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Are You on Track to Retire? (How You Can Find Out, With a Free Retirement Review from USAA)

Are you on track to retire?...

Are you on track to retire? I’ll share my current progress and show you some steps you can take to ensure you are moving in the right direction. One of those steps is getting a free retirement review from USAA.

Disclosure: This article is part of the #LifeUninterrupted campaign sponsored by USAA, which is designed to help future retirees learn how they can transition into retirement without worrying about financial interruptions. You can receive a free, no-obligation retirement review today by calling USAA. Note: We are receiving a fee for posting; however, the opinions expressed in this post are my own. I do not earn a commission or percentage of sales.

Retirement planning is part art, part science. The science part is generally fairly easy to figure out. It’s just math. The problem, however, is knowing which numbers and inputs to use. With retirement planning, you’re often dealing with imperfect data. That’s where the art comes in.

Experienced financial planners are trained to look at the future retiree’s entire financial plan, to include retirement savings and investments, pensions, current and future financial obligations, and much more. Then they take this information, along with additional information you provide, and give you feedback on your retirement outlook. The result is often extremely useful to help you see if you are able to retire now, if you are on track for retirement, or if you need to do a little more to prepare for retirement.

Things You Can Do to Prepare for Retirement

Everyone is in a different situation and place in life, so I will talk about how my wife and I are preparing for retirement. My wife and I are both around 40 years of age, so we are still close to 25 years from the traditional retirement age of 65. However, we both would like to retire a little earlier than age 65. So we are doing a few things to help prepare for that eventuality.

Contribute to Retirement Accounts

To begin with, we started saving and investing for retirement when we were in our 20s. We each contributed to the Thrift Savings Plan and opened Roth IRAs. In retrospect, I could have contributed much more to my TSP account when I was younger. But I valued flexibility with my cash flow. I still maxed out my Roth IRA every year, which was a great move.

It was after my wife and I were married that I really started kicking things up a notch. I suddenly had something more concrete to invest for – my family.

My wife and I were a dual income, no kid family for the first few years of our marriage. We lived off one salary, and basically banked the rest. It was around that time that we were first able to max out my wife’s TSP account. And I came close to maxing out my 401k at my civilian job (I had already transitioned out of the military and was a civilian at that point). This was also around the time that I started my online business, which is still going strong 12 years later. We have been able to stash away a lot of money in our retirement accounts over the years, and I think we’re doing very well in that regard.

I understand my wife and I have been very fortunate and I don’t take it for granted. But there is still time for most people to increase their retirement savings. Remember, every dollar that you save today is going to be even more valuable in the future. It’s almost never too late to get started. And the younger you start the better, as the power of compound interest will work its magic and do the heavy lifting as you get older.

Eliminate or Avoid Debt – The Killer of Financial Dreams

Another thing my wife and I did well was to avoid most debt. We have had a mortgage since we got married, and we are in the process of building a home that will also have a mortgage (we will buy it with a VA Loan). But other than that, we don’t have any debt. I did come into the marriage with a small car loan, but I paid it off within the first year of our marriage. I actually had the cash in my account to pay it off, but I preferred having that flexibility as an emergency fund.

Eliminating debt is something I encourage everyone to do. It may take time to pay everything off, especially if you have large student loans, credit card bills, or other large payments. But I promise you, paying off all debt will be one of the most important financial decisions you ever make.

If you have debt, I want you to take a moment to imagine how quickly your investment account would grow if you were to able to invest the amount of your monthly debt payments each month instead of sending those payments to your creditors. And the best part is, you would then have interest working for you, instead of against you. Your investment accounts would grow very quickly if you were able to add a few hundred dollars (or a few thousand dollars!) to them each month.

As I mentioned above, my wife and I are about to purchase a new home. While we will most likely use a 30-year mortgage, my goal will be to pay off our home before we reach retirement age. This will help us avoid the ongoing expense in retirement and help our retirement dollars to go further.

Reduce Ongoing Expenses

Benjamin Franklin wrote,

“Beware of little expenses. A small leak will sink a great ship.”

That can be applied directly to our spending habits. While I’m not perfect, I’ve made it a goal to avoid excessive financial obligations, even those that don’t seem to be big. My wife and I have avoided debt outside of our mortgage, we regularly shop for lower insurance rates, we each have an affordable cell phone plan (hint, look for military discounts for your cell phone), and we don’t use cable TV—instead, we use our digital antenna or a streaming service. We also don’t spend a lot on subscriptions, eating out, and other luxuries. We still have fun and meet all of our family needs, but we don’t need to spend a fortune to do that.

