When it comes to planning for their financial future, many veteran families don’t understand the true value of their service. This is reflected not only in the way that veterans approach the standard post-military-job-hunt, but also in their acceptance of the status quo military financial planning “benefits” when they retire. There are two issues that many military and veteran families don’t understand:
RMC is the combined amount of your military pay, which includes your basic pay, average basic allowance for housing, basic allowance for subsistence, and the tax advantages you enjoy by not having to pay taxes on these allowances. All military personnel have a RMC based on their pay grade, years of service, and family size. You watch a video on how to calculate your own RMC here.
The big takeaway here is that you are making more money than you probably think you are. If it is your intention to look for a salaried job post-military, and you are thinking in terms of matching your basic pay, then you are not asking for enough money. You are setting yourself up for a significant pay cut in civilian life. Just look at how much is allocated tax-free for housing allowances. Shockingly, these benefits are often forgotten about by Veterans when searching for a new career.
The Survivor Benefit Plan doesn’t reflect the true value of service.
Military spouses are required to make a major financial decision around the time their spouse retires: whether or not to accept the Survivor Benefit Plan (SBP). The SBP is a form of life insurance that is designed to provide a basic level of support in the event a retired veteran predeceases their spouse. It is offered without qualification to all retiring veterans. Rather than paying out a lump sum to the beneficiary like most life insurance policies, it pays a portion of the deceased veteran’s retirement pay each month, for the remainder of the surviving spouse’s life. I say that this is a major financial decision because once you accept the SBP, you are locked into the program for life, and this “benefit” isn’t free. Here are a few quick facts about the SBP:
Essentially, when the veteran dies, the value of his or her pension (and military service) is halved.
Service Members Group Life Insurance (SGLI) is the government-sponsored life insurance provided during active duty military service. SGLI coverage ends with active duty. VGLI, which is administered by the Veterans Administration, is offered to veterans as a replacement for SGLI. There is no qualification required if coverage is accepted within 240 days of service, which makes it a good option for the service member with a life-threatening disability who is thus unable to qualify for privatized life insurance. But for most retiring service members, VGLI has some definite disadvantages.
In order to show how these status quo financial planning options are undervaluing your military service, let’s look at a scenario:
A 40-year-old retiring male E7 with 20 years of service has an active duty RMC of $104,000 a year (see table column A.) He will receive an annual pension of roughly $30,000 (See table column B). If his spouse elects the SBP, if he predeceases her, she would receive 55% of the pension, $16,500 a year (E) or about $1,375 per month until she, also, passes.
So what is the true value of the E7’s pension, and will the veteran and the spouse receive that true value in this scenario?
To answer that question, we need to do a little math.
Let’s assume that the E7 lives for 30 years beyond his military retirement, to the age of 70. That $30,000-a-year pension (B) paid out annually over 30 years, including adjustments (2.5%) for inflation over the next 30 years, amounts to a total of $778,000 (D). This is the amount of money that the E7 would need to have RIGHT NOW, invested in an account that’s earning at least 4% interest, in order to generate a $30,000 a year annuity. In the event that the E7 dies, his spouse will only receive 55% of that pension, or $16,500 a year (E). If the spouse receives SBP payments over a 30-year period, the value of those payments, again adjusted for inflation, is $531,000 (F), significantly less than the true value of the pension (and the E7’s service) over that 30-year period.
Is there a scenario in which the surviving spouse could realize the full value of the E7’s pension through SBP payouts? Sure. The spouse would have to receive an SBP payment of $1,375/month for over 58 years in order to realize $778,000, a situation which is highly unlikely. To add insult to injury, that 6.5% SBP premium payment is deducted pre-tax, so the spouse’s SBP payouts are taxable, reducing, even more, the amount the surviving spouse can expect to receive, and increasing even further into the realm of improbability that she will ever see anywhere near the true value of the E7’s pension via the SBP.
The E7 whose spouse accepts the SBP is paying $1,950 a year for that protection (6.5% of the $30,000 a year pension). He is used to paying $300 a year for SGLI. However, VGLI, which replaces SGLI upon retirement, is significantly more expensive than SGLI, because the amount of government subsidy significantly decreases. ) In year one, the cost of VGLI is $800 a year (vs. $300 a year being paid for SGLI). Now the retired E7 who was used to paying $300 a year for insurance to protect his family is paying $2,700 a year ($1,900 for the SBP + $800 for VGLI), an increase of nine times. And every five years, the costs will go up, since the cost of VGLI goes up on a set scale every 5 years for everybody, regardless of health. Over a 30-year period, during which the E7 is statistically unlikely to die, he will have contributed over $180,000 into the SBP and VGLI.
If the spouse predeceases the veteran, the family will see much less return on this investment. If the veteran predeceases the spouse, and both SBP and VGLI are paid out, the spouse will receive a maximum of $400,000 in a death benefit (if they elected the maximum coverage), an amount which will keep the spouse going at their $104,000 a year lifestyle for only four years. The surviving spouse is being set up to struggle over the long term, with no opportunity for the E7 and his spouse to leave a legacy for the next generation.
For the sake of the scenario, let’s assume that the E7 dies around 30 years after retirement at the age of 70 with the VGLI still in force, and the spouse, who is the same age, lives for another 18 years. The best case scenario here, with regards to return on investment (ROI), is that a) the E7 dies, and b) the surviving spouse receives $400,000 from the VGLI death benefit, and $297,000 in TAXABLE SBP payouts ($1,375 a month for 18 years), for a gross ROI of $697,000 – hundreds of thousands of dollars less than the true value of the E7’s pension ($967,000), even before accounting for having to pay taxes on the SBP payouts. But wait, let’s not forget to subtract the $180,000 the E7 and his spouse paid for this coverage, bringing their net ROI down to $517,000, approximately half of what the E7’s pension was worth adjusted for inflation over 30 years, AND there is no legacy for any children when the E7’s spouse passes away.
There are other options that will truly value your military service.
Here at US VetWealth, we have designed an alternative to the status quo military financial planning options.. Our solution offers equity growth (as interest is credited based on the S&P 500 performance, not the federal bond rate) and a lot more liquidity that the retiree can access while still alive. It offers a safeguard against negative market returns, and allows its owner to both comfortably fund their retirement and do what the SBP can’t possibly do, allow you to leave a legacy behind you when you die. We call it your Survivor Liberty Plan.
This completely new approach to privatizing the SBP or pension protection has become available in recent years; however, few financial experts and professionals are aware of this solution and the game-changing benefits it brings to solving the SBP problem. Modern life insurance can provide the death benefit protection of a term policy like the VGLI while also producing an annuity stream much like the SBP; to be more accurate, it can provide an annuity stream much like the pension, because the payouts are higher, and you can use it while the veteran is still alive! Further, after 30 years, the costs are significantly lower than an SBP, and the ROI is significantly higher than on VGLI, a term insurance or whole life policy. It also costs less than the fees involved in typical Thrift Savings Plan (TSP), 401k, mutual funds, or other retirement plans that come along with money managers all taking a cut of the investment, regardless of the plan’s performance.
If this interests you, then click here to learn more about the Survivor Liberty Plan.
In the 1980s, some financial firms catering to the military and veteran community recognized that Permanent Whole Life insurance could be a way to privatize the protection of a military pension. Unlike term life insurance, which has no cash value and only pays a benefit if the insured dies, permanent whole life insurance—with its cash value, ability to grow the principal, and tax protection—offered a permanent solution to estate planning. In fact, whole life insurance has long been a way for wealthy individuals to protect and grow their assets.
