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How To Understand The Value Of Your Military Benefits

 
 
 
 
 
USVW can help you find your solution.

Decades Of Out-Dated Financial Advice

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.


It's Time To Stop Following Orders

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.”

The Sequence of Returns Risk

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.

The USVW solution


The Unknown Knowns

Think about the Servicemembers’ Group Life Insurance (SGLI). 


  • Did you all know when you signed up for it that the premiums would be payroll-deducted from your LES? 
  • Did you know at the time that you most likely qualified for a LOT more coverage for the premium you were being charged?
  • Or did the contractor talking to you about it show you any other option?
  • Did he give you a day—or even an hour—to talk it over with anyone before handing you a form and a pen so you could sign it?

 

  • Did you know that the premiums would go up every 5 years for the same coverage you had as an SGLI? 
  • Did you know that if you didn’t opt out of it, you would get charged for it, and it would go on your credit report if you didn’t pay for it? 

I know because it happened to one of us on the US VetWealth team when he was in the reserves and still serving!


What about your SBP?


  • Did any of you out there do 20 years and then get told to sign up for a Survivor’s Benefits Plan?
  • How clear were they about how the benefits worked?
  • Did they tell you that there’s no equity in an SBP?
  • How about the fact that you would be on the hook for 6.5% of your monthly pension for the next 30 years?
  • Did they show you what that 6.5% of your pension could get you on the open financial market so that you could compare your options?
  • Did you know that you and your spouse have to categorically opt out of it if you didn’t want it?
  • Is it even possible to get out of it once you sign up for it?
And what about your Thrift Savings Plan (TSP)?


  • Did they tell you who was in control of it? Do you know how to look at it and check your balance? 
  • Do you know how to choose your asset allocations? 
  • Is there anyone you can talk to in order to review your investment strategies based on your military pay?
  • Do you have ANYONE around who can show you how to spend it when you do plan to retire?
  • Is there anyone around who feels as though they have an adequate education as to how the TSP works?

So What can you do?


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.


Schedule a training today

The Program that changes it all.

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.

How To Prevent Taxes From Destroying Your Retirement?

 
 
 

Short Answer:


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.


A Hidden Retirement Tax Bomb

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.


A Simple Solution

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!!!


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3 Problems No One Else is Solving

 
 
 

1. Active Duty & Veterans Military Transition Problem

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.

 

  1. Naturally we are used to following orders and SOPs and have made the assumptions that DOD benefits programs are mandatory (they’re not), that they are provided by the government (they’re outsourced to contracted private companies), and that they are the best option no matter what (uhhh… since when is a government program the most efficient option?).
  2. Military and Veterans are told they deserve even more help from the American taxpayer. Whether that is true or not doesn’t matter, the reality is that this has backfired. It has left a generation of veterans confused about their finances, and expecting income and wealth to be as systematic and easy as it is on active duty. 

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.


2. Career Military & Spouse Retirement Problem

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.

3. Veterans Retirement Growth & Distribution Problem

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.

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How To Value Your Military Pension

 
 
 
 
 
 

20 Year Sacrifice

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.


How to Value Your Pension

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.


  • Plans for a military career are based on time in service. Am I going for 20?
  • As a service member nears the 20-year mark, they have become institutionalized. They hope to get just one more promotion…but not only because they love service.

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.

Schedule a Military Pension Valuation [FREE]


That’s why our team at USVW created the Military & Veteran Pension Protector (MVP-P) Here’s what you get:

  • Customized Military Career Valuation (How much you are worth in $$$).
  • Military Pension Benefits Review
  • Custom Survivor Benefit Plan Analysis (This is where we show you how much money and opportunity cost you almost wasted)
  • 30-minute consultation
  • A privately-owned, wealth-creating, pension protection alternative



How to Avoid Life’s Greatest Expense

 
 
 
 
 
 


Don't Ignore Your Biggest Lifetime Expense: Taxes

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.


Living Longer is Costly

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.


Diversify Your Tax Basket

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.


 

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How To Win Your Transition Battle

 
 
 
 
 

It's Time For An Upgrade

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.


Bad Leadership Creates Apathy

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.

A Time For Leadership & Opportunity

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.


A Waste of Veteran Potential

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.

