Financial Planning Tips For US Veterans And Those Who Serve (Forbes)

Posted on: July 7, 2016

Financial Planning

As Fourth of July fireworks still ring in our ears, we wanted to share a great article from Winnie Sun at Forbes, detailing financial planning tips for US veterans.

Read Full Article at Forbes/Investing

Six Financial Planning Tips For US Veterans And Those Who Serve (Forbes)

Independence Day is not only a celebration of our nation’s birth, it’s also a day to honor and appreciate the men and women of our country’s military. These tips will allow military members to take control of their financial future and feel empowered.

Tip #1: Use Your Education Benefits Wisely

The GI bill covers up to 36 months of the full cost of in-state tuition (and a capped amount for private colleges) for veterans. Education benefits can be transferred to other family members, but you normally have to serve an extra four years after signing up for this benefit, so make sure to ask for it as early as possible in your military career.

Tip #2: Take Advantage of a Roth IRA

A Roth IRA can be particularly beneficial if you’re receiving tax-free combat-zone pay. All contributions are tax-free. Withdrawals from the account may be tax-free, as long as they are considered qualified. (Limitations and restrictions may apply. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.) Speak to a financial professional to see if this option is right for you!

Tip #3: Maximize Your Tax Benefits through Residency

Your state of residence can have a big impact on your taxes. Active-duty military personnel areallowed to maintain legal residence in one state even if they are transferred to another state. If you live in a tax-free state (such as Florida or Texas) and later move to a state where you’d be required to pay state income tax, this can make a huge impact.

Tip #4: Discover Your Low-Cost Investment Options

Military service members can benefit greatly from using the Thrift Savings Plan. One of the lowest-cost retirement savings plans available, it lets you either choose one of five index mutual funds or opt to set a target date fund instead. Your contributions to the plan reduce your taxable income. In 2016, you can contribute up to $18,000 to the Thrift Savings Plan, and if you’re deployed and receiving tax-free income, you can contribute up to $53,000. Deployed personnel are eligible for the military’s Savings Deposit Program, which allows them to invest up to $10,000 for each deployment. The program lasts for three months following deployment. Members receive 10% annual interest which is compounded quarterly. Restrictions may apply as to the liquidity of this account while it is in use. Please consult with your benefits coordinator prior to selecting this option.

Tip #5: Understand Tools for Debt Relief

According to the Financial Industry Regulatory Authority , military service members typically have more credit cards and more costly spending behaviors than civilians. A 2015 Debt.org survey of military families found that they were an average of $13,700 in debt, and much of this was credit card debt. Yet, military members have some unique programs and rights that can help ease this debt.

For starters, the Service Member’s Civil Relief Act places a cap on the interest rates for any loans that you took out prior to active service. Unlikecivilians, military members are allowed to terminate a house or apartment rental agreement if they have been permanently moved to a new station or will temporarily be assigned to a new base for 90 days or more.

Tip #6: Simplify Your Home-Buying Experience

One of the best benefits offered to military members is the Veteran’s Administration home-loan program. Loan rates are competitive, and the VA guarantees up to 25% of the payment on the loan, making it virtually one of the only ways available to get a home with no down payment and no private mortgage insurance.

Read Full Article by Winnie Sun at Forbes/Investing

Ambassador Advisors is a Registered Investment Advisor. Securities offered through American Portfolios Financial Services, Inc. of Holbrook, NY, 631-439-4600 (APFS), member FINRA, SIPC. Investment Advisory Services offered through Ambassador Advisors, LLC. Ambassador Advisors is not owned or operated by APFS.

Any opinions expressed in this forum are not the opinion or view of Ambassador Advisors or American Portfolios Financial Services, Inc. (APFS). They have not been reviewed by either firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.