During the stock market boom of the 1990s, these firms took advantage of the investing mania that had gripped the country and started getting more clients to come in and set up retirement plans. Whole life insurance was an easy upsell to these clients as a way for them to both provide a death benefit for their families and leave a permanent legacy. At some point in retirement, the policy would be paid in full, and the insured wouldn't actually have to pay for the insurance anymore. They would also be able to purchase what are called “paid-up additions” every few years that would allow them to add more value to the policy without having to requalify for coverage. The reasoning was that taking this approach during a military career would leave you with the perfect amount of insurance to cover your pension, so there would be no need to take the government standard Survivor Benefit Plan (SBP).
Whole life insurance does offer both equity and permanent coverage, and when properly funded, properly used, and properly understood, the whole life insurance strategy can work. However, this approach has some major flaws and is very confusing—even for the agents who are selling it. They don't understand and don’t properly explain the distinct value proposition of these policies, nor do they understand the unique situation of military/veterans. They just do what they’re told to do by their firms and sell it. Consequently, a lot of veterans who purchase whole life insurance don’t really understand what they are purchasing. They believe it is just another form of life insurance, but comparing a term policy to any type of permanent policy, especially a whole life insurance policy, is comparing apples to oranges. It sometimes happens that the veteran learns later that they could arrange a death benefit much more cheaply with a term policy, and since they are paying a lot for the whole life policy without fully understanding what they are paying for, they abandon their whole life policy for the term in order to pay less in premiums, losing whatever equity they had in the policy in the process.
There is a lot of misunderstanding and misinformation around whole life insurance. But the biggest problem with whole life insurance today is that it hasn't changed in many, many years. Agents today are selling the same whole life insurance products they were selling in the eighties. Most of the policies that were sold to veterans don't reward you for good health beyond simply being a non-smoker, which makes them no different, at the end of the day, than Servicemembers’ Group Life Insurance (SGLI) and Veterans Group Life Insurance (VGLI).
Another feature of these whole life insurance policies is that you pay most of the cost up front, similar to the way that interest is front-loaded in your mortgage, so that you are paying off your interest before you ever really start making a significant dent in your principal, which is how you build equity in a house. It’s true that the equity in a whole life insurance policy can be accessed tax-free later in life; but this is usually by way of a loan provision stipulating that you have to pay the company that’s administering your policy in order to access your money, just like you would get a loan from a bank.
Finally, a traditional whole life insurance policy doesn’t offer a great deal in terms of equity. The return on investment (ROI) is severely limited by market interest rates. These policies only see growth comparable to a bank Certificate of Deposit (CD), which is not a smart way to leverage compound interest over 30+ years.
If you are a veteran who has already purchased a whole life insurance policy, we have good news for you. You can leverage something called a 1035 exchange to move the cash value from your policy into a more modern, permanent policy with definite advantages over whole life, all tax free and with no penalty.
At US VetWeath, we’ve been working on how to privatize the protection of a military pension to help retirees avoid the potential sunken costs and low ROI of the SBP/VGLI status quo for over ten years. Our team members do not have quotas to fill, and we offer these financial vehicles to our clients at substantially less cost than they would pay in “invest the rest” investment fees or for other whole life policies.
Our alternative to the SBP and VGLI problem gives you both a lot more equity growth (as interest is credited based on the S&P 500 performance, not the federal bond rate) and a lot more liquidity that you can access while you're still alive. It offers a safeguard against negative market returns and allows you to both comfortably fund your retirement and still be able to leave a legacy behind you when you die. We call it your Survivor Liberty Plan.
This completely new approach to privatizing the SBP or pension protection has become available in recent years; however, the majority of financial experts and professionals are still very unaware of this solution and the game-changing benefits it brings to solving the military pension problem. Modern life insurance can provide the death benefit protection of a term policy while also producing an annuity stream much like the SBP; to be more accurate, it can provide an annuity stream much like the pension, because you can use it while the veteran is still alive! It also costs less than the fees involved in typical 401k, mutual funds, or other retirement plans that come along with money managers all taking a cut of the investment, regardless of the plan’s performance.
Further, after 30 years, the costs of the Survivor Liberty Plan are significantly lower than an SBP, and the ROI is significantly higher than on a term insurance or whole life policy. In the best case scenario, whole life plans usually grow between two and four percent compounded annually, and the death benefits are typically significantly higher than they need to be because they are sold as an alternative to term instead of as a compliment, to the benefit of the agent (not the client), who gets paid much more for selling whole life. As a result, the cost to insure is also very high, and it takes about 10 to 15 years of regular contributions for an insured person to fully cover the cost of their insurance before they break even and there is any equity that can be accessed. Moving these funds into a Survivor Liberty Plan using the 1035 provision allows those returns to take effect much earlier. This basically amounts to taking money that you've already put to work for you and giving it a raise.
A 1035 exchange is a provision in the tax code which allows you, as a policyholder, to transfer funds from a life insurance, endowment or annuity to a new policy without having to pay taxes. When working with clients who already have an old-fashioned whole life insurance policy, we take a three-pronged approach.
First, we set up the bulk of the death benefit as a convertible term insurance policy with the opportunity to convert growing amounts of that money into investment-grade permanent placement insurance as more funds became available. Setting up the bulk of the death benefit in a term policy allows you to have a larger death benefit while keeping your costs low.
We then do a 1035 exchange to move equity from your old-fashioned whole life policy into the modern insurance policy with a relatively low death benefit, which we can comfortably do because the bulk of the death benefit is being covered by the convertible term plan. We do this because the smaller the death benefit initially, the lower the cost to fund the plan. In this way, we can take the type of product that would normally take 10 to 15 years just to break even and bring that timeline down to three to five years, if not immediately.
Finally, you start contributing funds to the new modern insurance policy at a rate that is comfortable for you. Unlike the older whole life insurance policies that offer growth rates comparable to CDs, with the new policy you are able to both capture and lock in the growth offered by the securities market without the value of your policy being negatively affected by market corrections. The worst case scenario market rate of return in any circumstances is zero, meaning you get to keep all of your market gains, but you don’t experience market losses; during any downturns you simply experience zero growth on your intact principal. It takes a lot less time for the cash value of the modern whole life policy to grow at a pace that outstrips inflation and quickly starts keeping pace with things like the S&P 500. The money you are using to fund the plan not only keeps pace with inflation, it grows in value over time because it is invested.
Furthermore, as the modern insurance policy matures, the death benefit increases, since there are IRS rules that require a certain amount of death benefit depending on how much the plan is funded. If you put too much in, it becomes a modified endowment contract and becomes a taxable event. To prevent this, we pace your contributions such that you will be able to maintain a certain amount of death benefit on top of what the cash value of the policy is or grows to be.
Converting your old whole life insurance policy into private placement investment grade life insurance will require you to fill out an application and go through the underwriting process to ensure that you qualify. Going through the qualification process DOES NOT commit you to buy the policy. Finding out that you are qualified DOES NOT commit you to buy the policy either. The sooner you apply—today, while you are young and/or in good health—the better. Once you know for certain that you qualify and that the Survivor Liberty Plan is something you want to consider, then you can take as much time as you need to reflect and discuss your options with us and your family before making a commitment. Reach out to US VetWealth to see if you qualify today. Or, if you still want to learn more before contacting us, read our blog post on How to Avoid the Pitfalls of SBP and VGLI at Military Retirement.
