Veterans and seniors in the United States might be done with their careers but many are far from done in terms of financial freedom. Fortunately, whether you want to take a more passive or active role in saving and investing, there are several options always open to you. A lot of the options we lay out here are more suited for service disabled veterans, but most seniors can benefit from them as well.
Here are our general tips for securing your financial future as a veteran or senior. In the first part, we focus on saving while in the second part we focus on investing.
One of the best ways to do this is to arm yourself with a college degree, to guarantee more options for you when you pivot to a new career path after retirement or leaving the service.
As service disabled veteran, always try to take advantage of all the benefits our country provides to you as a way of thanking you for your service. The GI bill states that all veterans are eligible for 36 months of full cost in-state tuition. This amount is capped for service-disabled veterans who choose to enroll in private colleges.
If you already have a college degree or feel that someone else can benefit more from free tuition, remember that education benefits are transferrable to family members. Note that if you plan on taking up this offer, you will generally be asked to serve an additional four years. It is best to ask for this benefit as soon as you can during your military career.
Your state of residence plays a large role in how much you pay in taxes. Use this to your benefit.
One benefit of active-duty military personnel is the ability to maintain legal residence in one state despite having transferred to a different state.
With this benefit, your state of residence can pay dividends for you, especially if you live in a state with minimal or no income tax (tax-free state) and transfer to a state with a massive state income tax. By being aware of the state taxes you are require to pay, you can keep an eye out for potential opportunities to lower it.
In cases where debt is unavoidable, always remember that the military offers an array of tools to help service members evade insurmountable debt. Military service members have been observed to spend at much higher rates than civilians. According to a study conducted by the Financial Industry Regulatory Authority, service members also have more credit cards than civilians.
When you combine credit cards with high spending behaviors, debt is never far behind. A survey conducted by Debt.org found that military families have an average debt of $13,700 – the bulk of which was credit card debt.
To their credit, the military has placed a number of safeguards to prevent military families from being drowned in debt.
The Service Member’s Civil Relief Act enacts a hard cap on the interest rates of loans service members took before they entered active service.
In contrast to civilians, military personnel are also provided the benefit of reneging on a house or apartment rental agreement, provided that they are assigned to a new base for a time period of 90 days and above.
When you do decide to purchase your own home, always try to take advantage of the Veteran’s Administration (VA) home-loan program. Not only are the loan rates offered by the VA competitive, but they also guarantee up to 25% of the loan’s payment. What this means for you is that you can get a house without any down payments or private mortgage insurance.
One of the first things you must do after you are discharged from the military is to find your next career. Many military service members learn trades or skills during their duty. They also learn how to take instructions well, and criticisms in stride. They are honest, forthright with others, and have excellent stamina.
These qualities make hiring service-disabled veterans an attractive proposition for most employers. However, some of the attributes they learn in the military can make it difficult for them to transition in some aspects of civilian society.
For instance, employers often laud veteran employees for their hard work and determination, but worry that their intensity can intimidate their co-workers or, in a retail-oriented industry, intimidate customers.
Fortunately, there are many careers that fit the military background perfectly. These jobs reward, rather than punish, the intensity many former service members have honed in their military careers. Not only are these jobs suited for the personalities and temperaments of veterans, they also fit the trades and skills taught in the military.
According to Military.com, the top 10 civilian jobs for veterans are:
These jobs were selected because many of their responsibilities mirror the kinds of tasks service members did in their previous career, especially during active duty. Additionally, many of the values needed for these jobs conform to the values espoused by the military, such as efficiency, grace under pressure, leadership, and independent problem-solving.
Once you have transitioned back to civilian life, whether you are a veteran or a senior, you can start looking for investment opportunities as soon as you are financially stable.
Here are some tips to get started on investing:
Most Americans hear a lot about investing and the stock market. They hear about the big success stories on TV, radio, and online, and think about how lucky these men and women are. They think that investing isn’t for them, that they might get taken for all they’re worth by financial sharks raring to feast on new blood.
While we’d be lying if we were to say that unscrupulous financial professionals don’t exist, the reality is much less exciting and more mundane than what we all watch on TV.
