Civilian Retirement: Time to Start Planning

Planning for the future can be beneficial, so we compiled some tips and advice from several military veteran financial experts on how to help you plan your long-term investments.

Don’t Count on SGLI

Servicemember’s Group Life Insurance (SGLI) is only available to those in the active military. While the fixed rate (no matter your age or health) is one of the most comprehensive plans available, you, unfortunately, can’t take it with you when you leave the service.
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Founder of the financial news site “The Military Wallet,” and Air Force veteran Ryan Guina, says that it’s a good idea to lock up an inexpensive term life insurance policy at a young age, when the policy is relatively inexpensive.

Remember, there will be no coverage gap if you start paying into a newer policy that also covers military just before you leave the service.

Purchasing a Home: Yes or No?

Of course, the military provides a housing allowance, but knowing if that’s the direction you want to go in could be difficult. Not using your housing allowance to buy a home might even feel wasteful. But owning a house comes with many unique risks.

Buying might be the smart play if you can either hold on to it until the market is favorable, or if you can manage it remotely, but an honest assessment of your own finances may be in order first.

Start Saving Now

Retirement plans aren’t worth much in the private sector, so it helps to start investing cash into retirement when you’re younger, have a regular paycheck, and have good options while you’re in the military.

Retirement Options to Consider:

  • Thrift Savings Plan: “The TSP offers incredibly low-cost index funds that track several major stock indexes,” according to Guina.
  • Individual Retirement Arrangement: Of this, the most common retirement fund for civilians, Guina says that there is more control over how you invest the funds. However, he recommends sticking with the TSP until you have a good handle on investing, and can manage an IRA on your own.”
  • Taxable investment accounts: Guina says that investing for retirement is great, but you might not want to put all of your investments in a retirement account that allows access to the funds without penalty.

Other Options

It’s a smart move to consider an employer sponsored retirement plan, like a 401K, or 403B, even if you’ve already left the serivce says Curtis Sheldon, former air force pilot and head financial planner of C.L. Sheldon & Company.

According to Sheldon, 10% of your monthly earnings should be put into retirement, with the employer hopefully matching some of those funds as well.

Passive Investment

Sheldon says that itt’s really really hard to try to beat the market and that you’re much better off just investing for the long term. He also believes that there’s nothing wrong with being just a passive investor.

Regardless: Invest, Invest, Invest

Sheldon says that the biggest single predictor of your success is getting started, and getting started now. “It’s critical to start now no matter when ‘now’ is for you,” Sheldon implores.

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