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How To Define Your Military Transition Opportunity

 

Institutions Create Soft Language


Ever heard of the swear jar? It’s a tool that’s meant to help break the habit of using “bad” words: whenever you say one, you have to put some designated amount of money in the jar. It works on the theory that no one wants to throw away money for no good reason; and yet, if you are a veteran who is following the standard routine of saving for the vague goal of “retirement” then that is exactly what you are doing. Sure, your money may be “safe” in a retirement fund, but if you can’t touch it until you are 65, then what you are throwing away is not money as money but money as opportunity.


That’s why today I want to propose that we add two new words to the list of “bad” words we need to stop using: military-transition and retirement.


The language that we use is so important. Language is not just about how people communicate; language goes on in your head. Language describes the reality around us. Language creates thoughts, and thoughts are your reality. So what kind of reality are we creating with words like military transition and retirement?



The word military is synonymous with combat, warmongering, fighting. It’s an abrasive term, it’s very limiting. Why would we attempt to use a word to describe ourselves individually that really describes the entire population of people? 


When a person is leaving the military, we’re talking about just one person — an individual veteran. What does that individual veteran want? Who is that individual veteran? Transitions suck — transition is about change, and for many, change is synonymous with uncertainty. Fear comes up. The words we are using — military transition — are literally creating fear and uncertainty. Look how people talk about this transition process. You can see it all over LinkedIn. It just seems so damn scary, going to job fairs and watching military guys put on a business suit, another uniform, and this one they don’t know how to wear properly. They look very uncomfortable. They’re walking around with resumes that look exactly like the resume of the guy next to them, hoping that they’re gonna get a job with one of these companies as a data analyst or project manager. It’s scary because of the tremendous amount of uncertainty. Transition is bad language. It offers zero motivation or guidance for self-discovery and self-leadership.


You Define How It Ends


Retirement is just as bad. Retirement is an end. Veterans should never end, they should continue serving. A veteran serves. We don’t retire. We don’t give up. We don’t want to live on a lake and kick our heels back and say, “Let’s just ride off into the sunset.” What for? That’s boring. We can do better than that. We must do better than that. If we’re not careful, we’re going to lose the liberty that our forefathers gave us. Retirement is not life. Retirement is not liberty, and retirement is not pursuit. Veterans need to continue to grow. The most successful people in the world don’t stop. Why would we stop?


I’m passionate about leadership, both from a personal level and having come out of the military. I thought I was doing all the right things: getting a good job, making a good paycheck, creating my own hours. Yet even I realized I wasn’t actually helping people, I wasn’t serving, and there was no true calling in what I was doing. I was literally just justifying some sort of existence with a paycheck, and the prospect of not having to live that way anymore was my reason to save for retirement.


You may think that I am going to propose alternatives for these words, something along the lines of choosing to employ cutesy, kid-friendly language when you really want to let loose with a string of expletives... but I’m not going to do that at all. In proposing that we change our language, I am proposing that we change our lives.


I don’t just want us to change the words we use in the conversation, I want to change the conversation itself.


I think that it’s time, as servicemen and women and as veterans, that we stop talking about transition and retirement and start talking about leadership and service. There’s no better time than now for such a large group of honorable and service-oriented people to stand up and lead again for the rest of their lives. But in order to do that, we need to get educated about our finances. We need to start thinking of money not just as something we need to keep our heads above water from month to month, or as a nest egg for later, but as a tool of empowerment, an instrument of liberty.


At US VetLife, we provide a network of like-minded businesses and non-profits to help post-military families live a civilian life of intention. If you want to stop talking about transition and retirement and start talking about leadership and service, then contact us to talk about the unique opportunities you may have available to you that will give you the financial freedom to transition to a new mission when you leave the military.

 

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How to Get Stuck Doing Work You Hate

Conventional = Ordinary = Mediocrity

When I was an adviser at a financial planning firm, I had gone through all the standard trainings and licensing. I wasn’t a Certified Financial Planner (CFP), but it’s not that hard to learn the standard retirement planning philosophy and basically follow the rules, regulations and compliance of how everybody is "supposed" to save their money if they’re doing all the correct things from a fixed income perspective. I didn’t know any better, and I served my clients in that capacity. I’m not saying that what I was telling them was wrong. It’s just an antiquated methodology, given the current times.


My wake-up call came when working with a young woman that I always considered my best client and one of my good friends. She was a former Air Force officer, really nice, a super-jolly-go-lucky type of personality who was working over in Germany as a Project Manager for one of the DOD contractors overseas. Those jobs tend to suck the life out of people. I had many friends that were just miserable with the hours they were putting in and the stress that was on them. Government contracting is high stress, because if you lose the contract, the company doesn’t get any money. People are constantly getting laid off. It’s hard to find good workers to come overseas on a whim.


