for the upcoming graduating class, but this is an annual requirement so the more the merrier!
If you have an extra MC collar device sitting around and are in the BUMED/DHA building, drop them off in the Corps Chief’s office at BUMED, give it to any member of the Corps Chief’s Office, or mail it to CAPT Anthony Keller at:
CAPT Anthony Keller
Bureau of Medicine and Surgery (BUMED)
Office of the Chief, Medical Corps (M00C1), 1NW148C
7700 Arlington Blvd
Falls Church, VA 22042-5135
Fleet Marine Forces Specialty Leader
The Medical Corps Chief’s Office is seeking a CDR or above with significant senior USMC operational leadership experience to guide policy and practice for Marine Corps assigned physicians. This Specialty Leader will liaise closely with both The Medical Officer of the Marine Corps (TMO) and the Corps Chief’s office. Applicants must be a privileged physician of any specialty with excellent organizational and leadership skills.
Please send all applications (CV, Bio, LOI, command endorsement, OSR, PSR and last 3 fitness reports) to CDR Wendy Arnold (MC Policy & Practice Officer, contact in the global) by 1 MAR 2021.
Navy Personnel Command Launching New Website; MyNavyHR.Navy.mil
This change tomorrow is probably going to jack up all of my links to the PERS website. I’ll slowly try to fix them, but if you find any that are broken feel free to contact me. Here’s the article:
https://www.dvidshub.net/news/388784/npc-launching-new-website-mynavyhrnavymil
Throwback Thursday Classic Post – Global Health Specialist Program Information Package
We have put out a lot of Global Health Engagement (GHE) opportunities. You can see all of them past and present at this link. Many officers are wondering how they can get the GHE additional qualification designator (AQD).
Here is a information package that explains the entire program, including how to get the AQD:
Medical Corps Career Development Board Assistant Program Manager – Application Deadline Extended!
Application deadline extended until 5 FEB 2021!
The Corps Chiefs office is soliciting applications for the CDB Assistant Program Manager, working closely with the CDB Program Manager and Medical Corps Career Planner to coordinate and compile CDB data and best practices from the enterprise. The successful candidate will be LCDR or above with excellent organizational abilities and significant enterprise experience in both hospital and operational settings. Interested candidates should submit a letter of intent, CV, BIO, Officer Summary Record (OSR), Performance Summary Record (PSR) and command endorsement to CAPT Miguel Gutierrez (contact in the global). Applications are due NLT 5 FEB 2021. The current program policy is here:
Rich Grandpa, Poor Grandpa
Unlike Robert Kiyosaki, I only have one Dad. I did have two grandfather’s though. One was rich and one was poor (or at least poorer that the rich one). What did they teach me?
My Poor(er) Grandpa
My poor(er) grandpa worked odd jobs his whole life. He never owned a business that I was aware of. I don’t think investing was his thing because he never had all that much money, but he did have Social Security.
Frankly, all he wanted to do was bowl, and he had a 300 game at least once, which I think was his crowning achievement in life.
Despite his lack of financial acumen or success, he never really wanted for anything. After his wife (my grandmother) developed dementia and moved into a nursing home, he lived independently right up until the end of his life in a small apartment that was near his children and the bowling alley.
He drove a perfectly fine car.
He went out for meals when he wanted, his favorite meal being well done steak at any local diner.
He had Medicare for his health insurance.
What’s the lesson here?
Poor Grandpa Lesson #1 – A modest lifestyle and low spending will make up for a less than impressive nest egg.
He lived into his nineties despite having severe heart and vascular disease, prostate cancer, and smoking nearly his whole life. He stayed mentally intact the entire time, and was bowling right up until the end. What was his secret? As he told me many times…
Poor Grandpa Lesson #2 – “Never drink anything but beer or coffee. Water will rust your insides.”
My Rich Grandpa
There are many things you can learn from his financial life.
He lived in a small town in Pennsylvania that had a population of 2,069 in the 2010 census. In that town, he ran a small business selling furniture and running a funeral parlor. As he once told me, the furniture makers made the coffins, so the businesses were linked in the old days. He and his brother worked for his father, who ran the business before them.
Running this small business allowed him to build a significant net worth by anyone’s definition.
Rich Grandpa Lesson #1 – The easiest way to become wealthy is to own a successful business.
He never owned more than one car while I knew him, although his business owned delivery trucks he could use.
He lived in the same house the entire time, which was a modest brick house on main street of his town. It was 2300 square feet, 4 bedrooms, 2 baths, and sold for $185,000 in 2015 when he moved into a nursing home. According to Zillow it is now worth $228,044.
He had the same spouse, my grandmother, and never divorced.
Rich Grandpa Lesson #2 – The path to wealth = one spouse, one house.
During his life, he made periodic investments by purchasing stock in a local bank. Over the years and after twenty or so bank mergers, that local bank was now a subsidiary of a large international bank. Along came the 2008-2009 financial crisis…and that investment was worth only a small fraction of what it once was. A very small fraction.
Rich Grandpa Lesson #3 – Diversify to reduce your risk. Don’t put all your financial eggs in one basket.
There is one final lesson that I learned from my rich grandfather that I’ll never forget.
Rich Grandpa Lesson #4 – If you are a young boy and you want to see nudity for the first time, go on a furniture delivery with your grandpa who owns a furniture store. There just might be a Playboy calendar hanging above the kitchen table.
Joel Schofer's Career Planning Blog 