The last twelve to eighteen months before military retirement is characterized by a firehose of retirement briefings. For most, this is a time of information overload, uncertainty, and possibly fear. And it is during this time that Uncle Sam requires a retiree to make a financial decision that can impact a military family for generations. The decision is whether or not to accept the Survivor Benefit Plan (SBP) and Veterans Group Life Insurance (VGLI).
Created in 1972, the Survivor Benefit Plan (SBP) is a form of life insurance that operates as an annuity. Instead of paying out a lump sum to the beneficiary like most life insurance policies, it pays out a portion (55%) of the member’s retirement pay each month until the survivor either passes away or is no longer eligible to receive the payments. It was designed to provide a basic level of support in the event a retired veteran predeceases their spouse. The SBP costs the same for everyone—6.5% of their pension, deducted automatically from their pension check—and is payable only upon the death of the insured veteran.
VGLI is administered by the Veterans Administration. It is presented to the veteran as a replacement for Servicemembers’ Group Life Insurance (SGLI), which is the government-sponsored life insurance provided during active duty service. VGLI is presented as a benefit because there's no qualification required if coverage is accepted within 240 days of service. This is a good option for the service member with a life-threatening disability who is thus unable to qualify for privatized life insurance. But many of our veterans without life-threatening disabilities who are paying into this program are not fully aware of the severe structured cost increases that occur as they get older. The price of VGLI goes up every five years, and it's a fixed cost for everybody. It's easy to calculate exactly how much someone will be paying into this by referring to the cost table provided by the government.
Retirees and their spouses are often shocked to discover the costs involved in both survivor benefit protection and replacing SGLI with VGLI. Spouses are often shocked to learn how little they’ll receive in survivorship payments if the worst actually does occur.
SBP, SGLI, and VGLI are all presented as benefits, even though the service member and veteran are paying for them. Government insurance packages are still insurance, and these policies are managed by a for-profit company by people who don’t work for free. The only aspect of these plans that are given to the service member or veteran is the guarantee of coverage without qualification.
Many retirees and their spouses think that SBP is the only option available to give the surviving spouse some financial protection if the retiree dies. Little to no guidance is offered regarding alternative, privatized options on the free market. Because it is presented as part of the government retirement program, many retirees who are well used to following orders without question feel compelled to enroll in SBP and VGLI, committing themselves to the program for the rest of their lives.
In fact, 80% of career service members do this. This means millions of dollars of taxpayer-funded benefits are being redirected right back to the government each year to fund existing SBP payments or to pay a third-party contracted insurer (Prudential). Similar to social security, the continuity of the program depends upon each succeeding generation paying into it, so the government does its best to entice its employees to enroll rather than encouraging military families to ensure they are doing what is in their best interest. Of course, there are plenty of circumstances in which the SBP/VGLI combo ARE in a military family’s best interest. But if the status quo path leading from military service, to 9-to-5 grind, to retirement doesn’t inspire you, then we’re glad you found this page, because here at US VetWealth, we’ve got a better option for you.
SBP is offered without qualification to every retiree, regardless of their age, health, disabilities, physical condition, life expectancy, or any other factors. Both of these things make SBP sound like a good deal; the problem is that those are the only arguments made. The SBP does have some drawbacks:
A retiree gets one chance to make the decision whether or not to take the SBP. The decision must be made at retirement, or within a year of a change in life circumstances, like remarriage or parenthood. If the veteran has a spouse at retirement, then there is no choice. The spouse and children are automatically enrolled at full coverage (6.5% of the pension) unless the spouse elects a lower amount or declines coverage. The decision as to whether or not to take the SBP rests SOLELY with the spouse, who must opt out with a notarized signature.
There is no requirement to qualify during the underwriting process. This may seem like an advantage, but a plan that doesn’t have qualification requirements isn’t an advantage for someone in excellent health, who could qualify for a much lower premium rate in the private marketplace.
True, the SBP can provide a monthly check to help pay the bills in the event that a service member or veteran dies prematurely. In the long run, however, the amount of money the beneficiary receives in that annuity is usually considerably less than what the monthly premium amounts could have generated as investments and insurance in the private marketplace. And your SBP payments? Like social security, they are going to some pot of money the government controls and helping to fund current SBP survivorship payments. They are not being saved and grown somewhere in order to fund your spouse’s SBP payments thirty years from now.
If you have sat through a military retirement SBP briefing then you have no doubt heard the argument that SBP premiums are “paid up” after 30 years, meaning that there is a cap on premium payments, while the SBP annuity is paid in perpetuity for as long as the spouse lives. Therefore, even a surviving spouse of a retiree who paid into the SBP for the full 30 years only needs to receive the annuity for just under 2.5 years beyond those 30 years in order to have recouped the total amount the couple spent on premiums, and the spouse is likely to receive more in annuity payments than was paid into the plan. In some cases this will be true. However, what was paid into the SBP will be a complete loss should the spouse predecease the retiree, and annuity payments stop when the spouse dies, which means that there is no opportunity for the amount of money the retiree and spouse have paid into the SBP plan to provide a legacy for their grown heirs.
A further matter for consideration is that there is no survivor payment on disability income. If the retiree’s disability payment makes up a significant portion of the income that his or her family depends on, that income is simply lost when the retiree dies, regardless of whether or not the SBP has been elected.
The ONLY way that the SBP makes good all-around financial sense with regards to ROI is if a service member dies within a few years of retiring. 6.5% of his/her pension adjusted for inflation, deducted over a couple of years, in return for 55% of his/her pension, again adjusted for inflation, to be paid to the spouse for the rest of the spouse’s life sounds like a pretty good deal, as long as the insured retiree dies within a few years of retiring from the military.
When the topic of life insurance comes up during active duty service, it is usually about the SGLI, and the response is typically, “I’m good for insurance. I don’t have a family yet, and SGLI will take care of it for me when I do.”
This creates a tremendous risk of never being able to qualify for a privatized option in the future, should some medical issues come up during service. It is in everyone’s financial best interest to qualify for private insurance when they are young and healthy and not wait until they are in their thirties and forties and leaving service with a number of medical issues. SGLI ends with active duty, so using it as a safety blanket backfires time and again when transitioning service members are not able to qualify for any other life insurance options and have no choice but to take VGLI This a shocking oversight with a costly outcome.
An E7 with 20 years of service is used to paying about $300 a year for life insurance (SGLI). When SGLI is replaced with VGLI at retirement, those payments are no longer being subsidized by the government, so they get much higher. In year one, the cost of VGLI is $800 a year (vs. $300 a year being paid previously). And every five years, the costs will go up. If he wants to ensure he leaves behind the (mere) $400,000 death benefit for his spouse, by the time he reaches the age of 75, he’ll be paying $1,840 a month for this coverage.
These costs are so astronomical that it’s unrealistic to expect that any veteran who's living off their pension will be able to keep up with them. If they are forced to stop coverage because they are no longer able to afford the premiums, then that $400,000 death benefit is not going to be around when the service member or veteran wants to leave a legacy.
One last thought: SGLI and VGLI are all connected to and being underwritten in the private marketplace. Most service members and veterans don’t realize that they are paying a contracted private insurer—not the government—and that this private insurer is profiting from them as a middleman.
Again, these plans are not really benefits. They are not given to service members and veterans, they are sold to them.
Government insurance packages are financial solutions that are managed by a private company operating in the private marketplace, and the fact is that what these plans offer is not the best deal across the board for everyone; it is only the best deal for those who have no other options. If you are already paying for insurance or plan to, doesn’t it make financial sense to find the best plan that you can that will do the most for your family?
