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We often say, we often hear that if you’re waiting for your retirement to think about what your plan is for post-retirement, you’re waiting for way too long. You should, you should start thinking about your post-retirement transition 2 to 3 years prior to transitioning out of service.
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The financial landscape for US military personnel, veterans and their families operates significantly differently from that of the civilian world. And here to talk with me about all that and then some is Dan Koons. He is the host of Warrior Money. Dan, welcome. Thanks, Bob. How are you? I am great, Dan, and I, and I’ll be even better after we have this discussion about whatMilitary personnel, they’re veterans and families need to know about all things money. There you go. There you go. So I wanna start here though with the news of the day first, right, which is, uh, according to published reports, the VA plans to reduce its headcount, plans to lay off somewhere between 25,000 and 35,000, uh, personnel, and I’m curious, what does that mean for, uh, those in the military.
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Uh, so not a ton of the folks in the military. If the VA serves the veteran community, right? So there’s a difference in healthcare organizations between the military organization and the veterans serving organizations. So I just want to differentiate the two real fast. Um, we’re living through a changing paradigm, I think, just generally. And what signals 2030, 30,000 people losing their jobs is that they want to shift.Care from VA facilities to private-public partnerships with integrating VA care with private healthcare as well. And I think that’s what you’re seeing here. So it’s left to be seen what that means and how that actually impacts the near-term care of the veteran community, but I think the question is, what is it going to look like in 2030?And given that announcement, it sure seems to me like it’s going to be a lot more private healthcare supporting VA veterans than VA led healthcare supporting
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supporting
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veterans.
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So is that for the better or for the worse from your perspective?
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I don’t view things binary like that. I, I can’t, I can’t view things binary like that. I, I, I try not to do, I, I don’t think that’s the, I don’t think that’s a good lens because like things are different. We’ve got a healthcare system.
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I mean, I guess I asked because people always say, what does this mean for me,
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right?
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I think for them they, they don’t want gray.
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Yeah, I think that’s, that’s the uncertainty part is the issue, um.We have a, I think we’ve got an aging infrastructure generally. We’ve got a, um, World War II generation that’s, that’s dying off. We’ve got the baby boomer generation that’s like entering their golden retirement years. I’m a millennial and we have different expectations for our healthcare and then the generations that come before me, and we, we, we, we fought the 25 years of the global war on terror and then the healthcare demands of our country.Over the next 25 years when my generation retires.is going to be significantly different than those of the World War II generation or the baby boomer generation.So at some point in time, you do have to make the changes based on the demographic conditions of the class that you serve. And I’m all for, um, I’m all for integrating telehealth. I’m all for integrating more modern ways of giving delivery and service. I’m all for getting closer to patients as opposed to farther away. And I think that there’s service that the VA has to uniquely give veterans like PTSD care.Um, some of the mental health things, some of the physical things that happen in service, but I don’t know necessarily why you have to go to a VA center for a regular illness, or regular problem when there’s a local urgent care or local facility near you, or telehealth. So I thinkI think the question is like how do we want to give service and who do we want to give it to and what does that mean for the next 2025 years.
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Yeah, so it sounds like in some ways it’s almost like a Medicare structure where I go to my local physician at my family office practice and they take Medicare.And instead of just taking Medicare, you’ll take VA benefits.
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I thinkthat’s, I think that sounds, that’s, that’s right.
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All right, so I don’t have to drive into Boston anymore to the VA hospital
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the,like the specialty care, I don’t think so. Like, there’s some, like the Penn Medicine in, in Philadelphia has a remarkable facility. Um, Vanderbilt’s doing some interesting things like Stanford does some interesting things. Like there’s, there’s centers for each of these places that have like very specific skill sets or care specialties. I don’t think that changes. I think that’s kind of similar in the private institution as well.I think it’s more like your routine care. How do we keep them.Handled most closely, most locally, and what’s the best way to go do that?
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All right, so you’ve given me some peace of mind, I think for a veteran, there’s little to fear. I mean, it’s
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gonna be the uncertainty is always something to fear because that’s how people think about things, but I think change is really hard, especially if you’ve gotten used to doing something one way for such a long time. I, I’m always 25,000, 30,000 people. It’s a staggeringly big number too. And it just sounds big. The VA is a massive organization.I want to see how they actually, those cuts are actually enacted and where, and I, I wanna better understand that the practicalness of that before I make a decision about how we talk aboutit.