But she was obviously very productive and didn’t really have much risk of getting laid off. She and many others like her justified doing this work because, guess what? Government contracting pays pretty well. In fact, they’re making the equivalent of 150,000 dollars a year, and the majority of it was tax-free due to the overseas foreign income exclusion tax. Of course, you’re getting extra housing allowances. As a single, 38-year-old former Air Force officer, she was living a high upper-middle-class lifestyle. She was frugal; she wasn’t cheap by any means, she just didn’t need her money. She lived in a small place and saved quite a bit of money on housing. She liked to go on weekend trips and really enjoy life. Any moment she could get away from work, she would travel. Her Facebook photos showed it. It was amazing to watch her. Eventually, she started to fall in love with going down to Africa to work with nonprofits and charitable organizations in Kenya and Ethiopia.

Sacrificing Real Dreams For Salary & Retirement

Now, one thing I haven’t talked about yet was the fact that because of this high income and frugal lifestyle, she had managed to save $750,000 — the majority of it in retirement accounts — by the time she was 38! That is not something you see very often in the military and veteran community.


I have seen Senior officers, Colonels and Generals, coming out of the army broke and in debt, not having saved any money, and scared to death of what comes next. So from her perspective, I’m sure she thought she had a stable lifestyle. But every time we’d get together, she was always confused about how we did the retirement planning. She didn’t want to take risk in the markets. So we had her invest in low risk vehicles, vehicles that offer absolute guarantees, in case the stock market crashed; vehicles that had no cost involved in them, and then some that had other costs. Either way, it was a completely unique and diversified portfolio because she was a very unique person and had unique opportunities around her. Now, I was never in a position as a financial adviser to give any life advice. I was just supposed to manage the money. Again, I was doing it based on the old school methodologies, and what it came down to is I recommended what my mentors told me I should sell her.


Then she got very passionate about these trips to Africa. She started to get more engaged with how her accounts were doing. Two things were happening. The first was that she would start to quiz me and question how we were investing the money. I would remind her that she didn’t need to take risk and I would re-explain what the fees were for. There was probably someone talking in her ear because his TSP was going up higher, which had nothing to do with her. But what are you going to do when you’re sitting in a cubicle and someone’s buying Apple stocks and getting returns, but not understanding the bigger picture? Second, she asked, "What if I used $20,000 and went down to Africa and traveled the world for a year, quit my job. Could I do that?" She was so nervous about the idea of quitting her job and using her money. This is about the time when I started to have problems with financial planning. So I said, "Yes! Take the money, use $50,000 you have enough. You don’t spend it. Use your money. Go enjoy the life you want.” 


And then she fired me! 

The "Retirement Planning" is a Trap - Wake Up Call

She sent emails to my mentor about me being in over my head. That’s when I realized that I wasn’t in over my head — everybody else was doing financial planning wrong. She had literally created the opportunity to do whatever she wanted, but somehow she had it in her mind based on all the poor information that society gives us that she couldn’t do it. That’s when I knew that if I was going to be a financial advisor, advising people on their budgets and portfolios was a waste of time. Anybody can Google how to do that. Instead I decided that if I’m going to be a “fiduciary” and make sure I’m doing things in the clients’ best interests, her best interest was to use her damn money and go enjoy life and do the things that filled her up.


But unfortunately, I didn’t know how to translate that conversation, so that set me off. I needed to fix this. I decided that if I was going to do what’s in the “client’s best interest,” I was going to teach them how to use their money to create wealth and abundance and opportunity, because there’s no better time than now. Unfortunately, my old friend is probably still working in that job, making big money and miserable. I hope she knows that she inspired me to help tremendous amounts of veterans change their lives and use their opportunity. I hope one day she joins me.

The Big Takeaway

Veterans have been taught to manage their money, but they are afraid of actually using it, which is why I recommend that you ask yourself: Who’s in charge of your life? Is your money a tool that propels you forward into a life of abundance and purpose, or has your money taken on a life of its own and convinced you that its existence as money is more important than anything you might want to do with it?