Investing isn’t only for those rich enough not to care about where their money goes. The stock market isn’t a temple for financial wizards. Ordinary Americans like you and me might not strike it big and make millions in one fell swoop, but if you do your due diligence and play your cards right, it’s perfectly reasonable to expect a tidy profit at the end of the retirement.
The most important thing to remember about investing is that it’s always best to start early. That means now! You can be 40 years old, 50 years old, and older, with no investment experience. Trust us – it doesn’t matter that you did not invest before. What matters is that you invest as soon as you can.
To see how small differences matter, using the Savings Goal Calculator at Investor.gov will tell you, for instance, that if your goal is to have $500,000 saved up by age 65, you can start investing $209 a month from age 25 to achieve your goal. This figure increases to $441 a month if you begin investing at age 35. It balloons to $3,016 a month if you begin at age 55.
Different people have different goals. A house, a car, a comprehensive medical plan, college—the list goes on. While undoubtedly all important, these things have different values to different people. Unless you are rich enough not to compromise, you will have to prioritize which goals are most pressing to you.
No one can really tell you how to prioritize things. It is up to you to make decisions over issues like whether you should think about a bigger house or focus on getting a college fund going for your children. It is up to you to decide what is important for you. If you’re having a hard time determining what the most important thing for you is, we suggest consulting with family and close friends.
Once you find what is most important to you and your family, you can think of it as your overarching goal. With an overarching goal in place, you’ll now only have to worry about bringing that outcome into reality.
Now that you are clear on what you want to achieve, it is essential to break down the essential components of that goal into smaller, discrete parts that will serve as your “mini-goals”, so to speak. These “mini-goals” may be small, but they will contribute to the achievement of your long term goal.
It is important to break down your long term goal because big goals tend to overwhelm most people. When a person gets overwhelmed, small failures can feel monumental and cause one to give up and quit. You can apply this goal setting process to personal goals, family goals and financial goals.
To evade such discouraging feelings, divide your long term goals into smaller goals that you can achieve in shorter periods of time. That way, you will have no problem keeping yourself motivated by racking up small wins on the way to the big win.
Be prepared to start from zero and learn as much as you can. One tremendous resource for information gathering is the government website Investor.gov. They offer several tools and resources that will be a huge help to your burgeoning investment career.
Some of the noteworthy resources available through Investor.gov are:
There are several other resources on Investor.gov. We suggest that you consult the website for yourself and learn how they can help you on your path to financial freedom.
Once your long term goal is clear and you have gone through the process of breaking it down into smaller, easily achievable goals, go ahead and can carry out your due diligence using the tools provided by Investor.gov. Once done, it is now time to get started on the nitty-gritty of investing.
Our specific tips for investing as a veteran or senior are as follows:
Let us start out by saying no every budding investor needs an investment advisor. However, many common investing pitfalls can be avoided when you have a professional by your side. Unless you are committed to learning investing totally from scratch, it is often cheaper in the long run to get an investment professional to handle the tough work.
Comfort on both sides is a precondition for a successful relationship. You want someone who makes you comfortable, but will not be afraid to tell you the truth at all times. As mentioned before, Investor.gov has a great database you can use to ensure that your investment professional is certified and registered with the government.
Having an investment professional on your team will help you avoid many investment scams, especially those that target veterans and their families. Most of these scams use fake military connections to ingratiate themselves to you, banking on your relative ignorance about financial matters and the fact that you are away from home most of the time.
An easy rule of thumb to sniff such scams out quickly is if it’s good to be true, it likely is. Does the investment promise massive returns in record time? Is the investment extremely time-sensitive? Is the person pushing the investment secretive about the details of the investment? If you answer “yes” to any of these questions, it’s often better to dismiss any offers outright. You can also research the investment opportunity online, or through the tools provided by Investor.gov.
Keep your eyes and ears open for news on frauds and scams. Stay abreast of the latest scams by subscribing to the newsletters released by the Securities and Exchanges Commission (SEC), which publishes investor alerts and bulletins regularly.
These plans often have “free money” your employers throw in when you contribute to the plans. One good example of this is workplace retirement plans such as the Thrift Savings Plan (TSP) and a 401(k).
