Making it to retirement is a great achievement for many veterans. Most retirees at 20 years will receive 50% of their base pay. Each veteran reaching this threshold is essentially a millionaire. Of course, this windfall is paid out incrementally over many years. For instance, an E-7 retiring today can expect to receive $1,997.20 per month and $23,972.40 annually leading to $958,896.00 over the next 40 years. Retiring O-5s will receive $3,848.70 per month and $46,184.40 annually for a total of $1,847,376.00 over 40 years.
Even without considering adjustments for inflation, we can see that veterans can reach some serious numbers. Veterans can also add 2.5% for every year they serve beyond 20 years before retiring and achieving higher pay grades can add hundreds, if not thousands of dollars per year.
Despite the terrific benefits of military service, retirement salaries alone do not allow veterans to maintain the standard of living they and their family were accustomed to when they left the service. Part of this reason is that retirees only receive a percentage of their base pay. They lose the other benefits, like basic allowance for housing (BAH), cost of living adjustments (COLA), flight pay, and other sources of income for which they’ve grown accustomed.
Additionally, recent changes to military retirement require military members joining the service after January 1, 2018 to be even more savvy with their retirement plans. That’s not to say this new program is a bad thing. As it stands, only 17% of veterans actually make it 20 years and qualify for retirement. Before January 2018, these veterans left the service with nothing. Now, they leave with the beginnings of a retirement savings, while retirees making it to 20 years receive a reduced percentage of their base pay.
So, how can service members get ahead of their post-military service and secure their financial futures? You probably already know the answer--invest. If you are in the military now, learn to pay yourself first. This means before you do anything with your paycheck, invest a portion of it to a savings, Thrift Savings Plan (TSP) , or other retirement account. You might even consider real estate investing. While I highly encourage you to maximize your TSP and other retirement options, life in the military can help set you up to do great things with real estate.
While this article is not nearly long enough to cover all the intricacies of real estate investing, I will recommend some books that will help you understand what real estate investing is, how it works, and how to use it to secure your financial future. For the time being, however, know that each time you PCS (permanent change of station), you have an opportunity to build your nest egg. The idea is simply to buy property and obtain equity each time you PCS and hold the property. When you PCS, turn your property over to a property manager, and let them handle the rental and maintenance of the property. With them handling all the leg work, you’re free to find the next property, and repeat the process. At the end of your military career, you could have a great cash flow that compliments your retirement. For instance, some military members have managed to passively obtain multiple rental units (over 20) while navigating their military career to achieve substantial cash flows in their post military career.
While I haven’t achieved a 20-property portfolio yet, I did leave the Army with two rental properties. One was paid off and the other one has nearly $100K in equity. Together, these properties net me an extra $18,000 per year. Two-years later, I’ve obtained two more properties, obtained a greater equity, and increased my cash flow to $27,600 (before maintenance, insurance cost, etc.). Now, I’m actively looking for my next investment. However, I could have done better and that is where vising websites like BiggerPockets.com and reading great books on property investing can help put you ahead. Honestly, had I read Brandon Turners book, “The Book on Rental Property Investing” before I bought my last townhome, I could have saved myself a lot of sweat equity. The good news is I’ve read it now, and I’m much better prepared. In fact, I just pulled off my first BRRRR, and if you’re wondering what that means, then pick up one of these books below and find out. Better yet, get them all, and keep going!
Whether you’ve been in for three years or thirty, all good things must come to an end, and military service is no exception. Like Winter, Transition is coming! Fortunately, you have a tremendous resource at your disposal to ensure your transition is a success! That resource is your local transition assistance office.
At most installations, dedicated staff are there to ensure you, as an eligible transitioning service member, have the education, training, and counseling necessary to be career–ready when you leave active duty service. If you happen to be on a post that doesn’t have a transition assistance office, then there are online course options as well.
However, many service members often do not take part in these courses until they are danger close to their departure date. Additionally, while a week-long course will expose you to an abundance of useful material, service members often find it challenging to complete their resume and cover letters, develop their elevator pitch, prep for interviews, identify their skills, build their networks, establish their brand, create a budget, and complete all the other tasks that come with preparing for a successful transition.
The question then is how can you make the most of this course when you do attend? The answer is quite simple: READ. One of the greatest things you can do to improve your chances of a successful transition is to read. Many veterans have crossed that threshold well ahead of you, and they can offer great insight into their own preparations, concerns, and eventual success. Reading can also turn you on to job hunting techniques and career opportunities you may never consider otherwise. These insights can help you traverse the challenges of finding a career during your transition and put you on the path to enjoying your post-military years.
The important thing is to start educating yourself well ahead of your actual transition. Doing so, can help you set events in motion that will help ease your transition experience and ensure your post military years are thriving ones. Start reading today and check back with The Military Post on a regular basis for new military transition materials.
Amazon also has several books you can pick up today!
Hire G.I. works with hundreds of employers who are looking to hire transitioning service members, veterans and military spouses. They offer boutique style veteran job fairs that allow service members and veterans to build relationships with HR employers and imform them of your talents. Are you interested in starting a franchise, Hire G.I. can help you with that as well.
Resource page: https://hiregi.com/.
CareerOneStop can help you find the tools you need to research career information, training, or jobs. CareerOne Stop is sponsored by the U.S. Department of Labor and strives to be a resource for veterans and service members to find employment information and inspiration. It offers the following services:
Resource page: https://www.careeronestop.org/Toolkit/toolkit.aspx
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