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How to Gain Value from US VetWealth

Survivor Benefit Plan (SBP) Cost Analysis 

The Survivor Benefit Plan (SBP) is the most misunderstood and over-utilized Government financial program we see among career military, as well as among veterans serving as federal employees. This program was designed almost five decades ago, is costly and inflexible, and doesn’t give you the control over your benefits that you have earned. While touted as a government program, you’re paying the SBP cost as a group insurance without being rewarded for your age or health. Our analysis is quick and easy and designed to give you the answers you need. Act now: far too many don’t even learn about this mandatory decision until their retirement briefing and that is far too late!


Thrift Savings Plan and 401k Rollover Process

Every time a veteran leaves military service, changes jobs, or starts a new career, they are usually presented with a benefits package. Typically, a qualified retirement savings plan is one of the primary incentives. These days, many veterans are changing employers every few years and don’t have the proper guidance about what to do with their old retirement plans. Many of their assets remain at the old plan, paying high fees and without investment advice. You may have heard about rollovers, but 401k providers make rollovers difficult to process (they don’t want to lose those fees). We will help you analyze your old accounts and facilitate a rollover or transfer of assets without any cost to you. Learn more about this specialized program for veterans today. 


SGLI and VGLI Transition Program

Service members are familiar with the Servicemembers' Group Life Insurance (SGLI) program because they see premium costs coming from their Leave and Earnings Statement each month and know that their beneficiary will receive a death benefit should something happen to them while they are serving. Seems like a good deal, right? The problem is that the death benefit isn’t enough for most families, but they assume it is. The government made it that amount for a reason, didn’t they? In reality, SGLI is underwritten by a private insurance company contracted by the government. This is important to understand because the day you leave the military this programs ends. As a veteran, now you have an opportunity to avoid costly programs like VGLI and FEGLI by outsourcing to a private insurance provider directly instead of going through a government program. 

NOTE: SGLI premiums are now only $25/month!  Yay! Thanks for the HUGE savings Uncle Sam... 🙄


Whole Life Cash Value Exchange System (1035) 

Love ​ it or hate it, whole life insurance has become a staple among many financial planning solutions geared toward the military community for decades. Whole Life is a type of permanent insurance that offers a fixed premium and the ability to earn dividends to grow a cash account inside the policy at a fixed rate. These programs allow you to “bank on yourself,” but they also have high costs, don’t reward you for good health, take years to accumulate, and lack the flexibility that today’s Veterans and their families demand. The good news is that innovations in the insurance industry have created a tremendous opportunity for whole life policy owners to finally take control of these accounts, significantly reduce costs, and greatly increase growth potential, all while maintaining a tax-free status. 


Veteran Retirement Income Consultation

Are you within the 10-year retirement window and concerned about whether or not you’ll have enough money to live on? We know that most veterans are asking themselves this question, especially today, given the state of the markets and government deficits. Many fear their benefits won’t be available to them and find most financial advisers either don’t understand or don’t properly address veterans' issues. They’d rather just sell you a product. That’s why we designed the Veteran Liberty Plan. We will work closely with you to understand your needs, goals, and resources and offer sound advice without forcing you to buy a financial product with high fees. Contact us today for a FREE initial review.



Term Life Insurance Policy Review

We believe that term insurance is by far the most misunderstood and misused financial product ever invented. Insurance companies love to sell it because 98% of the time the policy will end before being used, that's free premiums to the company they are happy to take. The vast majority of financial education providers and professionals will talk about term insurance like an afterthought and they make it seem like an easy sale for the military community. They do this because they are assuming everyone in the military is the same and that those in the military don’t make enough money to require real advice. These assumptions are wrong, and they won’t take the time that we do to not only understand the realities of the life insurance marketplace, but also to look at your unique situation and not just lump you into a pay-grade. Term Life is for catastrophe, similar to home and auto insurance. Contact one of our experts today to review your policy and ensure you have the best fit today.

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How To Choose The Best Life Insurance

A Rapidly Evolving Industry

In the noble profession of financial advice, insurance sales, and financial planning, there are as many theories about the ideal financial planning tool as there are dollars to be made. There are nuances to every product, and there are many different solutions that may work to meet a client’s needs. As time passes, interest rates change, life expectancy increases, and solutions evolve. Financial advisers must remain abreast of these changes and keep their clients similarly informed. Far too often, financial advisory companies emphasize the client acquisition process at the expense of the client servicing process. The idea of “one and done” is used as financial advisers, forever chasing their next commission check, keep filling their calendars with new consultation appointments, and often neglect the clients who occupy their current book of business — and for good reason. Yesterday’s deals do not pay today’s bills.