The chief advantages of these plans are diversified investments, tax advantages, and low fees. Employers generally match contributions you make to such plans, which can be added incentive for you to keep padding your retirement nest egg.
As one of the lowest-cost retirement savings plan, the TSP is a great choice for younger persons who are a bit strapped for cash. The TSP gives you a choice between five index mutual funds, or opt for a target date fund.
In 2016, members were allowed to contribute up to $18,000 to the TSP per year. This figure increased to $53,000 if you are deployed and receiving a tax-free salary.
Deployed service members can also enroll in the military’s Savings Deposit Program (SDP), where they can invest up to $10,000 for every deployment they go through. The duration of the SDP is three months after deployment.
All SDP members receive annual interest of 10%. The figure is compounded every quarter. If you feel that the SDP works for you and your needs, we suggest scheduling an appointment with your benefits coordinator to find out more about this program.
Another potential option to look into, especially if you are receiving tax-free combat-zone pay, is a Roth IRA. The best thing about contributing to your Roth IRA is that it is tax-free. Even withdrawals are exempted from taxes, provided that they are treated as qualified. Navigating a Roth IRA can be a complex business due to the possibility of future changes to tax laws that could shift their benefits. A good financial advisor can help you protect your investments and help you secure your financial future no matter that the future brings.
If you prefer to take a more active role in investing, one good way to do it is to look into real estate. Colloquially known as “house flipping”, real estate investing is when you purchase a property and fix it up, with the intention of selling it at a later date for profit.
According to Andy and Ashley Williams, hosts of the HGTV show “Flip or Flop Fort Worth”, their background as service members has made their second career as house flippers a seamless transition.
Unlike other jobs, the house flipping rewards intensity, directness, initiative, and ability to think clearly even under duress all of which are values military service inculcates in all members.
Service disabled veterans looking into real estate investing should keep these three tips in mind.
There are organizations like Association for Service Disabled Veterans with the goal of creating opportunities for SDVs to achieve and maintain their rehabilitation through enterprise development and managed employment, or individuals who help veterans. Andy Williams often helps out his fellow veterans when they reach out to him for advice or guidance on how to enter the real estate business. Williams believes that teaching other veterans what he knows about house flipping can serve as motivation for other veterans to join the industry. While Williams cannot mentor everyone who asks for his help, he said that he teaches his mentees to help other veterans looking for a second career.
There are quite a few veterans out there who have learnt the art of house flipping and are happy to help out seniors and veterans. There are a number of different ways for you to find reliable and trustworthy individuals and firms who will teach you the ropes.
One great place to scout is Meetup.com, where you can seek out fellow veterans who share your interest in investing. The website has a category called “VA Loan Groups”, where you can find meetings all over the country, such as the NYC/NJ Veterans in Real Estate Investing, or the Military Real Estate Investing Network in Ohio.
As mentioned before, veterans can avail of loans from the VA that allow them to buy houses with capped interest rates and no down payments. Taking advantage of this benefit can be a goldmine for veterans looking to flip houses.
VA offers generous loan terms, but the requirements can get a bit confusing if it is your first time navigating the VA’s financing arm. While a short article like this can never cover all of the terms, two important points to remember about VA loans are:
1) VA loans can only be used to purchase primary residences. What this means is that, if you use a VA loan to acquire a property with the intent of selling it off in the future, you must use the property as a primary residence during the renovation period. Once renovations are finished, you can then flip the property for profit, or retain it as a rental property.
2) VA loans cannot be provided for dilapidated properties. If you want to avail of a VA loan, your target property must not need a full overhaul to be inhabitable. Properties classified as inhabitable can be purchased with a VA loan—your job as a house flipper will be to improve the value of the property through renovations, then flipping it once they are finished.
Realtors who have a Military Relocation Professional (MRP) certificate are trained specifically on how to work with veterans. MRP realtors have an inside track on the complex loan processes of the VA, as well as knowledge about the regulations governing the loans.
MRP realtors will serve you well, especially when you are just getting started out in your house flipping career.
Of course, the tips we mention in this article are just a small part of the many different possibilities out there for veterans and seniors looking to invest for retirement. Doing your own research is essential, especially if you want to strike it big. We hope that this article provides you a boost in your ongoing journey to financial success and freedom!