Is your financial security on your mind? Even if it is 17 years away or 5 years away – something that everyone veteran or civilian alike, thinks about is how they are going to survive living in retirement. You’ve survived the military and you CAN DO THIS!
So, how can you set you and your family up for success?
If you are a veteran, or a milspouse, investing your military pension and your VA disability may be your best bet!
It may be easier than you think. Let’s start with how much your military pension and VA disability is, some financial basics then on to 5 ways to build your wealth!
And remember – getting started sooner than later will give you more time to grow your money!
How Much Is a Military Pension?
The total monthly payment forecast for their military pension in 2021 is approximately $2,275 per month, according to Statista.com.
How Much Is VA Disability Pay
Depending on your disability rating, whether you have dependents or are married, your 2021 rates range from $144.14/mo to upwards of $3,545.32.
You can determine your rates here, on the VA.gov website.
You may be thinking now what? Or oh sh*t – how can you take this and live off of it?
By investing, of course! We’ll talk about the basics in how to build up your retirement by investing your military pension and or VA disability.
Do you know how to invest in retirement? Let’s keep going.
How Much Retirement Savings Do You Need?
Ask yourself this question. Do you know exactly what you need for the rest of your life?
If not, the Ballpark Estimate calculator created by the Employee Benefit Research Institute, can help.
It’s easy to use and gives you a quick estimate of how much you’ll need to save for those retirement years. Find the calculator and other tips for retirees at www.choosetosave.org.
Hot tip! Something to also consider is WHERE YOU LIVE! You can check out our list of the best 10 veteran-friendly states for retirement to live here.
You need A LOT LESS to live a month in Tennessee than you do in the heart of Seattle.
Plus, Tennessee is B.E.A.utiful! Have you googled the scenic pictures? It is enough to take your mind off of the looming task of saving for military retirement. Make one of those mountains of majesty your screensaver, and let’s get back to it.
How Do I Find the Best Investments for Retirement?
Ask yourself these three questions:
- When will you need this money?
- What are your goals?
- What is your risk tolerance?
Basic types of investment products include real estate, commodities, stocks, bonds and mutual funds.
But, buyer beware!
Successful investors know to NEVER invest in something if you don’t understand HOW it will help you make money.
Also, beware of offers that claim any affiliation with the government, the T.S.P. or government retirement plans. Call the U.S. Securities and Exchange Commission toll-free investor assistance line at 1 (800) 732-0330 to check the seller’s registration.
Know that all investments involve taking a risk.
Are you considering working with an investment pro? Be sure they are licensed and registered.
Don’t risk your hard-earned money with someone who isn’t qualified! Check out your potential investment professional’s credentials at Investor.gov.
Many people like investing independently, but it’s safer to work with a financial advisor who has a certified financial planning designation for retirement savings. Check references. You want an advisor who is attentive and creates personalized plans to help with your retirement investments.
5 Ways to Build Wealth With Military Pension & VA Disability
1. Real Estate
Did you know that veterans can invest in a multi-plex property using VA home loan benefits as long as one unit is their primary residence?
Renters in the other units will pay at least part of your mortgage! Not all lenders will factor projected rental income into your loan qualification, though. Make sure to research your lender and see if they can help you do what you’re looking for. One of our favorite lenders is Churchill Mortgage.
At Churchill Mortgage, they do things differently than your average mortgage company. Churchill understands everyone’s goals (both financially and in life) are different, which means your home loan needs will be different too. Their goal is to make sure you are set up for financial success and help give you the smartest path for homeownership, regardless of your starting point.
Put simply: Churchill is a lender with a different mission: Doing what’s right for you.
Suggested Read: How to Increase Your Credit Score to Buy a House
Another great resource is our sister site AHRN! They have an expansive Automated Housing Referral Network, which is the preferred and trusted housing referral resource for the military community around the world. It is designed to assist the military community in locating available housing to help with your real estate needs.
AHRN.com provides the military community with convenient access to accurate information on available housing from anywhere in the world 24/7/365.
AHRN.com is a direct marketing resource for landlords and property managers to promote available rental units to the military community worldwide!
- 5 Reasons Why You Should Be Renting To Military Members
- 7 Steps to Writing a Home or Rental Property Listing
2. Commodities (Gold, Silver, Etc.)
There are many investments you can choose from. However, many experts recommend holding between 5% and 10% of assets in things other than stocks or bonds.
