WASHINGTON (AFNS) — “It’s never too early to start saving for retirement no matter how young you are,” said a top Pentagon official, reminding those in uniform of how important it is to act now to ensure long-term financial readiness.
The message from Barbara Thompson, director of the Pentagon’s office of Family Policy/Children and Youth, is part of the year-long “Military Saves Campaign,” a nationwide effort to encourage service members to build wealth and avoid debt. The financial health of members of the military is of top concern to the Defense Department because officials say service members who have financial problems may be distracted from mission readiness. DOD offers a range of tools that provide financial advice to service personnel including the website saveandinvest.org.
Thompson told AFPS and the Pentagon Channel that members of the military, perhaps more than those in other professions, face greater financial stress because of the nature of their jobs.
“The complexity of today’s financial environment combined with the realities of the military life, including frequent moves and deployment, present special financial challenges,” Thompson said.
But they are challenges, she said, that can be easily managed.
“Financial stability means you can pay your bills on time, and have a little bit in reserve to take care of those unexpected emergencies,” Thompson said. She suggests starting by examining monthly expenses.
“Look at your credit card, look at your APR [annual percentage rate],” Thompson said. “Reduce the number of credit cards you have, making sure you pay off as much as you can every month because that interest is causing a huge drain on your financial well being.”
DOD studies have found that junior enlisted service members are at an increased risk of experiencing financial problems. Pentagon data obtained through surveys and supplied to AFPS by Thompson’s office suggests an increase last year in those who experienced one or more problems in paying bills.
Having an overall financial strategy with achievable, identifiable goals, she said, is a key to successful money management.
“I think what’s important is that we know what our goals are and how comfortable we feel (about) the risk involved with not having savings and not having money in the bank,” Thompson said.
And that leads to knowing the difference between short- and long-term financial goals. Thompson identified near-term goals as those that include everything from having enough cash to cover living expenses, building an emergency fund, paying down debt, saving for a vacation or buying a car — generally expenses anticipated to occur within five years.
“Long term is really thinking about your future, thinking about your children’s future, thinking about college education for your children, thinking about buying a home, thinking about retirement,” she said.
And no matter how far-off retirement might seem, Thompson stressed the importance of developing spending habits that will ensure financial stability into later life, especially at a time when the nation is going through a period of budget and economic uncertainty.
“Even though it seems so far away and so out of the picture, it’s important in today’s world that you start saving,” she said, “because we’re not really sure what the picture is going to be in the next 50 years, or what our social security is and what our benefits are going to be.”