In this episode, Dr. Barbara O’Neill revisits some of the key concepts in the October 23 webinar, Employment Resources for Military Families. She also explores strategies for meeting the financial needs of military families experiencing financial strain due to military relocations.
If you’d like you can watch the Webinar Recording
This morning we’re going to talk about employment opportunities for military families. It was our webinar held in October, and the webinar really focused on resources for military spouses. So what retirement savings options work best for military spouses who may have sporadic employment?
That’s a big issue with military spouses because often the family has to uproot itself every time there’s a PCS and of course that means having to leave a job and perhaps start a new one somewhere else. Retirement savings can suffer, so some strategies for military families to consider… One would be a spouse IRA and of course that’s available to any family, whether they are civilian or military. Let’s say you have a married couple and one spouse is employed (e.g. the servicemember) and the other one is in between jobs. The employed spouse can set aside money for the at home spouse and fund not only their own personal IRA but also their spouse’s IRA up to the limits of tax law. That’s a good strategy for people. Also, once people do have employment, they can certainly look into an IRA for themselves. If their employer has some kind of tax deferred plan (e.g. a 401k), something of that sort would be good. People can always save for retirement in taxable accounts. These are accounts that are not part of any kind of tax deferred plan, but maybe they are earmarking them for retirement.
Well what about entrepreneurs? What savings options are out for entrepreneurs who are self-employed. Military spouses that might be self-employed… what kind of options do they have?
Well, I thought the webinar was actually really good, and I encourage people to look at it because they really talk quite a bit about different support services that can help people with entrepreneurship. Once people are established in their free-lance work or small business, they can look into a SEP-IRA- a simplified employee pension plan.That enables them to save up to 20% of the net income from their business in this retirement savings plan. Of course, with self-employment income, any type of income is eligible for a regular IRA as well. That’s another viable option for people.
What about the Blended Retirement System? How is that going to impact military spouses retirement savings?
I think it’s more of an indirect impact. Obviously, it’s the service member themselves who’s in the Blended Retirement System, but the choices that service member makes obviously impacts the military spouse. Probably the best thing that the service member can do is to fully maximize the savings opportunities that they have under the Thrift Savings Plan. Because under the Blended Retirement System, the defined benefits portion is going to be less than it was previously under the Legacy System. It’s relying on people saving more on their own through the Thrift Savings Plan. The more that the service member can do that, the more it will benefit not only the service member but their military spouse as well.
What budgeting strategies do you recommend to military families who anticipate having that unemployed spouse after relocation?
I think that one strategy is to do what I recommend for a lot of people who have volatile incomes. Build up what I call a buffer or a holding account. This is a little bit different than an emergency fund because an emergency fund is kind of a lot of unexpected things (e.g. cars breaking down). Many times the emergencies are unknown. You know something might happen, but you never know what will happen or when. But in this case, you kind of know that you will be moving frequently and perhaps having some interruptions in a spouse’s employment. Set up a buffer account where you might have some money that you just set aside from from the peak times because you know that there’s going to be some lean times down the road when there’s a relocation. Certainly scaling down expenses is important. You can cut back a little bit on expenses, and it doesn’t necessarily have to be in a deprivation kind of way. For example, I volunteer at a thrift shop, and right now we’re having 50% off on all our clothes. In a few months, we’ll be having a bag sale where you can literally fill up a big bag with clothes. If you roll them up right, you can fit 50 different clothing items into a bag, so you’re talking about buying a piece of clothing for 10 cents a piece. There are still a lot of creative ways that people can get things, but at a lower price point. So scale down expenses and possibly seek out support services that can help the family readjust during that period when there’s reduced income. I know there are many support services on military installations that can help service members and their families. Also, don’t assume that the job necessarily has to end with the PCS. These days, so many people are telecommuting. I mean look at you Molly. Technically, you’re employed by the University of Florida, but you live in North Carolina. Why couldn’t a military spouse explore that option with their employer as well? If they’re particularly valued in their company and they have a skill set that’s transferable from one location to another, it might be that they can continue their employment from a remote location. Finally, another option for families with a reduced income might be to explore public benefits if they qualify. These benefits can help provide a stream of income at a time when income has been reduced.
Let’s talk quickly about side hustles. How can military spouses make contract work or multiple side gigs work in their favor?
Again, they might want to start out with their current employer. Perhaps, if they can’t stay on as an employee in a remote sense, they could be hired back as a consultant contractor. Always start out with the people that you know in previous jobs or in your current job and explore some opportunities to perhaps work as a consultant. Social media is really important. I just put together a webinar for urban farmers here in New Jersey, and we’re going to be talking about the different ways that they can create visibility for their business. Social media is key. Having great images in your social media and a strategy of posting on a regular basis is really important. Certainly, support networks are important. For example, AFCPE has a wonderful military spouse fellows group that has really bonded over the years and become a really good support network for spouses of service members. Finally, some local networks in their new communities (e.g. chambers of commerce) might be a good place to reach out and make contacts as well.