home loan finance blog
Well, in theory a typical military family could save quite a bit for retirement but I think it would hard unless someone was a full colonel (0-6) or General(0-7). A family can put this year $15,500 in their TSP account plus $4,000 in either a Roth IRA (income eligible) or Traditional IRA. A family can further save an additional 4,000 in a ROTH IRA or IRA for a spouse.
That is a total of $23,500 a year. As an O-2 there is no way I can afford this per year, unless we really cut out some of the normal stuff like internet,TV, etc. Maybe one day, I will get to this level. However, I do know of another LTJG that saves to this maximum each year. His wife works as a one of the highest managers at Wal-Mart in their local area. She makes around $50,000 a year. So, they pretty much make a lot with the two incomes combine so they put in away is his accounts and her Wal-mart employee stocks. He has calculated last month that he would have about $100,000 in about two years since he already had a bunch save up. So, as you can see, if there is a two income household it can be done but without my wife working I can only save so much.
I read an article about how one can save even more money in a Health Saving Account and if the money is not used it turns into a Traditional IRA after the person turns 59 1/2 or so. That means one can save even more money than the limits. Being in the military one pretty much has free health care on a pre-approved basis. So another words, one could have a bunch more money later on in life for retirement using this method. However, since we have tricare we are not eligible for this type of savings. But, it keeps you thinking about how one can save for retirement if you had more money and decide not to be in the military. What do you think?