Our alternative to the SBP and VGLI problem gives you both a lot more equity growth (as interest is credited based on the S&P 500 performance, not the federal bond rate) and a lot more liquidity that you can access while you're still alive. It offers a safeguard against negative market returns, and allows you to both comfortably fund your retirement and still be able to leave a legacy behind you when you die.
Although this new, modern approach to privatizing the SBP or pension protection has been available for a few years, few financial experts and professionals are aware of it or its game-changing advantages. The key differences between the Survivor Liberty Plan and what most think are the only other solutions (SBP, term life insurance (SGLI/VGLI), and whole life) are flexibility and control.
The SBP offers neither. Once enrolled, you pay a fixed cost until you die. Everyone pays the same rate, regardless of your health and age. Assuming the veteran passes away first, the spouse receives a significantly reduced monthly annuity (55% of what the veteran was receiving) until their death. That’s it. There’s nothing beyond that. The veteran’s service is forgotten and there is no legacy.
With term insurance the problem is actually much worse, even though it’s perceived to be a better option due to its much lower cost. But again, flexibility and control remain elusive. A 30-year term means exactly that. You are now committed to a fixed program that only has an ROI if the insured dies early. What’s worse is the assumption that typically goes along with the purchase of term insurance, which is that the veteran will eventually “insure themselves” via asset growth. There are far too many variables likely to take place within the next 30 years for anyone to have any realistic sense of self-insurance relying on the stock market.
For both SBP and term insurance, the likelihood of sunken cost and no legacy protection are VERY real, yet no one in the government, the financial planning world, or the expert blogging community are focusing on these problems. They don’t recognize the potential of the innovations occurring in the financial industry. Instead, they keep guiding service members, veterans, and their families into traditional and more risky solutions like SBP and term or whole life insurance. This dishonors not only the financial investment that veterans have made in order to provide a survivor benefit, but also the 20+ years of investment (sacrifice) that the veteran and their family gave to this country.
We believe it is just plain wrong to accept that those 20 years of service won’t be rewarded for a lifetime and beyond, when in the modern age such a solution is both possible and accessible. That’s why we have spent the better part of ten years researching the financial vehicles and creating your Survivor Liberty Plan. Our team members do not have quotas to fill, and we offer these financial vehicles to our clients at substantially less cost than they would pay in “invest the rest” investment fees or for other whole life policies.
Below are some of the reasons why we believe our Survivor Liberty Plan is superior to other life insurance/pension vehicles on the market today.
Few people think about long term care costs, but failure to plan for long term care can quickly wipe out retirement funds. Not only are people living longer, they are requiring high-cost medical care that didn’t exist just a few decades ago. Costs like assisted living won’t be covered by the VA and Medicare, and there’s no option to leverage the SBP death benefit to help with long term care costs.
The Survivor Liberty Plan offers a long-term care provision that allows a living insured to use a portion of their death benefit to pay for assisted living costs, even if those costs are paid to a close friend or family member. This provision is a game-changing solution that can mitigate the risk of a veteran being forced to liquidate their hard-earned retirement funds to pay for health care costs before they are able to qualify for Medicare. With a Survivor Liberty Plan, the veteran can ensure their own self-care and still have a large probability of leaving a lasting legacy for his/her heirs.
The SBP will cost you up to 6.5% of your pension, a significant amount of money over twenty or thirty years. There is no ROI unless the insured dies, and even then, there is no inheritance available to the heirs.
The Survivor Liberty Plan, on the other hand, offers more equity as well as liquidity that the insured can access while they're still living. And unlike term insurance, the protection never ends. With your Survivor Liberty Plan, you are able to both capture and lock in the growth offered by the securities market without the value of your policy being negatively affected by market corrections. The worst case scenario market rate of return in any circumstances is zero, meaning you get to keep all of your market gains, but you don’t experience market losses; during any downturns you simply experience zero growth on your intact principal.
Furthermore, the benefit doesn’t just get paid to the surviving spouse, nor does your investment evaporate should the spouse predecease the retiree. Your Survivor Liberty Plan can be structured so that it gets paid to the next generation as a legacy.
There is an opportunity cost for not having that 6.5% of your pension that you are paying for the SBP liquid and invested. Any annuity the SBP will pay, if it is ever paid at all, is considerably less than what might have been generated had those premiums been invested over the long term.
When we first set up your Survivor Liberty Plan, we structure it to start out with the lowest possible death benefit, in order to keep the cost of funding the plan low. In this way, we can turn the 10 to 15 years this type of product would normally take just to break even and bring that timeline down to three to five years, if not immediately. It takes a lot less time for the cash value of the policy to grow at a pace that outstrips inflation and quickly starts keeping pace with things like the S&P 500. The money you are using to fund the plan both keeps pace with inflation and grows in value over time, because it is invested.
If you have already sunk money into an older whole life insurance policy, you can redirect that investment into the Survivor Liberty Plan, along with whatever other contributions you want to provide, using a mechanism called a 1035 exchange.
In the best case scenario, whole life plans usually grow between two and four percent compounded annually, and the death benefits are typically significantly higher than they need to be because they are sold as an alternative to term instead of as a compliment, because the agent makes more money selling a whole life insurance policy. As a result, the cost to insure is also very high, and it takes about 10 to 15 years of regular contributions for an insured person to fully cover the cost of their insurance before they break even and there is any equity that can be accessed.
Moving these funds into a Survivor Liberty Plan using the 1035 provision allows those returns to take effect much earlier. This basically amounts to taking money that you've already put to work for you and giving it a raise.
Some people worry that they won’t qualify for the Survivor Liberty Plan for various reasons: disability rating, tobacco use, flight status, Special Forces, pre-existing health condition, cannabis use, etc.
However, this is simply not the case. Many retiring service members receive disability ratings from the VA for issues that are relatively minor and of no concern at all to life insurance underwriters, so it is worth the time to go through the underwriting process to see whether or not your disability will prevent you from qualifying. With regards to other possible concerns, it is possible to obtain a policy within a variety of situations. When qualifying during the underwriting process, the insurance company is making a determination of how much of a death benefit they should offer you based on the likelihood that they are going to have to pay out this death benefit.
Your physical condition or lifestyle may have an impact on the amount of death benefit you qualify for, but this should not be a show-stopper, because unlike only using a term life insurance policy, in which the only advantage is the death benefit, the Survivor Liberty Plan is about much more than the death benefit; it’s about having a place to protect and grow your money, without risk of loss due to market volatility or taxes.
That said, health qualification is an aspect of establishing a Survivor Liberty Plan. If you think this might be a viable financial solution for you, the sooner you initiate the process, while younger and in good health, the easier the process will be.
The Survivor Liberty Plan can be funded with as much or as little as you want to contribute. You can pay for it for as long or as short of a period as you like. You can customize your premiums/contributions and make adjustments to them over time as your life circumstances change.
Because a permanent life insurance policy is not considered part of an estate tax bill or otherwise considered to be part of an individual’s net worth, it can’t be taken from you to pay for legal damages. In the event that you are involved in a lawsuit that ends badly, whatever other assets might be taken from you, you will retain complete control over and access to your Survivor Liberty Plan.
