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My father always says that he’s “overworked and underpaid.” Who hasn’t felt like that? As a financial advisor, my job is to help people win the money game - not just in retirement, but in everyday life. It may be surprising, but some of my most difficult clients to work with are from the military because of the amount of control they need in their financial decisions. Sometimes it feels like they don’t want to win, and it’s confusing because our job as military members is to win at everything we do.
Every successful business model prioritizes controlling costs, and the military isn’t an exception. Where most soldiers miss out on the big picture is the fact that saving, investing, or purchasing permanent life insurance feels like added costs when they’re not. All successful financial plans require allocating certain amounts of your income for a significant amount of time in order to win the long term money game. If saving 15% of income and contributing to a retirement plan (like a 401k or a TSP) were enough to win the game, then there would be no need for financial advisors like myself. Unfortunately there isn’t a “one size fits all” plan for financial planning, and very few people have an understanding of the many factors that erode wealth eroding factors. That’s why most soldiers will never be able to enjoy the retirement they deserve.
I don’t intend to provide basic solutions that we all know are true. Yes, saving 15% of your income and contributing to a retirement plan are basics to financial well-being so by all means, start saving! What I hope to encourage is contributing to ways to reduce your present and future tax liability.
Taxes eat away at your rate of return so if you’re not investing in a Roth IRA, consider switching to one. Consider reducing your long term tax liability by purchasing a permanent life insurance policy. The misconception about life insurance is that it’s a waste of money. The truth about TERM policies is that you really only get money out of them if you die, which means you can’t enjoy that money anyways, and only 2-3% of them ever payout. Permanent life insurance, on the other hand, will “cost” more on a monthly basis but the cash value that grows inside of the policy grows tax free, can be withdrawn tax free upon retirement, or can be used for emergency situations without the harsh penalty you would encounter with a more typical retirement account.
Another way to lower your tax burden is by contributing to charity. You don’t have to be religious to contribute to charity and if you look at some of the wealthiest people on the planet, they all have this in common. Do you think they all truly care about helping others or making a name for themselves? Some of them might, but most wealthy people contribute to charity because they understand that they will receive a tax deduction when they file their taxes.
Finally, consider buying collectibles such as guns, knives, books, cars, sports memorabilia, war memorabilia, and anything else that has collectible, long-term value. Be smart with these kinds of purchases, and don’t be afraid to purchase for both long- and short-term gain.
Wrapping up, I hope you understand that winning the money game is your choice and your choice alone. Being in control of your life, especially in consideration of your finances, is a good thing. However, be smart about it. Everyone in this world is clawing to get as much of your money that they can, and being aware of your options can help you keep a bit more. When you get back from deployment, think twice about going on a $10k shopping spree, think twice about buying that brand new car that will depreciate thousands of dollars as soon as you drive it off the lot, or any other risky financial moves. If you need help financially, ask for help. That’s what battle buddies are for – hooah.
Every successful business model prioritizes controlling costs, and the military isn’t an exception. Where most soldiers miss out on the big picture is the fact that saving, investing, or purchasing permanent life insurance feels like added costs when they’re not. All successful financial plans require allocating certain amounts of your income for a significant amount of time in order to win the long term money game. If saving 15% of income and contributing to a retirement plan (like a 401k or a TSP) were enough to win the game, then there would be no need for financial advisors like myself. Unfortunately there isn’t a “one size fits all” plan for financial planning, and very few people have an understanding of the many factors that erode wealth eroding factors. That’s why most soldiers will never be able to enjoy the retirement they deserve.
I don’t intend to provide basic solutions that we all know are true. Yes, saving 15% of your income and contributing to a retirement plan are basics to financial well-being so by all means, start saving! What I hope to encourage is contributing to ways to reduce your present and future tax liability.
Taxes eat away at your rate of return so if you’re not investing in a Roth IRA, consider switching to one. Consider reducing your long term tax liability by purchasing a permanent life insurance policy. The misconception about life insurance is that it’s a waste of money. The truth about TERM policies is that you really only get money out of them if you die, which means you can’t enjoy that money anyways, and only 2-3% of them ever payout. Permanent life insurance, on the other hand, will “cost” more on a monthly basis but the cash value that grows inside of the policy grows tax free, can be withdrawn tax free upon retirement, or can be used for emergency situations without the harsh penalty you would encounter with a more typical retirement account.
Another way to lower your tax burden is by contributing to charity. You don’t have to be religious to contribute to charity and if you look at some of the wealthiest people on the planet, they all have this in common. Do you think they all truly care about helping others or making a name for themselves? Some of them might, but most wealthy people contribute to charity because they understand that they will receive a tax deduction when they file their taxes.
Finally, consider buying collectibles such as guns, knives, books, cars, sports memorabilia, war memorabilia, and anything else that has collectible, long-term value. Be smart with these kinds of purchases, and don’t be afraid to purchase for both long- and short-term gain.
Wrapping up, I hope you understand that winning the money game is your choice and your choice alone. Being in control of your life, especially in consideration of your finances, is a good thing. However, be smart about it. Everyone in this world is clawing to get as much of your money that they can, and being aware of your options can help you keep a bit more. When you get back from deployment, think twice about going on a $10k shopping spree, think twice about buying that brand new car that will depreciate thousands of dollars as soon as you drive it off the lot, or any other risky financial moves. If you need help financially, ask for help. That’s what battle buddies are for – hooah.
Finance
Financial Advisor
Retirement
Money
Command Post
Posted 9 y ago
Responses: 4
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1LT (Join to see) great post. I would like to see personal financial planning added to high school graduation requirements. The fact that over 60% of Americans cannot pay for an unforeseen $500 emergency (car mx, roof leak, whatever) indicates we don't have a strong grasp of "living beneath ones means", or "spend less than you make...a lot less". The lessons learned by our grandparents during the Great Depression are being lost, and the psychological sophistication and omnipresence of advertisement is at an all-time high.
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Great write up. However, I wouldn't discount term life insurance policies. Term life insurance, as you said, does really only pay out if you die. If you don't get paid any money by term life insurance it is a good thing because it means you are alive. Term life insurance can be great for young families. It is generally cheaper than whole life so young families can afford it earlier on in their lives. The earlier they purchase the term insurance increases the likelihood that they'll be healthy and receive a better rating when they have to do their physical.
The best, and main reason I am posting this, is that term life insurance can be converted to whole life insurance before it expires. This is great for two reasons:
1) As the policy holder gets older they can convert their term (which was cheaper) to whole life and keep it until they are deceased.
2) If they purchase the more affordable term life insurance when they are younger they do not have to retake their physical when they convert it to whole life.
As you said there is no one size fits all for finances and it also applies to insurance.
The best, and main reason I am posting this, is that term life insurance can be converted to whole life insurance before it expires. This is great for two reasons:
1) As the policy holder gets older they can convert their term (which was cheaper) to whole life and keep it until they are deceased.
2) If they purchase the more affordable term life insurance when they are younger they do not have to retake their physical when they convert it to whole life.
As you said there is no one size fits all for finances and it also applies to insurance.
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