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So my goal today in this podcast, Dan, is to empower the military family to construct a fortress of financial resilience that is robust enough to withstand economic volatility and agile enough to adapt to career transitions.But before we get to that, I wanna hear more about your story because I think it sort of bridges into this goal,
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yeah, I,um.It’s funny, we were talking before the show and I, uh, started working when I was really young. I was like 9 or 10 years. I was 9 years old when I started working. I had a paper route. My paper route turned into a, a landscaping business, which turned into a snow plowing business. And I started the
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way my paper route business turned into quarters in a pinball machine. So I,
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I don’t know where this is going. So all these, all these things started to grow on one another, and I was about 15, maybe 16 years old, uh, and I heard about this thing called an IRA. Like I.I don’t even know how I heard about it. Probably because my grandfather told me about it or I probably read it somewhere and I’m like, hold on a second. I have to put, I can put $5000 in this thing.And I never touched it again and I’m I’m 1560 years old. Like, I don’t know what the number is, but it’s gonna be more than it was today and the taxes aren’t gonna take anything out of it. So I started saving for retirement when I was 1516 years, 15 years old, and I started doing my contribution limits when I was pretty young. And like, I had to get a, I got, I got a W-2 job. The W-2 job was at Wawa was a hoagie place. And so I was making, I was making hoagies. I was getting paid and I was contributing money to my 401k, my IRA.From a pretty young age and that’s kind of, that’s kind of how I did it. And then I was fortunate enough to go work for some big employers and they were helpful in the 401ks as well and continue to contribute myself and the military is still, I’m still on a pathway to have a military retirement as well, so.These things are coming together for me, but it wouldn’t have started had I not started really young with planting a couple of seeds. And it’s pretty cool seeing what those $5000 seeds have turned into, uh, uh, what was that, 2020 years ago.
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Pretty cool. It’s so interesting. It’s time-honored advice. Start early and save regularly, and you’ll be amazed at what
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I don’t know howpeople, I don’t know how people that are my age now that are trying to save for retirement. I don’t know how.They save enough, even at 40. I don’t know how they save enough to get to 59.5 or 60.Because like my runway, I had another 15 years runway, like I.With all the expenses that I have and how expensive everything is, if I wasn’t saving early, like my quantity, I’m not sure, I’m not sure where I’d find the extra money to like, to save, to savemore money.
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Yeah, and, and the risk of starting later is that you have to increase the percent that you save to reach your goals. And
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I don’t know where 5
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or 10% then becomes 15%,
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and I don’t know where I would find that. I, I, at this point, I don’t know where I’d find that extra 20%, like extra 15 extra 10% or extra 15%. Like, like the, with the cost of daycare with all the other competing costs, I don’t, I don’t know where you find it.
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Um, all right, so let’s turn our attention to retirement for a second then, since you brought it up, which is for military professionals, there’s the, uh, thrift savings plan that they have. There’s a blended, right? There’s a blended retirement system, uh, and there are pros and cons to that versus the legacy system. And then there’s some tax optimization techniques that perhaps, uh, military retirees can take advantage of. So let’s start with the, the TSB. What do folks need to know about
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it’s a 401k,just a different, it’s the government version of a 401k.So I contributed to that as well when I was in service. I, uh, about 76 or 7 years ago, you had the there was a juncture between the stay in the bunny retirement system or stay in the legacy pension fund. That was essentially it. I chose the legacy pension fund.A bunch of my brothers chose the blended retirement system. You can leave at a certain point in time in your service, say 1012 years, and you’ll get a distribution when you hit a certain age. These are the 12 years that you’ve served. The rest of it doesn’t come to you because you haven’t qualified for the rest of it, right? That’s where the 401k or the TSP kind of kicks in. So there’s a blended retirement, and then there’s the defined benefit plan that I was still enrolled in because I was at the juncture to move forward. Um,Is that your question?
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Yeah, I mean, I guess so in terms of actionable advice, if someone is in active duty now, they’re in the military,about,
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yeah, save as much as you can. Like you’ve got, you’ve got the plenty of retirement right now. If you joined after a certain age, certain year, you have plenty of retirement.You have TSB. You’ve got multiple, you’ve got 5 to 8 different investment options within your TSB. It’s very similar to the way you think about I bonds and some of the other things that we talk about. Like, it’s, it’s target, target retirement dates, government bonds, like all those things are still available there. Yeah, they’re super low cost. And so it’s like, um, do them both.And if you’re getting basic allowance for housing and you’re getting all the other things that you get in your military service, try to do your very, very best to stow away some cash, um, both for yourself, but also in your retirement. Like that’s, that’s the way, that’s, that’s just good advice for everybody. And the one thing that I was asked in the military all the time is how do I make more money? Everybody wants to do it.How do I make more money? Some junior officer, some senior enlisted, and, um, my answer to them was like, don’t worry about making more money from investments. Like, go figure out, like, go make, because you, you only get paid a certain amount of money in the military, right? Like, just contribute as, as little as you can into a retirement account or an investment account and realize that if you stay in there for 20 years, you have 20 years of a very consistent paycheck, that once you start to aggregate that a little bit, the compound interest takes, takes its roll.That I think is the best advice that anybody’s gonna hear. Just, just get started. $10 out of your first paycheck turns into $100 which turns into $1000. Then all of a sudden you’re 50 years old and you’ve gotmoney.
