250/mo for 30 years for a 150k payout is a bad use of your hard earned money. The same amount, compounded at the generic 8% that many use for historic hypothetical stock market returns, comes out to ~372k. A more realistic 5% would yield 208,000. As several have stated, any type of insurance policy other than term is inappropriate for all except high earners that have already exhausted all tax advantaged space.
Over the last 15 years, the S&P has grown at about 3-4%. Same for DJIA. That doesn't adjust for inflation, so your real returns are around 1-2%, and most of that growth was in 2013.
2 things: thank goodness I asked this question and glad I got that accounting degree. At least now some people can see some pros and cons thrown around to make some educated decisions later on, whatever their situation may be. I think I'll take anywhere from 250k-400k SGLI pending my situation, @ $15-$26, and stick 300 into the Traditional IRA and 158 into the roth. Still clearing a solid amount as an 0-1 with car payment and insurance. Getting $3,600 tax deduction from the T-IRA and $1,900 a year in capital gain tax free contributions per the Roth. If a 26 y.o. were to do that and earn 6% over the life of the investment(vesting at 62) they would get $454,565 T-IRA and $239,404. 700k sounds alright and again if I fall in the ocean I still have the SGLI for the family to fall back on. Again this doesn't account for any investments outside of IRA's such as real estate or non retirement accounts and the wife's money as well. Only question left is will there still be an military retirement agreements in 20 years?
It's been a while since I crunched the numbers as a single Ensign, but I believe that investing in a traditional IRA/TSP is of negative value to you. Your tax return is going to show $25k-ish in taxable income, which will put you at an actual tax rate of ~10-12% if you just factor base pay. Factor in BAH and the state tax exemption a lot of states give to military, and your actual marginal tax rate should be in the 6-8% range. Take off more if you are paying off student loans. If you go into traditional IRA, all those withdrawals are going to get taxed by both federal and the state where you retire and you're probably banking that you are going to collect significantly more than Ensign pay when you retire. The extra $3,600 of income at 15% tax rate saves you a whopping $540 a year in federal tax liability now, but the tax man is going to recuperate that and then some when you retire. If you're still single as an O-3 and start to have income that reaches the 25% bracket, then using the traditional option might be worth it.
TSP didn't have a Roth option when I first commissioned, the mantra was "max out a Roth IRA, then put money into TSP."
Well, now TSP has a Roth option, so unless you are really good with picking stocks and absolutely must have the greater control that comes with an IRA through a broker, then TSP is your best bet due to their really low fee structure (0.004% vs. 0.05-0.25%, depending on how much you can put in). After you've contributed your max of $17,500 to TSP, you could look toward another IRA.
Good question. CNO has indicated that there are currently no plans to change the retirement system as it is, and in the event of future changes, those already in service will be grandfathered in. So if that's true, we're good to go.
The VCNO said that no changes to retirement were in the works that would affect current AD servicemembers or retirees. Two weeks later Congress altered the CPI increases to current retirees.
assume you're 37. You've been investing since 17?