There is no liquidity in either the SBP or VGLI unless the insured dies. With the Survivor Liberty Plan, there is liquidity for the retiree and the surviving spouse, and nobody has to die in order to be able to access it. The Survivor Liberty Plan has something called the cash surrender value, which is the amount of fully liquid cash that's available to be taken in distributions without penalties or taxes. As long as a person keeps 10% of that number inside the plan, they can do whatever they want with the other 90%, which is comprised of a combination of contributions and the returns on invested dollars.
The greatest expense most American will ever face in their lifetime is taxes. As more baby boomers retire and less millennials are working, as our national debt rises, it’s not going to be possible for our government to maintain our current low tax rates as they struggle to pay for unfunded liabilities like social security, Medicare, and Medicaid. 401(k) retirement plan distributions are subject to income tax as soon as you begin taking your Required Minimum Distributions at age 70 ½ , and we can expect much higher marginal tax rates within the next decade. This is a risky situation for retirees, who don’t want to have to hand over their hard-earned retirement savings to Uncle Sam.
In the same way that wealthy Americans leveraged the tax-advantages of whole life in the 1980s, modern life insurance leverages IRS code 72(t) to provide the same advantages and with greater flexibility and control, allowing you to access up to 90% of the equity of your Survivor Liberty Plan tax free.
The SBP is a one-size-fits-all option for solving a complex problem. It wasn’t designed to address every financial need, and it has definite drawbacks. As with every major life decision, every service member and veteran should reflect on their individual situation (together with their spouses) to determine whether or not the SBP is the best fit for their financial situation. The Survivor Liberty Plan offers an alternative by focusing on the service member’s life rather than their death, including realizing the proper asset valuation of the service member’s military career and the sacrifices made by the spouse and family.
That said, the Survivor Liberty Plan is not for everyone. Depending on your individual, family, health, and financial situations, as well as your vision for your life, the traditional SBP/VGLI or SBP/term insurance strategies may be the best solution for you. But if you want to do anything other than follow the traditional path from military service to 9-to-5 job to retirement; if you and/or your spouse want to devote your post-military lives to a new means of service that involves starting a business or any other kind of lifestyle that will require the availability of funds much sooner than the normal retirement age, then the Survivor Liberty Plan offers both sensible financial protection for the family (tax-free retirement income, long term care protection, legacy for heirs, etc.) and the flexibility, control, and liquidity that will allow you to forge your own path.
If you're sick of getting the cookie-cutter power point slides from the military retirement briefings, then this white paper will blow your mind with new perspective on what is best for YOUR family.
If you are reading this blog post, or if you have clicked over and read our white paper, then you may be contemplating a deep dive into the modern insurance products we are referencing right now, but we urge to hold up before doing that and instead take a very simple first step: reach out to us to see if you qualify. Neither your interest in our solution or your deep dive research into it matters if you don’t know if you even qualify for the plan. This is why we like to put all the information out there for free and share it, because it saves both of us a ton of time.
If you’re serious about considering this modern, privatized approach to your financial future, then reach out to us and let us know that you are ready to go through the application and underwriting process. If you wait to do this, there is a risk that something could pop up medically or you could be involved in some accident that might change your health circumstances. The ideal time to get qualified for the most amount of insurance is when you're twenty. If you can get $10 million of coverage when you're 20, you should do that. Why not? It's so cheap, and you can pass it off to so many people and have that rating for the rest of your life because once you get qualified, the insurance company can never take that qualification rating away from you. It doesn't hurt. It’s a simple medical exam and an application, and you're done with it.
When the results come back, then you can actually make an informed decision about whether it is something you want to pursue, rather than wasting all your time doing the financial analysis and planning only to find out during the application process that you don’t qualify.
In order to determine if you qualify, you must go through the underwriting process, and in order to get underwritten, you have to apply. Going through the qualification process DOES NOT commit you to buy the policy. Finding out that you are qualified DOES NOT commit you to buy the policy either.
The sooner you apply—today, while you are young and/or in good health—the better. Once you know for certain that you qualify and that the Survivor Liberty Plan is something you want to consider, then you can take as much time as you need to reflect and discuss your options with us before making a commitment. Reach out to US VetWealth to see if you qualify today.
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In the course of working with service members and veterans, I have had dozens, maybe hundreds, of conversations with military spouses, and they face some very unique and challenging problems.
I have touched on how the military can become the whole of a service-member’s identity in other places, but this can also happen to the military spouse.
There are really two sides to this coin. On the one hand, some military spouses identify so strongly with the service-member and the military that they limit any sense of their own identity to that connection. On the other hand, in terms of employment, other military spouses purposefully avoid mentioning that they are a military spouse when they’re trying to network because they’re afraid that revealing it will prevent them from getting a job.
In both cases, the role of the military in the identity of the military spouse is both disproportionately large and limiting.
It is a known fact that military spouses face real issues when trying to establish themselves professionally.
There are even military spouse employment laws in place to try and rectify this situation, but it is not enough.
To put it bluntly, no matter how educated, highly-qualified, and employable they may be, marrying a military man and being attached to the military life can really kind of screw up traditional career prospects for a military spouse.
The root of the problem is quite simply: lack of control.
Their lives unfold at the whim of the military industrial complex, which dictates where they’re going to live and for how long. Many companies don’t want to hire someone that they know isn’t going to be around for very long, and to be fair, their point of view is understandable.
For one thing, simply going through the process of hiring someone is expensive.
Training people is expensive. Retention is always a huge issue for employers. Given a choice between a candidate who might stay with the company long-term and one who will definitely NOT (through no fault of their own), it’s easy to see why the military spouse can have so much trouble finding any position, let alone one they really want and care about.
But even if they do get a good job, they likely face another frustration: their upward mobility can be limited.
If they’re working for a company with a brick and mortar presence, they may not be able to stay in the area, and thus in the job long enough to move up the ladder, meaning that rather than advancing in their careers, they can stagnate for decades in an endless series of lateral moves.
It’s stupid that military spouses have to hide this aspect of their lives when they are looking for work.
Military spouses have as much capability and level of commitment as anybody else. They are educated, motivated, talented, and ultimately frustrated, because their talents are going to waste. And what can happen is that over time, they accept and take on this lack of control, too, as part of their identity.
Once they have internalized this lack of control as part of who they are, there is a real risk that they will just stop trying. It becomes easy to make and believe statements like, “Well, if we’re going to PCS within a year, there’s no point in bothering to try to get a job.” Or, “We only have a few years left, I’ll just wait until we get out.”
The problem has become an excuse to not solve the problem.
Meanwhile, far too many military families are living paycheck to paycheck and many unhappy military wives wish they could do something about their lack of career prospects, while still supporting their active duty spouse. They’re stressed. They don’t feel like they have any control over their day-to-day lives, let alone what direction their lives are taking.
There’s a sense of inevitability and hopelessness.
And yet, there is nothing inevitable or hopeless about this situation — if you know where to look for the solution.
Many people don’t realize just how dramatically the world has changed even in the past ten years, and military spouses really need to know this, because the world is changing in ways that empower them.
It’s changing in ways that mean they aren’t in a bad position when it comes to earning a living at all; they’re in the PERFECT position.
The Internet brought us a massive shift in economic opportunity.
On the one hand, it ushered in something called the “gig economy,” which means working on short-term contract jobs from home. According to a 2018 article in Forbes magazine, 36% of the people in the U.S. work in the gig economy and that number is growing.
In talking to military spouses and looking at the military spouse statistics on employment, very few of them are aware of this opportunity, which is a crime, because they are in the perfect position to be freelancers, virtual assistants, etc.
