Military retirement plans offer the flexibility of withdrawing your pension regardless of age. There are a few different military retirement options depending on when you joined the service. Here are three things to consider when setting up your military retirement:
- Each military retirement plan requires at least 20 years of service for eligibility except for the Thrift Savings Plan (TSP). Are you not planning on staying in the military for that long? Consider setting up an alternative retirement fund like contributing to an IRA or a Roth IRA.
- As of 2018, all service members are eligible for the Thrift Savings Plan (TSP), which is more like a traditional 401(k). Your TSP can either be tax-deferred like a traditional account, or you can pay taxes upfront like a Roth. The best choice for you will depend on your planned years of service, annual contributions and individual financial goals.
- Your military retirement is taxed as a pension. Military retirement is not tax-free upon withdrawal, like Roth accounts. The pension tax will depend on the retiree’s state of residence. For example, states like Florida, which do not have an income tax, also will not tax a pension either.
Talk to a ProVise CFP® professional about your retirement planning options today
At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances to determine if a military retirement plan is right for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about using a military retirement plan? Contact ProVise today to schedule a complimentary consultation.