Within this ruthless market, there are those who argue that a client would be better served by buying a term life insurance policy and putting the rest of his or her disposable income in the securities market. Why spend thousands of dollars a month on a policy that lasts forever if you may not need all those death benefits past a certain age? Just get a policy with an expiration date. Put the rest into a managed account. The stock market has greater accumulation potential than an insurance policy.

Cheap Costs More

This school of thought speaks to a person’s tendency towards frugality. It also caters to financial services companies that make most of their money through the accumulation of assets under management. They make their annual 1.49% management fee and their “active managers” are off to pursue additional clients to increase their firms’ assets under management (AUM). On the surface, this school of thought seems sensible. A person’s family is covered in the event of a loss of life, and their assets are accumulating tax-deferred growth in the securities market in order to provide a comfortable retirement nest egg.

There are a few issues with this particular school of thought. Namely, the term “invest the rest” is rather vague. There are many investment objectives. There are nine different asset classes in the securities market that all have symbiotic, but often inverse, relationships with one another. These include equities such as U.S. Large Cap stocks, U.S. Mid Cap Stocks, U.S. Low Cap Stocks, International Developed Stocks, International Emerging Stocks, Real Estate, Bonds, and Cash. Every single one of these asset classes falls under the legal definition of security.

A “security” is an investment asset in which some or all of the principle is placed at risk of loss. 


A Modern Safe Approach

There is another school of thought that emphasizes the tax efficiencies of cash value from permanent life insurance. Term insurance policies are very inexpensive because 98% of term life insurance policyholders either outlive their policies or cancel them. With only a 2% probability of paying out, these policies are easy money for insurance carriers. Permanent life insurance offers tax-deferred growth and tax-free distributions of cash value growth. Though they offer lower rates of returns than the securities market, particularly the stock market, they do not offer risks of loss due to market volatility. As a result, a well-planned, well-funded permanent life insurance policy can be an excellent source of safe dollars.

Into the fray comes the Modern Life Insurance policies. This is a form of permanent life insurance that allows a client a great deal more freedom when it comes to funding their policy. But with greater flexibility comes greater responsibility. In a permanent life insurance policy, premiums that are paid in fill two buckets. The first bucket is the cost of insurance (COI). The cost of insurance is determined based on the company’s morbidity table, where it determines the probability of a person of a given age passing away. It is the amount of funds that must be kept aside in order to pay out every insured at a given age in case of his/her death. The older and less healthy a person is, the greater amount the COI is. As a person ages, it costs more to insure him/her. Permanent life insurance solves this problem by being priced out to fill this bucket within the first 5-10 years that the policy is in force. As this bucket is filled up, the excess is paid into a second bucket, cash value. This cash value is liquid, not subject to income taxation, and grows outside of the market. Universal Life Insurance allows a client to choose how quickly the funds in his or her policy accumulate value by setting his or her own contribution schedule and adjusting it as he or she wishes to. It is thus incumbent on the client’s financial adviser to maintain a long-term relationship with the client, keeping the client aware of the rates of return and the company’s overall expense ratio.


The History No One Tells You

In  the 1980s and early 1990s, both schools of thought for financial services operated like the Wild West. It was the era of Jordan Belfort and Barry Minkow and the San Marino Savings and Loan Scandal. On the Life Insurance side, the manner in which Universal Life Insurance was peddled in that era could well be compared to the manner in which a Stratton Oakmont day-trader hooked a new client. While we could argue about the accuracy in which Martin Scorsese’s Wolf of Wall Street portrayed Belfort, the manner in which Stratton traders conducted business was quite accurate. With dollar signs behind their eyes and an eye towards collecting another fat sales commission, these young men would extol the virtues of this stock and that one, advising their clients to invest all they could. Now, although the senior-level Stratton Oakmont Traders were fully aware of the illegality of their actions, they recruited sales teams composed of less than the best and the brightest. Often, many of these floor-level traders had little understanding of the illegality or even the immorality of their activities. This double-blind robbery could leave many unsuspecting clients fleeced out of their money, yet none the wiser as to what had happened to it.

