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Ask Dave

Let The Military Handle It?

Are Megan and her husband doing enough for retirement by just letting his Navy pension cover them, or should the actually invest?

QUESTION: Megan’s husband has been in the Navy for 22 years. If he stays there for 30 years, he’ll retire with a pension that is 75% of his pay. Should she still follow Baby Step 4 and save up 15% for retirement?

ANSWER: Sure, follow that. I want you to be saving in addition to pension plans. Your military pension will come, but it’s not coming out of your pocket, so there’s no reason that you shouldn’t be able to invest 15% of your income. I want you to have a separate nest egg over and above what the military gives you.

If you turn it down a little bit because he’s getting this wonderful pension, then that’s OK. However, I wouldn’t refuse to save money because the military will take care of you guys. You can turn it down to 10%, but the point is that you want to be investing on your own, over and above a pension. Even though it’s pretty stable, you don’t want to lean on something that’s out of your control.