But even more importantly, the Internet, along with the impact of social media, has put the power to start a business within everyone’s reach.
Today, it is possible for anybody to determine how they can add value to the world and then create their own personal brand around that and MAKE SERIOUS MONEY. People do it every day.
Two critical questions, then, for a military spouse are:
I know these are deep questions. Identifying where you are and where the end goal is will help you with the plan forward.
Here at US VetWealth we are all about personal power and following your passion.
We are also about leaving behind old-fashioned, unproductive systems that no longer adequately service a modern world. We want to help the 1% who serve become part of the 1% who influence how our country evolves, and we include you, the military spouse, among that 1% because of the personal and family sacrifices that you make for the benefit of our country every day.
That’s why we want to make sure that you know that you have options.
There are six simple steps to exploring those options and the first four only need to happen in your head.
The thing military spouses should know if that If you want to have financial freedom and control over your professional life, self-employment is the path. Self-employment is a way to use your skills to provide extra income and ultimately financial freedom for your family. Decide that you’re going to make it happen, and figure out a way. If you have to work for other people for another five years to make it happen, then do that, but with the intention that you are doing it in order to build something else. If you want to escape your current limitations, you have to have the intention to not work for somebody else.
An institution is an organization that has been founded for a particular purpose. That word purpose is very important. The very reason that an institution exists is to further its own purpose. What about your purpose? What about your personal purpose and passion? That doesn’t enter the equation. How could it? Allowing you the freedom to pursue your own purpose gets in the way of the military achieving its purpose. If you want to pursue your own personal purpose and passion, you have to do that on your own time. That means self-employment.
Building upon #2 above, the military IS making assumptions about you with regards to your role in achieving its purpose. In particular, they are making an outdated and short-sighted assumption that your sole function is to stay home and take care of kids. They even have a special word for you and the kids: dependent. The word dependent literally means “a person who relies on another, especially a family member, for financial support.” You’ve probably used the word dependent hundreds of times, but have you ever really stopped and let it sink in what that means? The military doesn’t expect you to be able to make money. They don’t expect you to be able to steer your own life. If that doesn’t sit well with you, if you want more for yourself than that, if you want to BE more than a dependent for the rest of your life, if you want to have a purpose and an identity of your own, then you may be ready to start thinking about your own wealth and liberty strategy. You can take control of your future by participating in the economy in a way that is not limited by where you are located or by how long you expect to be in any one place. That means self-employment.
Completing numbers one, two, and three above are the first steps towards doing that. Step four is to recognize, accept, and commit to an identity that is in control of its own destiny. Yes, you may still have to do things at the whim of the military for awhile longer, but make up your mind that that is not WHO YOU ARE.
The US VetWealth website offers a lot of information around self-employment that we call our Wealth & Liberty Strategy. We understand the military community from the inside. We are veterans, military spouses, and Gold Star Families. We know what military spouses deal with. We know how the benefits work. Take some time to look over our web page. If you like what you see, reach out. If you don’t, there are many other sources of information out there about starting your own business in the modern economy and we encourage you to check out any of them.
Here at US VetWealth, we have been where you’ve been. I separated from the military in 2008. I followed all the standard one-size-fits-all guidance, and I hated it. But I noticed that there was something else going on around me, and I decided that I was going to figure it out. So now I know how to go about starting a business and all that that entails, and that’s how I came to identify LinkedIn as the best way to start forms of self-employment. Now I can help people to establish themselves in business more quickly and more easily, but that doesn’t mean that I can just hand you a ready-made business and say, “Go do it.” If you want to pursue the wealth and liberty strategy, you have to get into it and get your hands dirty. You have to be willing to put in the time to build something sustainable and worthwhile.
You DO have control, and your future is up to you.
You could create a situation where it doesn’t matter where your military spouse PCSs, because you can work from home.
You could have plenty of money to meet your immediate needs and even be able to start saving. Or you could just keep hoping to get lucky and get offered a job somewhere, or just keep waiting until your spouse gets out of the military and it’s finally your turn.
The choice is yours.
I’ll cut right to the chase. Veterans are suffering the consequences of financial planning theories and military benefits programs leftover from the 70s and 80s. They only show us a limited picture of their benefits. This is hurting both our service-members and the American taxpayers.
That’s why we launched US VetWealth, to help service-members, veterans, and their families learn how to navigate and leverage their financial benefits so that they get the most out of a lifetime of service.
At first glance this may not seem like such an overwhelming “problem,” but I assure you, it is. And it’s not surprising—it follows logically from everything else that the military gives us.
We’re all given standard-issue uniforms, bunks, MREs, eye protection, weapons, and the like. We go through boot camp, OCS, and academies designed to burn away our individuality. It is so that we can respond to commands. We are taught to hit the “I believe” button. We are essentially aimed like weapons at objectives decided at pay-grades way above ours.
This is a great strategy for winning wars. It is an awful strategy for winning at life.
As soldiers, sailors, airmen, and marines, they always treat us as bulk items. But the one-size-fits-all approach to financial planning DOES NOT WORK.
As veterans, we have to remember how to be individuals. It is about time that we learn to use our benefits as such.
When it comes to your military benefits, there are questions that “they” hope you never ask. And if you were to ask these hard questions, it would sound suspiciously like you were questioning an order.
We do not do that.
But these are your benefits, and the taxpayers want you to use them the right way.
It is our responsibility as service-members and veterans to be stewards of these benefits. But when we start being smart about our benefits, this whole rotten bureaucracy would come tumbling down, because it is essentially one bucket of laziness, greed, and a whole lot of “this is how we always do it.”
It goes to that expression about generals being experts at winning yesterday’s wars.
Our benefits system is great at providing benefits for military veterans of WWII who have long since retired. But your pensions are not ration coupons. They are assets we need to leverage.
But when we start being smart about our using benefits, this whole rotten bureaucracy comes tumbling down, because it is essentially one bucket of laziness, greed, and a whole lot of “this is how we always do it.”
One of the repercussions of the benefits problem we are facing today is that it allows room for too much change.
Consider a couple with $500,000 saved up for retirement in a managed retirement account, which earns on average a 6.5% return per year. Some years are good, some are not, but at the end of the day, there’s plenty left over for the next generation.
But what happens to this couple if they are unfortunate enough to have to start drawing on their retirement funds in a bad market?
This is called the sequence of returns risk. Bad luck in the first few years of distribution could cause them to spend their assets down too fast for them to recover when the index recovers. Thus, it is possible for a once-affluent couple to deplete their assets down to destitution in a very short period of time, even though they did “all the right things.”
Are we all hopelessly at the mercy of Lady Luck? What if there was a way to diminish the role luck plays in our ability to attain our goals?
There is, and it starts by making sure we understand the tools at our disposal.
I know because it happened to one of us on the US VetWealth team when he was in the reserves and still serving!
Too many service members and veterans are “choosing” these benefits because everyone else is signing up for them, or because it’s better than nothing.
But “nothing” is not the only alternative. Another alternative is to stop following orders and start educating yourself.
It all starts with reaching out to US VetWealth and asking a simple question: What are my options?
We’re here when you’re ready.
Check out the new technology that makes money management easy. The Betterment Dashboard will help you make the most of your money and our advisors are standing by to help.
You cannot. We’ve all heard it. In this life, two things are inevitable: death and taxes. But unlike death, the effects of taxation can be mitigated.
Income taxes mean something very different for a 35-year-old professional than they do for a 70-year-old retiree. For the professional, they are a nuisance that can be tolerated. After all, the 35-year-old can continue to work and to earn what was lost to taxation.
