Question by wckc2002: For those in the military when calculating retirement savings?
Do you include your BAH when you calculate the 15% you’re supposed to set aside for retirement?

I would think you should since on getting out we’ll still need to pay for housing, however here in Hawaii BAH is a pretty large amount so it kind of throws things off. I’d like to increase some other areas of our budget but I don’t want to short-change our retirement savings.

Best answer:

Answer by Kevin N
Retirement calculations are a bit “strange” for military folks. When you’re trying to follow a basic formula like “save 15% of your income,” you have to remember that that figure is based on a “typical” income. I actually found it “better” (for me) to calculate not only the BAH, but what BAH would approximately equate to – which means considering BAH as after-tax dollars. Essentially, I added ~28% to the BAH figure, and, after adding it to my base salary, special pays, and BAS (+28%), considered that result as my target salary. From that target salary I calculated my retirement percentage.

It’s tough to be able to put that much aside, but if you can do it, you’ll be thankful you did!

Know better? Leave your own answer in the comments!

Joel Green Vice President Legal Affairs & General Counsel of Upsher-Smith Laboratories, Inc., Maple Grove, Minnesota, in support of legislation that will protect the employees of Upsher-Smith Laboratories and working people throughout America, whose retirement security is imperiled by the Madoff fraud. MadoffHearing 12/09/09Sub-Committee on Capital Markets.

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