Crawford, who also is a CFP, believes the most serious error in retirement planning is failing to develop a comprehensive retirement plan. “Without a road map, it’s difficult, if not impossible, to see where you’ve been and where you’re heading.”

Understandably, Crawford thinks a retirement plan prepared by a CFP is the best choice for most military families. “The services of a good CFP [are] not an expense,” he says. “By preparing a plan that maximizes investment income, a CFP becomes an asset, not an expense.”

Still, many people prefer to do their own planning. “That’s fine for people who have a good feel for personal finance and how to handle money,” he says. “Whether you prepare it yourself or have it done by a professional, it’s important that your plan stay active and flexible.”

Les Abromovitz, attorney, financial author, and producer of the television series “Your Financial Future,” agrees on the need for what he calls a retirement blueprint. “Your retirement plan need not be overly complex,” he explains, “but it makes little sense to travel down the road to retirement without a well-thought-out plan to get you there.”

Here are some steps you can take now to develop a solid road map for your retirement portfolio:

Decide where you want to be and when. The ultimate objective in your retirement plan is to accumulate the necessary assets to fund a comfortable and satisfying lifestyle. 

“Most military officers don’t start thinking about retirement early enough,” says Carl Kunhardt, CFP, and he should know—Kunhardt is also a retired Marine Corps major.

“Fifty percent of base pay after 20 years, plus Social Security, may look good when you’re 40,” he says, “but as you get closer to full retirement, reality sets in.”

So, how much will you need to enjoy life after you pack it all in? Probably more than you think. 

“You may think you’re sitting pretty with a half a million dollars or more in a 401(k) or a traditional IRA,” warns Abromovitz. “But that kitty doesn’t look so huge when you consider that you’ll lose $30 or $40 in federal and state taxes on every $100 you withdraw.”

Many financial planners say you will need 80 percent of your pre-retirement income to maintain your current lifestyle in retirement. If your combined military pension and current job earnings are, say, $100,000 per year just before you retire, you will need $80,000 to maintain the same lifestyle.

Walt Woerheide, Ph.D., vice president of academic affairs at The American College in Bryn Mawr, Penn., thinks many standards for retirement planning are too demanding.

“Traditional rules of thumb logically assume that you don’t want to reduce your standard of living when you retire,” he says, “but it’s a mistake to overestimate your needs.”

Woerheide believes that most people experience a significant drop in living expenses when they retire. “Chances are your mortgage will be paid off, you’ll no longer need to put aside money for savings, and you’ll have the time to do chores that you may have been paying other people to do.”

Kunhardt, however, says his experience in predicting expenses is different. “We are finding that clients are spending essentially the same in retirement as before. It’s what they are spending on that changes in retirement.”

The Charles Schwab brokerage firm recently published a new set of guidance for retirement planning. It suggests that it will take $230,000 in retirement savings in today’s dollars to provide $1,000 in monthly income during retirement. For example, if you want to add $2,000 a month to your pension and Social Security income, you would need $460,000 in retirement savings and investments.

Obviously, no single retirement plan can pinpoint your precise financial needs after retirement. If you’re not entirely comfortable with any specific formula, you might want to average the results of two or more different systems.

Take a careful inventory. An essential part of every journey’s road map is a mark indicating where you are now. Your retirement planning road map should be no different.

To get a fix on your current position on the road to retirement, list all of your present assets that will contribute to your income. Include all forms of savings, current balances in your investment portfolio and retirement plans, plus any other assets that can or will produce income when you retire.

“You should also take stock of where you are now in a lifestyle sense,” says Kunhardt. “You must know where your money is going today. Do you have a budget [or] spending plan?” Planning for retirement is about managing your inflows and outflows—you can’t manage what you can’t measure, and you can’t measure what you can’t see. 

Protect what you already have. Once you have a clear idea of where you now stand, says Abromovitz, the next step in rebuilding your financial nest egg is to protect it. 

Protecting your investments against market reversals means diversifying. “The problem with diversification,” says Crawford, “is that many people simply don’t understand what it means. I’ve worked with investors who proudly point out how well they have diversified their portfolios by investing in a wide variety of big companies in different industries. That’s not what diversification [also known as asset allocation] is all about.”

True diversification requires that you divide your investments among different types of assets such as stocks, bonds, and cash equivalents. That’s because different classes of investments behave differently under any given market action. Bonds, for example, usually rise in price when stocks fall. Thus, the reaction of one class of investment tends to balance out the reaction of another.

Optimum allocation of assets in a retirement portfolio varies sharply with personal circumstances. When you plan diversification, you must consider such things as your age, size of your portfolio, other sources of income, lifestyle, and your personal tolerance for risk.

Specific advice on the best asset allocation for individuals is beyond the scope of this article. Enlist the services of a good financial planner or find help online. Visit www.todaysofficer.org to view and use the many investment calculators to tailor your portfolio. The Allstate Insurance Co., also has developed what it calls a risk-assessment calculator (available at www.allstate.com/handson). Once you complete a simple 12-question survey, the calculator will recommend a mix of assets for you to consider. 

Examine the role of equities in your retirement plan. Although financial advisors differ on the specific formulas for asset allocation, virtually all agree that some part of your portfolio always should include investment in equities. Regardless of your age or risk tolerance, the best way to offset the effects of inflation is to invest some part of your portfolio in assets likely to grow in value over time.

“There is little room for argument about the need for equities in a retirement portfolio,” says Woerheide. “Countless studies over the years have shown that a portfolio consisting of a mix of equities and fixed-income investments produces a better return at less risk than a portfolio restricted to fixed-income investments.”

Kunhardt agrees. “For most [people], it is critical that a significant portion of their portfolio be in equities. Of traditional retirement investments, only equities provide significant growth after inflation.” 

Take full advantage of tax-advantaged retirement accounts offered by your present employer. “Military retirees who are working should take full advantage of any retirement savings plan offered by their employer,” advises Abromovitz. “Whenever possible, they should contribute the maximum allowable amount.”

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