Considering adding the security of precious metals to your investment strategy? Here are a few key points from Forbes 5 Questions to Ask Yourself Before Buying Precious Metals.
- The best gold and silver coins for investors in North America are the American Eagle, the American Buffalo and the Canadian Maple Leaf. They are easily recognizable, easy to trade and often sell at higher premiums than a bar.
- It is best to buy precious metals through an online dealer that offers a buy-and-store program with non-bank London Bullion Market Association-approved vaults.
- Investors should avoid taking physical delivery. It is safer and easier to sell metals stored in a secure vault because you don’t break the chain of custody.
Here is a fun little history fact – did you know the simple two-sentence Buttonwood agreement, signed by 24 traders under a buttonwood tree in 1792, was the start of what would become Wall Street and the New York Stock Exchange?
Agreeing to trade only with each other, the traders created a network of trusted brokers who honored payments and offered legitimate investment opportunities. The deal made it easier for investors to spot con artists, and with building up investor trust, so began the modern trading system.
The stock market allows companies to raise money through stock shares and corporate bonds. It also lets everyday investors (you) participate in the financial achievements of the companies, make profits through capital gains, and earn money through dividends, although losses are also possible.
Investors lend money to a government or company in exchange for an annual payment based on a predetermined interest rate. At the end of that bond’s term — usually between one and 30 years — you get back your original investment.
5. Mutual Funds
A mutual fund is a company that combines money from investors for stocks, bonds and other financial products. As a result, investors own a small portion of many investments. Fees apply to different accounts, so be sure to watch your funds for high costs impacting your money.
Investors can educate themselves with Mutual Funds and ETFs – A Guide for Investors from the S.E.C.
And the Financial Industry Regulatory Authority’s Fund Analyzer allows investors to compare more than 18,000 mutual funds and exchange-traded products. And FINRA’s BrokerCheck Help Line, 1 (800) 289-9999, is a free way to look into financial brokers, advisers and firms.
Protecting Your Money
Sadly, military ties can contribute to financial fraud — even by fellow veterans you served beside. Always make sure a professional is licensed and the product registered. This is a lesson that James Gonedes and other veterans learned the hard way. Watch the video to see how you can avoid affinity fraud.
Protect your investments by watching for these red flags from Investor.gov:
- Unlicensed investment professionals
- Aggressive sellers who provide exaggerated or false credentials
- Offers that sound “too good to be true”
- “Risk-free” investment opportunities
- Promises of great wealth and guaranteed returns
- “Everyone is buying it” pitches
- Pressure to invest right now
- Over-the-top, sensational pitches with fake testimonials
- Unsolicited pitches seeking to obtain your personal information
- Asked to pay for investments by credit card, gift card or wiring money abroad or to a personal
NOT SO FUN FACT – Investment fraud costs Americans $50 billion per year. Research funded by the FINRA Investor Education Foundation showed that more than eight in 10 people receive a solicitation for a potentially fraudulent offer.
The last place you want your savings to end up is in the hands of a fraudster. Understanding how investment scams work is an essential step in avoiding fraud and protecting your hard-earned money.
Play the Game, Learn the Tactics
Do you know all the clever persuasion tactics con artists use to defraud consumers? Then, sharpen your skills in the fictional town of Shady Acres in this interactive strategy game from the FINRA Foundation and the D2D Fund.
The Registration Deficient List names foreign entities that appear to be acting in a capacity that requires registration with the CFTC but are NOT registered.
It is best to be cautious of unregistered firms or individuals, especially when participating in products or markets that see many fraud complaints, such as commodity pools and precious metals.
How to invest your military pension and VA disability is a personal decision. There is no guarantee that you will make money from your investments. But if you educate yourself about investing and create a plan, you should see contributions to your financial security resulting from intelligent money management.
Diversification is an excellent way to protect yourself. Adding investments to your portfolio also means additional fees and expenses. Consider how they will affect your investment returns to find the best way to diversify.
If you feel overwhelmed, re-evaluate your risk tolerance. For example, you may be more comfortable in a more conservative portfolio where a market decline won’t impact your mental health.
Investor.gov—the S.E.C.’s website designed for individual investors—includes a section with resources specifically for military personnel at Investor.gov/military.
Is your brain on overdrive after all of this information? Enjoy one of our trending articles Sylvester Stallone vs Arnold Schwarzenegger: Who Was Best? as you decompress.