Ric Edelman, host of the television show "The Truth about Money" answered questions about mortgages, retirement plans and educational savings posed by servicemembers, retirees and civilians from the National Capital Region during a taping of his show at the Fort Belvoir Community Center, Tuesday night.
Edelman, who's been named Barron's top independent financial adviser three of the last four years spoke about how it's vital to start saving for retirement as early as possible, and that servicemembers should not get complacent about their money. He also stressed that servicemembers could follow his four-point plan for better financial success.
"Time is of the essence, so it's important to start now," said Edelman of why it's important to start a retirement plan as soon as possible. "Don't allow excuses to get in the way and don't fall into the misconception that you have plenty of time. Time is your most important ally in the effort to create wealth."
The idea among servicemembers that they can do what they want with their money because the military provides housing, health
benefits and food is a misconception, according to Edelman, that will hurt servicemembers if they don't start planning for their financial future.
One way to get started, said Edelman, is by following his four-point plan:
• Start using the Thrift Savings Plan and make the maximum contribution the plan allows at a pre-tax basis.
• Pay off your credit card debt.
• Build cash reserves that reach one year of spending.
• Open long-term savings bonds.
"If you don't have a Family yet, you probably will," said Edelman. "You want to have a higher income after you leave service than the pension will provide you, so you do need to take a portion and set it aside for your future."
Edelman was also adamant about having a 30-year loan when buying a home because banks can no longer demand that home owners pay off their mortgage in full. He also said servicemembers who don't plan on living in a home for seven to 10 years may not want to buy a home.
"Real estate is expensive, it costs a lot to maintain, there are a lot of taxes associated with it and we aren't sure if it will rise in value or rise a lot in value," said Edelman. "It's difficult for members of the military because you are constantly moving. So, if you are going to buy real estate, be aware it's challenging to have an ideal financial approach."
Corynne McCleary, Lorton resident, recently became a military spouse and came to the taping because she wanted to learn the best way for her and her husband to plan for buying a home and setting up their retirement funds.
"We're already maxing out our retirement contributions based on his advice in the book," said McCleary. "Now, we can see in order to reach our goals here's the basis of what we are going to have to sacrifice now in order to get where we want to be in the future."
Lt. Col. Kathleen Culp, U.S. Army Special Operations Command, plans on buying living property in the U.S. and some real estate overseas. Edelman confirmed for her the type of mortgage she should acquire.
"The 30-year fixed loan is how I planned on going," said Culp. "So, he just reinforced that for me."
Culp does not have a retirement plan, but plans on looking into a Thrift Savings Plan after hearing Edelman's recommendation.
She also found the information Edelman shared on the 529-College Savings Plan useful despite not having any children of her own.
"I took notes in regards to the educational savings for my brother's children," said Culp. "So, I will definitely pass that information to him."
Despite their selfless nature, Edelman said servicemembers need to be selfish when it comes to planning their financial futures.
"Recognize that you do deserve to create wealth," said Edelman. "You are allowed. You deserve it. Even though the military benefits are very strong compared to those in the private sector, they're not enough for you to have the financial security you deserve."