For the retiree, money that gets lost to taxation amounts to a permanent loss of capital.
This becomes especially important as it relates to retirement dollars, particularly for veterans and federal employees who contribute to a traditional Thrift Savings Plan (TSP). While at the height of their earning potential, professionals often deduct TSP contributions from their taxable income. After all, these deductions can land them into lower income tax brackets while helping to fund their retirement. It seems like a win-win scenario until it comes time to take distributions.
Since every dime contributed to a TSP was contributed pre-tax, every dime that gets distributed gets taxed as ordinary income even before it hits your bank account. Just as there are tax penalties for taking distributions from a TSP before the age of 59 ½, once a TSP account holder turns 70 ½, there are tax laws requiring that the account holder take Required Minimum Distributions (RMDs) so Uncle Sam can get his hands on that tax revenue.
This becomes especially important when retirees liquidate TSP accounts in a bear market. In this case, the retiree has just watched his/her account drop in value and wants to cut bait and run, lest he wind up pouring good money after bad. But now, the cash that the retiree has just removed from the TSP counts as income and the United States Treasury sends the retiree a hefty tax bill. This is a retirement tax trap that leads many people to spend down their lives’ savings to zero long before they planned. Talk about adding insult to injury.
Thankfully, this scenario is 100% avoidable. A retiree is allowed to roll as much of a TSP as he/she wants into a Retirement Rescue Plan with no taxation penalty at all. Once rolled into into this plan, the entire value of the TSP is treated as principle, thus guaranteed against loss, so no individual ever has to take distributions as a result of negative returns again. Once the retiree does start to take distributions, the plan begins providing annual payouts that only stop when the he/she and his/her spouse are deceased.
These distributions are taxed as ordinary income, but there will be a steady or growing income payout every single year, regardless of cash value or market performance. This does not completely remove income taxes because Uncle Sam will have his due, but it changes the nature of the retiree’s income taxation. No longer will income taxation result in a permanent loss of capital. The capital that this retiree lost to income taxation will be replaced the following year, just as it did when this retiree was employed. The only difference is that now the retiree no longer has to work to get paid!!!
When we decided to join the military, we signed up to serve our country. We were aware that some financial pay and benefits would come along with the commitment but never made that our focus. Until… they made it all about the military benefits. In this day and age, it is more difficult for the DOD to compete with universities and corporations, and that has forced them to create attractive retention programs. They turned us into employees focused on retirement.
We have forgotten that our desire to serve is our top priority, not retirement. We want to secure our service.
This problem is compounded by two factors.
The DOD competes with universities and corporations by creating attractive retention programs. Service members have shifted their focus from service to employment. Furthermore, they are taught to focus on retirement planning, rather than how to transition from the military to the civilian workforce. The initial desire to serve our country is lost. Without proper education, service members struggle to find a sense of purpose in post-military life, which also affects their financial decisions.
Career service members and their families have sacrificed years of their lives in service to our country. They deserve the valuable pension offered when they retire. What if we told you the reality is… this is NOT HAPPENING. At least not how we have all been led to believe.
The recent implementation of the new “Blended Retirement System” was masterfully rolled out with a fanfare of confusion and cliches. The underlying truth that the government never told our veterans is that they ran out of money, so they can’t afford to take care of the future veterans.
On the surface, this should sound like a major concern. From a tax payer perspective, it certainly does continue to prove the inefficiencies of the current system. From a veteran's perspective, they want to know that they will receive the benefits that they served for.
We now have an opportunity to give our veterans the responsibility that they have been seeking. But now, it’s up to us to educate ourselves and our fellow service members on the true value of their pension.
Career service members and their families have sacrificed years of their lives in service to our country. With US VetWealth, we show you how you can attain the valuable pension you deserve for retirement.
You are a part of a forgotten generation of Veterans entering retirement after years of military and federal service, and no one is helping you manage your life savings during the time you are transitioning out of the military and after.
You have been largely ignored by the financial industry because your “investable assets” have been locked up inside of the Government Thrift Savings Plan or Company 401Ks and other qualified retirement plans.
But now as veterans are retiring en masse, so are those same financial professionals who ignored you before. And the new generation of advisers aren’t taught to help these veterans because they’ve been told veteran’s don’t have money to invest and won’t pay their fees.
How is that being a “fiduciary?”
Ouridea is The USVW TSP/401k (Retirement Rescue) Private Pension Plan, a unique solution developed with the modern professional veteran in mind. Veterans in or nearing their retirement have earned the right to finally have a trusted guide and resource to maximize retirement dollars that are currently in storage. Without the high fees, shaky performance, and risk of principle loss associated with other investment advisers.
Are you or your spouse “career” military? Are you planning on doing that 20 years so that you can bank that nice military pension—especially before the fancy new blended retirement system completely takes over?
Then it’s time you had a wake-up call about what it is you are creating for yourself!
By the time most military retire and get their pension, they’re so exhausted from a career of military service that they don’t have the awareness to understand the true value of this benefit.
That’s actually the problem: the military pension is touted as a benefit, yet another incentive the military throws at you to get you to stay. So why not use it properly and to your TRUE advantage? Why not add some serious INTENTION to this benefit?
You see, a military pension isn’t just a nice little side income that you get monthly until you die. It’s an ASSET that you’ve earned in service to our great nation: an asset that both you and your family has sacrificed for. In fact, it’s a tremendous asset with significant value.
For the average retiring officer (let’s say an O5),this military pension amount is valued at well over a million dollars!!! Did you know that?
I bet you didn’t think of it that way. And right there, my friends, is the opportunity cost—the cost of not thinking intentionally about the opportunity you’ve created for yourself. You are at risk of being okay with a mere side income to supplement your new job.
If you’re reading this and thinking, ”Yeah, That’s how I was thinking of my pension," then you need to keep reading because what I have to tell you is extremely important. And yet most military get little more than a few PowerPoint briefings about how this works. Maybe they mention it to their spouse. Then they go on their merry way to the inevitable job fair.
Sounds like lack of preparation to me.
Discovering how your pension can work for you isn’t hard. In fact, we developed a proprietary system to not only help you understand your true value, but to significantly enhance how you can use this powerful asset to continue your life’s mission.
After speaking with thousands of veterans and active duty, here are the issues we’ve discovered that most military face.
They say, “Well, if I do another three years, I’ll get a little more pension.” What they mean is, “I have no idea what I want to do next. Transition seems hard.” They never truly understand their military pension or the proper context for how it should be used. Without this context, they don’t value it properly. If they don’t value it, they don’t truly own it. And without ownership, they inherently won’t care about it.
The problem becomes compounded when military members accept whatever a senior officer, personal assistant, or PowerPoint brief says as gospel. While these things are well-intended to help them properly prepare for their military retirement, they are nothing more than one-size-fits-all descriptions of the government programs. They don’t offer any information about what these government programs can really do for you.
And that’s important, because this isn’t about the military anymore. It’s about YOU! What comes next for you?
Once you leave the military, all the comforts are gone. You can’t turn to the guy next to you who has a similar career MOS, the same time in service, the same rank, etc. and compare. That structure no longer exists. It’s up to you to know what you are doing. YOU must take responsibility for your future. No amount of trips to the GS employee (who just transitioned himself, no offense) at the separation and military retirement office is going to answer the questions you should have but didn’t know to have asked.
