Don’t Just Plan for the Future, Plan for Your Future
You have a unique vision of what you want the future to look like. Maybe you want to buy a home, send your children to college or you’re looking toward retirement. When it comes to planning for your “some-day” expenses, they become a lot more attainable if you start planning and saving early.
Here are four common long-term goals that you can start planning for now.
1. Owning a home
Whether you see home ownership as a way of creating stability for your family or as a long-term investment, there are steps you can take to smooth the path toward becoming a homeowner. As a member of the military community, the first thing you might want to consider is the timing.
• With the amount of moving you do, the question of renting or buying a home has probably come up a lot, but the answer must be tailored to your personal and financial goals. If you’re unable to live in the home for more than a few years, are you prepared to become a landlord? Selling a home shortly after purchasing it doesn’t usually pay off.
• If after weighing your options and considering your timing you decide that buying a home is right for you, take a look at your personal finances. Your financing options are heavily impacted by your current credit score. A low credit rating could mean higher interest rates, which would significantly increase your monthly payment and the long-term cost of the home. If yours is less than stellar, consider putting off the purchase until you can rebuild your credit.
• If your credit looks good, take a look at your financing options. The VA Home Loan is a substantial benefit available to service members, veterans and surviving spouses who are looking to purchase a home for personal occupancy. You need to consider eligibility and purchasing requirements, but for those who choose a VA loan, there can also be significant benefits.
o If you look at using a conventional mortgage, consider whether you have enough saved for a down payment. Without a substantial down payment, you may be required to purchase private mortgage insurance, which is more money out of your pocket. Planning and saving ahead of time is the best way to increase the financing options available to you.
Purchasing a home can be an exciting and fulfilling experience if you take your time and lay the financial groundwork. As soon as becoming a homeowner develops into a future goal, talk to a personal financial manager or counselor to see how you can prepare your finances to support your vision.
2. Supporting your children’s future
As your family grows, so do your expenses. If you have aspirations of sending your children to college, the best time to start planning and saving is now. If plans change and they don’t need the funds, you can easily divert the savings toward another goal.
Paying for education
As a military family, you have some unique opportunities to help offset the cost of education for your kids. There are hundreds of national, state and local scholarships awarded specifically to military children, which can help augment the money you set aside. Scholarships can be helpful, but they shouldn’t take the place of a solid plan. Consider these additional ways to set aside funds for your children’s future:
· As a member of the military, you may qualify to transfer some of your GI Bill benefits to your children or spouse, which could mean a huge cost savings in the future.
· Recent changes to 529 plans mean you can now use the funds for K-12 education expenses, in many cases. Putting money aside into one of these tax-advantaged programs may be a good move.
Talk to a personal financial manager or counselor at your installation’s Family Center to see if one of these options will help you reach your financial goals.
Paying off student debt
The prospect of paying for your children’s education can feel extra daunting if you’re carrying your own student debt. Consider these steps for reducing your education costs and paying off your loans while saving for the next generation.
· No need to rack up new high-interest debt to support your own education. As a member of the military, you have access to programs like tuition assistance and the GI Bill to help fund your educational goals. Check with your education office to find out which programs you qualify for.
· Military spouses have access to loans and scholarships for funding education, as well. Visit your Family Center or contact Military OneSource to learn more about military spouse-specific programs.
· If you entered the military with student-loan debt, there are several programs that may help you pay it off faster or even forgive some of the debt.
o Start with Student Loan Benefits for Members of the Armed Forces by the Department of Education to learn about the benefits you have earned through your service and ways to manage your student loans. Once you have a plan in place, you can focus on saving for the next generation.
o Learn more about Zero Percent Student Loan Interest Relief, and see if you qualify for assistance.
Higher education, whether for your children or for yourself, can be a big expense. Begin saving early and take advantage of the many programs designed to help military families reach their academic goals.
3. Career transition
Transitioning from the military to the civilian sector can be exciting, but also stressful. Build a solid foundation before making the move by researching and investing in financial products, like insurance, that are designed to help you stay on top.
Change in lifestyle
There are a few types of insurance that you are automatically enrolled in as a member of the military. Research the best way to replace the benefits you will be giving up as you transition to the civilian sector.
· Your Servicemembers’ Group Life Insurance, or SGLI, is in place while you’re wearing the uniform, but it won’t transition with you. Look into life insurance policies, so you can still financially protect your family if the unexpected should occur. Begin your search by meeting with a personal financial manager to discuss the amount of coverage you’ll need and to learn strategies for comparing offers.
· Tricare is a significant benefit extended to military members and their families, and another type of insurance you will need to replace when you transition. Many employers offer health insurance as a benefit, but if you intend to start your own business or are planning to go back to school, you’ll need to learn about the many options out there and financially prepare for them.
o Work with a personal financial manager to develop some research and purchasing strategies you’ll feel good about.
Insurance can help you weather the unexpected. Make sure you have the support of proper coverage when making substantial life changes, like transitioning to the civilian sector.
4. Military retirement
Retirement planning is a journey, and the outcome heavily depends on the choices you make along the way. Learn about your options and different retirement strategies, so you can make informed choices that reflect your long-term goals.
• As a service member, you will either participate in the Blended Retirement System or, if grandfathered in, the High -3 Legacy system. Both military retirement programs provide peace of mind for your retirement, but also require your active participation in order to personalize the outcome.
• Spend time discussing your options with your family and make sure your disbursements, matching funds and incentives or bonuses are planned in a way that complement your financial goals.
• The Thrift Savings Plan is available to all service members regardless of the retirement
system you participate in, and opening an account may be one of the best retirement savings decisions you can make.
• Military spouses who intend to retire from the workforce also need to plan.
o Check out the Department of Labor’s Top 10 Ways to Prepare for Retirement to make sure you’re on track too.
• Maximize your retirement savings as a couple, and create security for a non-working spouse by contributing to individual IRAs.
o Non-working spouses can have their own retirement funds through a spouse-funded IRA, sometimes called a Spousal IRA. See if you and your spouse qualify, and start increasing your retirement security.
Saving for retirement requires patience and discipline. It’s the ultimate long-term financial goal. Resist the urge to borrow from your future, and avoid taking early disbursements from your retirement savings.
Your long-term goal
It’s easy to get stuck in the now, but taking a few minutes to think long-term can help you get organized for success. Early planning is the key to one day owning your dream home, sending your kids to college, or setting yourself up for a comfortable retirement or transition after military service.
No matter what your long-term goals look like, you’re more likely to get there if you plan ahead and stay on track. Want a little help getting started? You have accredited personal financial managers and counselors at your fingertips. Set up a no-cost appointment at your nearest Family Center to learn more about planning for your future.