In the sales of Universal Life Insurance, a similar type of double-blind swindling was taking place. When life insurance sales agents got in front of their clients, they showed their clients illustrations with grossly exaggerated rates of return. These rates of return were illustrated at 11% compounded annually. This definitely sounds awesome, almost too awesome to be true. In the 1980s and the early 1990s, interest rates were very high. Yet, in all investments, past performance does not guarantee future behavior. In high-interest-rate environments, many agents representing well known companies sold Universal Life Insurance policies with such illustrations. Buried in the fine print, however, is the insurance company’s investment spread. Essentially, these spreads are the difference between “earned” rates from assets versus “paid/credited” rates to insurance contracts. This disparity and the right of a company to adjust it would have serious ramifications regarding the disparity between illustrated rates of return and actual rates of return. 


Many of these companies offered lower spread during periods of high interest rates with the right to readjust the spread during periods of high interest rates. Keep in mind that when a life insurance company collects premiums from its policy holders, these premiums are placed in the company’s overall investment portfolio, which is composed primarily of high-end real estate and high-yield corporate bonds. The returns obtained from these investments are relatively stable, but also correlated with interest rates. To mitigate against this, insurance companies can keep their operating expenses low. This keeps the spread from fluctuating wildly. Unfortunately, the aforementioned companies failed to do this, causing their spreads to expand wildly when interest rates dropped. Add this to the fact that the illustrated rates of returns were exorbitant. Further add the fact that these illustrated high rates of return caused many agents to recommend that their clients under-fund their universal life insurance policy, and you have a situation in which many universal life insurance policyholders who have paid into their policies for 15-20 years request an in-force ledger only to find that their policies are devoid of cash value and are in danger of lapsing.

Know Who To Trust

This is a tragic situation akin to one faced by victims of Ponzi schemes. It is made all the more tragic by virtue of the fact that less than one insurance sales agent in a hundred even knows what an investment spread is. We had a rash of people who were swindled by sales agents who did not even realize that they were swindling their clients.

When reading these stories, no one is saying to paint all investment advisers or Registered Investment Advisers with the same brush as the Belforts, the Minkows, the Madoffs, and the Ponzis. In this same vein, it would be equally foolish to paint all companies that offer permanent life insurance solutions, particularly the more modernized Life Insurance solutions with the same brush as those who perpetrated the aforementioned bad faith sales. Yet, in a marketing email sent to a prospective sales agent one company attempted to use the settlement to a class action lawsuit against Transamerica to point out the “dark side of universal life insurance,” as if all universal life insurance transactions would lead to the same bleak outcome as that which befell the plaintiffs of this class action lawsuit.

This underhanded oversimplification is a tool to incentivize people to place more of their investment assets into securities. This can be a decent accumulation strategy. Of course, the securities market is fraught with volatility. With volatility comes the opportunity for growth. However, investing exclusively in this arena leaves many people subject to the double sequence of returns risk and income taxation risk, which leaves many people who work hard and save well penniless in their old age. This is especially important because investment firms and financial wirehouses can wax poetic about their accumulation capabilities and rates of return that their assets under management achieve, but they offer ZERO advice on how to DISTRIBUTE assets under their management. Why would they? Every dime taken out of their clients’ investment accounts is one less dime under their management and cuts into their 1.5% annual management fee. Yet, what good is an account balance if a person cannot spend it?

Fixed products in the insurance market can be a great way to mitigate against the risks of income taxation and market volatility and have many built-in ways to prevent a client’s account balance from reaching zero, while providing a client with a tax-efficient, principle-protected liquidity.

It would be the height of hypocrisy to advocate the use of fixed products to the total exclusion of securities products. However, the nature of the relationship between investors and their advisers must change. These relationships must be cultivated the way a family cultivates a relationship with its family doctor. The family must trust the doctor’s integrity. The doctor must be willing to make himself a trusted adviser to the family. The doctor must abide by his Hippocratic oath to first do no harm. The family must keep in regular contact with the doctor, so that the doctor can respond in kind to the family’s changing needs. The doctor must keep up with the latest medical trends in order to provide his patients with the most up-to-date advice. Such relationships lend themselves poorly to the rapid transactional practices of financial advisory firms and insurance companies.


It is in this vein that financial advisers must determine the interests of their clients and accordingly recommend a uniquely tailored blend of insurance and securities-based instruments. As the clients’ situation evolves, so must this blend evolve. That recommendation may involve term insurance, it may involve permanent insurance, it may involve large stock positions, or bond positions. There is no panacea, nor is the same advice necessarily applicable to any two situations, except for this: Do your homework. Do not pass judgment on an entire asset class based on one story. And above all, make sure that you evaluate your situation with a knowledgeable expert that you can trust.

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