With a majority of the Marine Corps force younger than 30, Louis Bromley, personal finance manager at the Personal Financial Management Program aboard Marine Corps Base Quantico, said saving for retirement is an idea that can seem almost irrelevant to many service members. However, they aren’t alone. According to a new study from the Employee Benefit Research Institute, the average American has saved less than $25,000 for retirement.

But neglecting to invest long-term is a decision that can affect the future quality of life of a military member and their family, Bromley told a group of Marines and family members at a “Saving and Investing” workshop June 12, 2013, at the Religious Annex.

Planning for retirement requires considering one’s current quality of life and what it would take to maintain or improve that standard of living after leaving the workforce. Although some people would prefer to retire comfortably with more than enough money, at minimum, Bromley suggests saving enough money to live on more two-thirds of pre-retirement salary.

“You need around 70 percent of pre-retirement income to maintain the same quality of life you had before retirement,” Bromley said.

Since life expectancy in the United States, which is currently 78, continues to rise, Bromley advised Marines and family members not skimp on their investment contributions.

“Financial planners are now calculating [compound interest] rates [for investments] out to 100 years of age, because people are living much longer,” Bromley said.  “The last thing you want to do is work hard and invest throughout your life, only to realize you’ve outlived your money.”

According to data from the Personal Financial Management Program, to have $500,000 by retirement—starting at age 25, an individual would need to save $79 per month, a 35-year-old would need $221 and at age 45, an individual would need to set aside a whopping $658 per month.

These numbers can seem daunting, but Bromley said the key is to start early.

However, before considering future savings and investments, current and short-term financial obligations should be in order. To that end, participants were advised to establish a budget and then a savings strategy.

“There are three factors to consider with saving: safety, which means how safe is your investment;  liquidity, which means how easy you can access that money, and yield, which means how much is the investment going to pay you,” Bromley said.

A regular savings account with a local bank or credit union is usually the safest route, he advised, because deposited funds are insured up to $250,000 through the Federal Deposit Insurance Corp. Furthermore, there are little to no penalties on withdrawals.

It’s what Bromley calls the foundation of building wealth and investing. He said families should have enough money to cover unexpected living costs like car repairs, loss of job or home maintenance.

“You should have at least three to six months of living expenses in your savings account for emergencies,” Bromley told Marines and family members.

In addition, there are also savings programs that are exclusively available to civilian and uniform members.

The Thrift Saving Plan, which is a retirement savings and investment plan for federal employees, active-duty and retired service members, offers similar savings and tax benefits that private corporations provide with a 401k plan.

The Savings Deposit Program, which is designated for military members who are serving in a combat zone, offers a 10 percent annual interest for contributions, up to ten thousand dollars.

After building a viable savings base, diversifying investments by contributing to CDs, U.S. Savings Bonds, money market accounts, or mutual funds is the next step, Bromley said. These avenues generally yield a higher interest rate compared to savings but the risk is greater.

Stocks and mutual funds are another investment option that can produce a high rate of return.  But again, there’s also increased risk. Investors can lose money or gain money, depending on the market value and investments aren’t insured.

There are numerous ways to invest and save money for the future but the key is planning early.

“The earlier you start with saving and investing, the better off you’ll be,” Bromley said. “You have to be an educated consumer who says, ‘what is my money going to do for me in the future.’”

Staff Writer: afelton@quanticosentryonline.com