Military Officer - November 2007 - (Page 66)

ﬁed ﬁnancial planners (CFPs) through MOAA’s sponsored ﬁnancial planning partnership, the Garrett Planning Network (GPN). Their ﬁnancial tuneups highlight challenges faced by many active duty ofﬁcers and offer creative potential solutions provided by experts. Read on for tips you might implement in your own situation. NAME: 1ST LT. ALEX GREEN, USAF SitRep: Green is on active duty and engaged; he and his ﬁancée want to start a family soon after marriage. Planner: Kim Jones, CFP, of Jones Strategic Financial Planning LLC in Broomﬁeld, Colo. year level premium term policy, which will lower Jackson’s insurance costs from $4,500 a year to just $215. They use the $360 a month of freed-up cash ﬂow to increase their retirement savings, especially after Jones showed them how much the extra savings could add up to over the next 40 or so years. Jackson had been contributing a minimal amount to her 401(k) plan, but Jones recommended she increase the contribution enough to capture the maximum employer matching contribution and fully fund a Roth IRA each year ($4,000 annually). Jones selected the Vanguard Wellington Fund (ﬁve-year average return Increase of 11.37 percent, 0.30 peryour 401(k) cent expense ratio) — a contribustable, low-cost balanced fund investing in both tion to stocks and bonds — for capture the the Roth IRA and helped maximum Jackson reallocate her employer 401(k) plan as part of the couple’s overall asset mix. matching Although Green’s contribuThrift Savings Plan (TSP) tion. account doesn’t beneﬁt from matching funds, it does provide an excellent low-cost investment vehicle. Jones recommended he initially target 10 percent of his pretax pay — split between the TSP and a Roth IRA — and increase the amount to 15 percent once the couple’s debts have been paid off. She recommended the Vanguard Wellington for Green’s Roth IRA and an allocation of 40 percent C Fund (common stock), 20 percent S Fund (small cap stock), 20 percent I Fund (international stock), and 20 percent G Fund (government bond) for the TSP. At the close of the meeting, Jones provided Green and Jackson with a detailed set of implementation instructions, carefully reviewed their debt-reduction plan, and helped them ﬁnalize their detailed cash-ﬂow J ust getting started: Air Force 1st Lt. Alex Green, newly engaged and a recent graduate of the U.S. Air Force Academy, Colorado Springs, Colo., has several key ﬁnancial concerns. Like many young ofﬁcers, he used a USAA cadet loan to buy a car. He also is carrying credit card debt and a loan for the engagement ring he recently purchased for Sandy Jackson, his ﬁancée. He contacted Kim Jones, CFP, of Jones Strategic Financial Planning LLC in Broomﬁeld, Colo. Because Green is about to be married, Jones suggested they include Jackson’s ﬁnances in the decision process. Her ﬁnances complicated the picture somewhat, because she has both student loans and a car loan. She also is paying nearly $4,500 annually for a life insurance policy providing limited coverage. Since the couple plan to start a family shortly after marriage, adequate insurance coverage at a reasonable cost is a key concern. Jones ﬁrst assisted the couple in crafting a debtreduction plan to pay off all debts except Green’s car loan, which has a very low interest rate. They jointly developed a program to get rid of all other debts within six months and scheduled a follow-up meeting with Jones to keep them on track. Next they tackled their life insurance coverage. Green has the maximum Servicemembers’ Group Life Insurance coverage of $400,000 and already had purchased an additional $250,000 term policy through military-friendly Army-Air Force Mutual Aid Association, but Jones is concerned that might not be enough once children come along. She recommended increasing the term coverage for Green to $800,000 once they start a family. After consulting a life insurance expert, they also decide to cash out Jackson’s very expensive whole life policy and replace it with a $400,000, 20MILITARY OFFICER NOVEMBER 2007 66

Table of Contents Feed for the Digital Edition of Military Officer - November 2007

Military Officer - November 2007 Contents From the Editor President’s Page Your Views MOAA Directory Rapid Fire Washington Scene Chapters in Action Financial Forum Ask the Doctor Cover Story: Commanding the Corps With Love, From Home Financial Guidebook Financial Tuneups Banking on Your Time Pages of History MOAA Scholarship Recipients Faces of MOAA MOAA Scholarship Donors Member Books Advertising Index MOAA Calendar Sounding Taps MOAA Member Services Encore

Military Officer - November 2007

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