I encourage you to take a look at your spending every few months to see if there are items that are costing you money on a regular basis, but don’t bring you equal value in return. If so, I encourage you to find ways to reduce those expenses.

Again, this ties in with the above section. Each dollar we don’t spend for our ongoing expenses is another dollar we can use to more quickly reach financial independence. And of course, once the habit has been established, this will help us to more easily afford retirement.

Understand the Incredible Value of a Military or Government Pension

My wife and I both served on active duty for several years. However, we both transitioned out of the service, and for a few years, had no military affiliation. Several years after leaving active duty, I read a book that changed my life. That book was The Military Guide to Financial Independence and Military Retirement, by Doug Nordman. (Doug also started the website, The Military Guide).

Doug and I met at a sponsored blogging event held at the USAA HQ in San Antonio, TX and have since become good friends. His book had a big impact on me and opened my eyes to the value of military retirement benefits, including the value of a military pension.

That got the ball rolling on my joining the Air National Guard, which I was able to do after an 8.5-year break in service. I later commissioned in 2017 and I am currently just over 8 years away from being able to earn a retirement from the Air National Guard. If all goes as planned, I will reach 20 years of service and be able to earn a military retirement. And that will be incredibly valuable.

How valuable are military retirement benefits?

I recommend reading these articles for more information, and you can use your own judgment.

The last link above is an important one. Military and government pensions are inflation adjusted, meaning the amount of your pension will receive cost of living adjustments each year based on the same formula used for Social Security Benefits. It’s incredibly powerful and will help you maintain your spending power as you age.

Social Security Benefits Are Also a Valuable Part of Your Retirement Plan

Speaking of Social Security Benefits, you should be eligible for Social Security Benefits once you reach age 62, though you will have to take a discounted rate if you begin at age 62. Full benefits start at age 66. You can also wait beyond age 66 and you will receive a higher payout.

Depending on when you served, your military service may increase your Social Security Benefits.

How much will you receive for Social Security? You can create a free account with the Social Security Administration at SSA.Gov, which will show you your earnings history and an estimate of your future retirement benefits at age 62, or at different ages if you decide to wait before receiving benefits. Additionally, Social Security Benefits are based on your highest years of income. So working a few more years at a higher pay rate may increase your Social Security Benefits.

Protect Your Legacy – Insurance and Estate Planning

Buying adequate life insurance is one of the most important decisions you can make. I think of it as a love letter to my family. If anything happens to me, I know they will be taken care of. I have two policies, one through USAA, and another through the SGLI. Together, I know those policies would go a long way toward providing for my family, should the worst happen to me.

I also recommend reviewing all of your insurance policies at least once a year. This includes auto, home, life, health, an umbrella policy if needed, and anything else you may need insurance for. The hope is that you will never need insurance, but if you do, the benefit will almost certainly far outweigh the cost!

Estate planning is one area I need to work on. My wife and I recently moved to a new state, and we realized our will and estate plan is out of date and needs to be updated. This is something we plan on addressing in the very near future. Estate planning is an essential act – another love letter to your family, if you will. It will ensure your desires are met and it will help your survivors avoid costly probate, court costs, and legal fees.

Putting These Together

This seems like a lot to do, and in some ways, it is. But the good news is that you don’t have to do it all today. You most likely have years to prepare for retirement, so you can take the time to ensure you have your financial house in order.

I recently spoke with a retirement specialist at USAA, and we went over much of the topics discussed in this article. Overall, I believe my wife and I are on pace to reach a comfortable retirement before age 65. I think we should be able to easily do so by age 60, which is when the Guard retirement pay will start (if I make it to 20 years of service). But my stretch goal is to retire even earlier than that. And hopefully, we will be able to do so.

The retirement specialist I spoke with gave me a few tips and recommended I update the beneficiaries on all my financial accounts and that I update our estate plan. Other than that, his assessment was that we are on the right track. We will stay the course and check back with the advisor at USAA in another year or two, just to make sure we are still on track and to see if we need to take any additional actions.

How You Can Get A FREE Retirement Review from USAA

Right now USAA is offering a free, no-obligation retirement review with one of their retirement advisors. There is no cost, and you do not need to be a USAA member. To learn more or to schedule a call, you can visit the USAA website.

I recommend everyone have a retirement plan review, regardless of their age, or the amount of money they have. Taking an hour out of your day today can have an immense return on your investment and help you understand what you need to do to realize the retirement of your dreams.

You can get started now at USAA.