As a Veteran of the U.S. military, you have financial priorities and concerns that are different from the general population. When it comes to your investments, your financial planning should address those unique attributes such as affordable healthcare, access to fixed-income revenue, and inflation as applied to benefits.
Here are typical income sources and asset allocation strategies to consider as components of your military financial planning.
Financial Planning for Military Veterans: Common Sources of Income
As a military Veteran, you may have a surprising number of potential sources of revenue, such as:
- Pension: Scheduled monthly payments corresponding to your years of active service.
- VA Disability Compensation: Payments due if you have disabilities directly tied to your military service.
- Social Security (SS): Standard SS benefits common to all Americans.
- Employment: Many Veterans have second (civilian) careers providing regular income.
- Veteran Benefit Programs: Education, vocational training, home loans, Veterans’ Group Life Insurance (VGLI), and discount programs.
These benefits open up more capital funding opportunities for your investments, making financial planning especially critical.
Asset Allocation Strategies for Military Financial Planning
As a military Veteran, you must balance your risk tolerance levels with appropriate rewards. Military financial planning breaks your investments down into three general areas — aggressive, moderate, and conservative approaches.
Aggressive Investing
Many financial professionals suggest a bold, ambitious investment strategy, especially for younger Veterans with a longer investment horizon in front of them. Aggressive investing involves a higher concentration of stocks — generally more than 70% of an investor’s overall portfolio — with the remaining 30% or less devoted to bonds and alternative investments.
Investments like tech exchange-traded funds (ETFs), venture capital, and corporate bonds are typically part of an aggressive strategy. They represent higher growth opportunities over time for those willing to shoulder and monitor the risk.
Balanced Investing
If you’re a Veteran in the mid-career phase — or if you can handle a moderate level of risk — you may want to seek a more balanced investing strategy that levels market exposure with overall stability.
Asset allocation tends to be more even-handed. About half of the investment portfolio goes to stocks and the remainder goes to bonds or other reliable alternative investments like real estate.
Stock market index funds, such as the S&P 500, are a common element in balanced investing. Dividend-issuing stocks are especially highlighted in a balanced portfolio. Municipal bonds, mutual funds, and real estate investment trusts are often part of this strategy as well.
Conservative Investing
Veterans with a low risk tolerance may prefer a financial strategy that covers more dependable, consistent investment types. The goal is to gain stability and preserve capital from reliable sources of financial steadiness. You may choose to devote as much as 60% to bonds, with 25% to 35% going toward stocks and the remainder as cash.
Conservative investments include blue-chip stocks — established, well-known, historically-sound companies with billions in market capitalization. They also can include U.S. treasury bonds and high-yield savings accounts.
Considerations in Military Financial Planning
Other areas to think about in financial planning for military Veterans include:
- Building an emergency fund covering six months of estimated income
- Using IRAs, Roth IRAs, the Thrift Savings Plan (TSP), and other tax-advantaged funds
- Estimating future healthcare expenses
- Accessing educational benefits like the GI Bill
Other considerations unique to your situation may arise as well, so you’ll want to consult with financial professionals who can help guide your decisions toward the best outcome for you.
Complete Financial Planning for Military Veterans and Families
AAFMAA Wealth Management & Trust LLC (AWM&T) focuses on benefits, custom investment strategies, and tax and healthcare planning for the military community. We’re military Veterans ourselves, so we know the issues and challenges Veterans may face in investing. AWM&T frames our service around the most important aspects of those who have devoted their prime working years to serving their country.
We exclusively serve military families just like yours, delivering the wealth management solutions and the specialized financial advice you need and deserve. To get in touch, call 1-910-307-3500 or click here to speak to a professional. You can also learn more about us and your options on our website.
About Us
AWM&T was created in 2012 to meet the financial needs of military families. We provide experienced, trustworthy, long-range financial planning, investment management, and trust administration services to support financial independence and security. We aim to be the premier provider of fiduciary services by always working for AAFMAA Members’ best interests.
We are proud to share the mission, vision, and values of AAFMAA, our parent company, consistently building on AAFMAA’s rich history and tradition to provide Members with a source of compassion, trust, and protection. Through AAFMAA’s long-standing legacy and our financial expertise, AWM&T is honored to provide personalized wealth management services to military families across generations.
Menu
