Why SGLI Isn’t Enough Life Insurance For Most Military Families (Part 2)

This is the second of a two-part article, designed to outline why SGLI isn’t enough life insurance for most military families.  Part one discussed SGLI coverage on the servicemember.  This article discusses the reason why Familymember SGLI (FSGLI) is usually not enough to cover the death of a spouse.

Overview

Every successful military family succeeds not just because of the military career, but because of the spouse.  In this article, we’re going to discuss three major factors that should be considered when insuring a supportive spouse.  Continue reading

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Why SGLI Isn’t Enough Life Insurance For Most Military Families (Part 1)

Most people know that SGLI is the cheapest life insurance available.  At $28.00/month for $400,000 in coverage (or about 7 cents/month for every $1,000 in coverage)—by far.  Unfortunately, this creates two problems:

  1. SGLI’s pricing leads people into thinking that all life insurance should be this cheap.
  2. The $400,000 ceiling leads many people into thinking that all they need is $400,000 in life insurance, regardless of what’s going on in their life.

Both of these assumptions leave many families in a very precarious financial situation.  This article won’t address why commercial life insurance (even term insurance) isn’t as inexpensive as SGLI.  It also won’t give you a ‘one size fits all answer on how much life insurance you need.’  There is no ‘best’ answer here.  The best answer is one that helps you sleep at night.

This two-part article will outline three ways many fee-only financial planners help families figure out their life insurance needs so they can obtain coverage that’s appropriate for them.  Part one focuses on determining the life insurance needs to cover the primary breadwinner’s lost income.  There are families where the servicemember is not necessarily the primary breadwinner.  However, for purposes of this article, we will assume that the primary breadwinner is the servicemember. Continue reading

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10 Considerations About the Blended Retirement System (BRS)

Recently, I sat down with someone who asked me whether she should take the military’s Blended Retirement System (BRS).  As most people know, the BRS is the military’s attempt to slowly move away from a defined benefit pension to a defined contribution pension.  So her question was, “Should I take some money now, in exchange for a lower pension later?”

As a member of the military community, I’ve seen this discussion a lot.  There are any number of opinions across the spectrum.  As a financial planner, though, I’ve seen less discussion.  However, from my experience, personal finance is more personal than finance.  In other words, it’s not just crunching the numbers.

Immediately, these thoughts came to my mind.  Granted, this is not for the majority of people who only stay for their initial obligated service (enlistment or officer obligation).  Nor is this for those who truly don’t plan to stay in for at least 20 years.  However, if there is even an inkling that you might, you should consider these thoughts: Continue reading

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5 Home Purchase Considerations For Your Military Transition

When leaving the military, one of the most important considerations is where to live.  Should we buy a house?  Should we rent?  When making a home purchase decision, you need to understand how complex your situation is.

For example, staying local during your transition might be a lot simpler than relocating.  But relocation isn’t the only factor.  You need to truly understand all of the moving pieces so that you can make a truly informed decision.

Let’s look at five considerations when trying to decide whether a home purchase is right for you. Continue reading

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When Departing FROM the Military, What Are You Going TO?

The military does a great job of assimilating this varied group of people into one common purpose.  However, we all leave the military, for one reason or another.  And that’s where there’s room for improvement.

The military has a moral (and legal) responsibility to provide us transition resources.  However, it’s ultimately our job to make sure that the rest of our lives is as productive, fruitful, and rewarding as we want them to be.

Before we begin, it might occur to some people that the title of this article is grammatically incorrect.  As an English major, I can appreciate it.  And I hope that this title is grammatically incorrect enough to take an extra second to think about what your post-military life will look like.  That’s what this article aims to discuss. Continue reading

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Roth Conversions: Why Timing Is Important (Part Two)

In a previous Roth conversion article, we discussed the importance of timing when it comes to Roth conversions.  There are other Roth benefits, such as not having to worry about required minimum distributions (RMDs), and being able to take out qualifying contributions & conversions at any time.  However, there is a danger of overpaying for that privilege.

Let’s imagine a household currently in the highest tax bracket (39.6%).  They plan to eventually retire to the 15% tax bracket.  A Roth conversion today would cost that household more than twice as much than if they waited until they had to take RMDs.  Conversely, a family that is currently in the 15% bracket might save thousands of dollars by maximizing their conversions in their current tax bracket.

This article aims to discuss:

  • Why a military family’s tax bracket might change over time
  • When you might want to consider Roth conversions
  • When you might want to delay Roth conversions
  • Why you might want to hire a tax professional to help with tax planning
  • Why you might never want to convert to a Roth account at all

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Roth Conversions: Why Timing is Important

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Back to Basics-VA Interest Rate Reduction Refinance Loans (IRRRL)

This article was suggested to me by a long-time shipmate & colleague (thanks, Dave!).  Over my life, I’ve refinanced several times using an IRRRL, when it made financial sense for me to do so.  However, it wasn’t until I got this question that I thought about researching it a little more for an article.  Hopefully, this article will achieve a couple of things:

  • Provide some information without dangling a mortgage-application process in front of your nose (I hate learning about how something works from someone who has something to gain from it)
  • Give you some perspective beyond what the VA’s website tells you.  It’s good information, but not all of it is accurate.  Also, sometimes it helps to have a real-life example or two.  That way, you can make your own decision based upon the facts in your own financial situation.

Continue reading

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The Difference Between a Financial Plan & Financial Planning

I remember the first time I received a financial plan.  Actually, it was for my mother.  It was a while ago, before I decided to become a financial planner myself, and is probably one of the reasons why I did so.  My mother had inherited some money from my grandmother, and after a couple of years of waiting for the broker to do anything, we decided that we were going to move it.  I’d researched some financial planners in the area, and decided to work with an hourly financial planner we’d found.  For $800, she presented us with a beautifully designed, articulate financial plan.

My mother paid the fee, smiled at the planner, and graciously thanked her for her work.  As we left, she turned to me and said, “What am I going to do with this?  I want you to tell me what we’re going to do, and to help me do it.”  I didn’t realize it at the time, but that statement highlighted one of the key differences between a financial plan and financial planning. Continue reading

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3 Ways to Make the Most of Your Terminal Leave

In a previous article, I wrote about the decision to either take terminal leave or sell it back.  Basically, it boils down to the opportunity costs—what are you going to do with that terminal leave if you choose to take it?  Personal reasons aside (like taking a well-deserved break), if you have nothing better to do with your leave, then you’re better off financially just selling it.  In this article, we’ll discuss 3 ways you can make the most of your terminal leave. Continue reading

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