Becoming a Millionaire on A Military Salary
What if I told you that you could retire a millionaire on a military salary? Through disciplined investing and deferred gratification, it could be possible.
The U.S. Military offers a distinct set of risks. Soldiers, Sailors, Airmen, Marines, and Coast Guardsmen risk their lives, sacrifice their freedom, and spend long periods away from their families, friends, and loved ones and all for what amounts to a fairly meager annual salary. The men and women who choose to make these sacrifices are the backbone of United States and in this writer's opinion deserve to be paid much more.
The military is a noble choice of profession, and one that, along with the many and varied sacrifices, does offer some distinct financial benefits that if taken advantage of, could yield significant returns. The following are a few of the distinct benefits offered to active duty personnel:
The military is a noble choice of profession, and one that, along with the many and varied sacrifices, does offer some distinct financial benefits that if taken advantage of, could yield significant returns. The following are a few of the distinct benefits offered to active duty personnel:
- Tax Savings
- Health Care (TRICARE)
- Thrift Savings Plan
- Montgomery and Post 9/11 GI Bill
- Tuition Assistance
- Military Discounts
- VA Loans
- Military Retirement Pension and TRICARE for Life
Indeed, the benefits of military service, coupled with the desire to serve the country are often what attract recruits to military service. Throughout this section of compounding returns, we will explore the potential of these benefits for financial reward and will seek to derive maximum value from the benefits provided to military members by the grateful nation that they serve and protect.
Back to the topic at hand. How can a military member retire a millionaire? Simple. Pay yourself first. Put at least 10% of your base pay in the TSP, and max out your Roth IRA (5000$/ Year). By the time you are eligible to withdraw the contributions penalty free (Age 59 1/2), you will have over 3 Million Dollars!
(Assuming you begin contributing at age 18, achieve a 10% rate of return, invest 10 percent of base pay in the TSP, invest $5,000 per year in a Roth IRA, and stop contributions at 20 years of service.)
(Assuming you begin contributing at age 18, achieve a 10% rate of return, invest 10 percent of base pay in the TSP, invest $5,000 per year in a Roth IRA, and stop contributions at 20 years of service.)
Its really that simple. I calculated the 10% of base pay TSP contribution at a 2010 Base Pay of an E-3 with less than 2 years of service. Obviously, getting promoted only increases the amount of money you will be able to invest.
This is all possible due to the amazing power of compound interest. It is absolutely possible, through careful planning and paying yourself first, to retire a military millionaire. If you are in disbelief, run the numbers yourself using this Compound Interest Calculator.
This is all possible due to the amazing power of compound interest. It is absolutely possible, through careful planning and paying yourself first, to retire a military millionaire. If you are in disbelief, run the numbers yourself using this Compound Interest Calculator.