There is one major problem that everybody ignores, yet I think that this is the greatest cost over any individual’s lifetime and the greatest risk to the American people and the American way of life: taxes. I encourage you to understand the true history of the tax code in America, where it comes from, why it’s there, and how it’s hurting the American people. It’s not about taxing the rich versus taxing the poor — that’s just political fear-mongering in the media. The reality is that taxes are taking from one person against their will and giving it to another. Personally, I’d rather make that choice myself and call it charity. But by constitutional law, the government can now come at you with guns and take your money from you just because they think somebody else should have it. It’s wrong and it’s immoral. Unfortunately, we have to deal with it for the time being.
What the majority is unaware of, though, is that all the increases in healthcare have caused two problems. The first is that the older, aging population — the non-working, non-producing population — is living longer. They’re not dying when the government thought they were going to die when they implemented these plans like Medicare, Medicaid, and Social Security. The reason the corporate pension system doesn’t work anymore is that companies couldn’t afford it. People weren’t dying, and they had to keep paying them. They ran out of money and then went bankrupt. The government had to pick up that bill. So they invented the 401(k) system, because they’re thinking, “Aha! If we get people to not pay taxes now, we’ll get them to save for 20-30 years. When they have much more money, then there’s all our tax revenue later on.” Don’t you see what they did there? Some kind of “retirement planning,” it’s not a benefit to put money into a retirement account. It’s a place to leave it until the government gets our taxes later. That’s why it’s called tax-deferred.
The second problem is that this same old age group is causing Medicare, Medicaid, and Obamacare costs to go up, so Social Security costs go up. These things are unfunded liabilities; there isn’t a big pot of money in the government that’s funding these things. No, they’re bringing that money in from the taxpayers. So if the older population is living longer, then we’re having to fund these benefits real-time with current tax dollars from the younger, working population. But we’re not having as many babies anymore as we used to, so the older, aging population is getting bigger and the younger, working population is getting smaller. This is a major demographic problem, and nobody’s addressing it, we’re just kicking the can down the road. So if all your money is in accounts that are taxable at some point, the government is eventually going to have to raise taxes. There was a time in history when the tax bracket was at 90%.
As a veteran myself, I have no problem giving and being charitable to others, but I’m not going to do it at the force of Uncle Sam. Veterans didn’t sign up to serve the government, we signed up to serve our country. If veterans know there’s a better way to be a steward of their money, then they can choose how they create wealth and abundance, probably create more jobs, and be able to give more to charity versus paying taxes to a government that is going to inefficiently filter it off to pay for programs and rising health care health costs and social security benefits that are poorly managed.
Our current situation cannot last, and veterans shouldn’t be the ones passing it on to future generations. We can change this, but it’s up to us because we’re the only ones that understand true teamwork, and community, and can communicate and continue to lead. Remember, we were also paid by taxpayers to serve. Therefore, veterans have a unique opportunity to be better stewards of those tax dollars and not just get stuck in the same trap.
There are many limitations to traditional financial products if veterans want more than a standard retirement and the inevitable last-minute planning for their transition out of the military. And they can’t just leave money in the bank or under the mattress because of inflation. That money will lose value because the cost of goods goes up. We all know that a house costs a lot more money than it did 10 to 20 years ago — that’s inflation. Cars cost more, gas costs more, food costs more, everything costs more. If veterans are not growing their assets, they risk literally running out of money because they can’t afford things anymore. That’s not creating wealth. That’s having a poverty mindset. And veterans deserve more than to live paycheck to paycheck.
Unfortunately, the financial industry makes so much damn money, they don’t bother to innovate. Financial advisers continue to churn clients through the old products and solutions, managing money and talking about accumulating assets. “I can beat your stock returns.” Or as a tip on retirement saving, “use retirement saving vehicles first.” Sure, there’s nothing wrong with putting some money in retirement savings vehicles, but if that’s the only place you’re putting money, then you’re putting all your eggs in one basket. If I haven’t made myself clear yet, veterans deserve more than the standard retirement. It’s time to diversify.
Fortunately, there are other options for military service-people. Just like Tesla and Netflix are changing the way we’re driving cars and watching movies, the financial industry has created new vehicles in which Americans can invest money.
Call us at US VetWealth today to find out how.
Veterans are suffering the side effects of financial planning theories and military benefits programs left over from the 70s and 80s. We are receiving all of our career and financial influence from the two slowest-moving and most corrupt industries that exist: the greedy knuckleheads on Wall Street and K Street. These theories are old and misguided. They are bad for veterans, and they are bad for America.
Let me tell you why.
Veterans have been led blindly into a financial quagmire of lost potential and opportunity. In our careers and in our financial lives, we are fighting the old fight using old tactics, tools, and strategies. You deserve to be led on a counter-offensive using modern technologies and tactics. There is no better time than now to maximize our full strength as veterans serving together, once again, to preserve liberty.
Sadly, blood has already been spilled on our home soil as mediocre leadership, disingenuous politicians, and the general ambivalence and “what are you going to do for me” attitude of many Americans have slowly created a new domestic enemy: pure mediocrity. It’s the same enemy that the Romans ignored, but we are smarter. We have something they don’t: a crazy, messy experiment called liberty. And if we want to keep that liberty, then America needs its veterans to be successful, to join the wealthy, and to become the new leaders.
Theyears before the Internet age were peaceful. The economy was booming. But in the past several decades, we have not been good stewards of taxpayer dollars. Our economy has been propped up by massive debt. Our current political leadership on both sides are telling us to keep spending money and go into even more debt?! And now we’re going to leave our economic problems for the millennials to solve??!!
This is WRONG.
We are living in different times than we were even 20 years ago. We have entered a completely new phase of the industrial revolution. This is the Internet age. We are living in a connected global economy in which anything is possible. Veterans are entering it 20 years behind the power curve, but there is opportunity in their position. Our global internet economy is changing fast, but veterans are fast learners. And the millennials are BEGGING for our leadership, so let's lead them!
As leaders, we need to know the actual rules of the game we are playing. The rules from the 70s and the 80s cannot help us. They don’t apply anymore. There are no finite solutions to today’s economic problems. Getting veterans a “job” is yesterday’s finite solution to yesterday’s problem. It misses the point and only pretends to be an answer. Those who council transitioning veterans to transition in the same way that their fathers and their grandfathers did are playing the wrong game, and they’re telling veterans to play the wrong game.
Life is finite, sure; but the possibilities of how to live a life are infinite. Life truly is a journey, IF you are playing the right game.
In the old game, we threw our resumes out there, and competed against others for the same job. In this new game, in our new modern and interconnected global economy, we compete every day against ourselves, not others. In order to play this new game, we have to ask ourselves not how to win the game, but how to get better at playing it than we were yesterday. And in order to play this new game, we need those modern technologies and tactics that I mentioned.
Unfortunately throughout the years, both veterans and civilians have only been presented with a small and skewed picture of the financial products that are available for themselves and their families. These squandered military benefits have manifest into a tremendous opportunity cost: the lost potential of veterans who have been steered to seek a job for a paycheck rather than to seek a calling in which they can continue to serve our nation. Veterans aren’t in the game for the paycheck, but they have been told to believe they are. This is a waste of America’s greatest resource: her Sons and Daughters. Veterans simply are not shared the WHOLE TRUTH and are not being FULLY INFORMED of the WHOLE list of military benefits available to them when it comes to protecting their loved ones and properly building financial security. It is time to make a change.
If you don’t want to go into today’s battle with yesterday’s weapons and gear, then we need to talk.