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Yeah. So unlike in the private sector, uh, the government isn’t matching your contribution. Is that
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there’s a contribution amount. The TSB has a contribution, uh, matching program.
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Great. And it’s similar to what you might have counted 3% private sector. So, so you might as well take advantageof
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the it’s 401. It’s a 401k. It’s the, it’s the very, it’s the very same thing, right.
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And then obviously with, with a, um, with a defined benefit pension plan, a lot of benefits come with that, which is to have a guaranteed source of income in retirement, uh, or even prior to retirement is, is a good thing or much of the research says that having that guaranteed source of income allows you to enjoy life a little bit better than someone who doesn’t have a pension.
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Icouldn’t agree with you more. I mean, most of my, my mentors that are retired.Tell me that the greatest thing that ever happened to them is they’ve got a small pension from the military, but they’ve got healthcare benefits. And the ability to continue those benefits post-service allows a lot of them to retire early because they don’t have to worry about having an employer with the benefits.
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Yeah, so when you think about, uh, retirees, military retirees, and how they can optimize, uh, their income stream in retirement, are there any tips or, I’m sorry.Are there any tips when you’re trying to optimize your income in retirement between your pension, your 401k, and maybe othersources
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of assets? You’re a young, you’re a young man or woman when you retire. Like the military is not an old, an old, it’s not for most folks, an old, an older folks’ game. Like you, you’re, if you do, if you join when you’re 25 and you do 30 years of honorable service, you’re 55 years old.There’s no reason in the world why you can’t have another job at 55 years old. You’re just creating the next phase of your retirement, what that next version looks like. But you have the baseline of a pension, you have the baseline of health insurance, and you’ve got whatever other VA benefits you’ve also gathered. And there’s no reason why, there’s no reason why at 55 years old, if you wanted to have another job, you can have another job and remake yourself. And on Warrior Money, we talk constantly about finding your purpose. Like you do 30 years serving this country.You can spend the next 20 years serving your community. You can spend the next 20 years serving whatever it is you want to go do, but you can’t, I don’t think you can just sit at home on your couch and collect your pension checks. So I think, I think you’ve got to relitigate your purpose. Yeah,
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finding purpose, whether you’re in the military or in civilian life is always hard for people.
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Mydad just retired. I’m so proud of him. He’s, uh, he, um, he just retired two Fridays ago. He worked as an electrician at, uh, at a pharmaceutical company outside of Philadelphia.And I talked to him yesterday. I’m like, Hey, man, how’s the retirement treating? And two days ago. I’m like, Hey, man, how’s retirement treating? He’s like, Great. I said, what are you doing? He goes, I’m at the Y every day at 8:30, at the YMCA every day at 8:30. And like, I just, I’m really glad. And he said, Great. And I’m just like, really glad.That he found himself into some sort of routine two weeks out of retire into retirement because like that’s a, that’s a lot of time that you have to figure out how to fill. I was, I was proud of him for doing that.
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Yeah, so there’s the routine and also at the Y or any place like it is community. So which is the other thing
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theparty he actually told me is like, hey, I run into your father. My father-in-law and he are both retired like the same time. And he goes, I see your father-in-law. His name’s Kevin.At the Y every day I’m like, no, I’m glad you two all better hanging out having, having a good time at the Y.
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Maybe they can, uh, brag about how many, uh, uh, pull-ups they do.So, all right, you mentioned healthcare a second ago, right? We’ve got, um, Tricare. Maybe we need to think about that. We need to think about Medicare integration strategies, uh, long-term care planning. I guess there’s some issues around long-term care insurance for that military folks need to worry about, right, that the,That’s a suspension of the federal long-term care insurance program, uh, which could affect people in
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that’snews to me. I gotta go learn about that. Yeah, well,
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at least that’s the research I’ve, I discovered.
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I gotta open that, that
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you can prove it. I gotta go
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figure that out. I hope there’s, I hope it’s not. I’m not aware of that. I’m not tracking that, but, um, I, I think the, um, they start with Tricare, I guess, yeah, I have a dear friend, uh, Brian Masters. He’s, uh,He’s over at Fidelity, uh, Fidelity Investments, and he’s helping build this, uh, kind of a personal finance investment platform for the veteran community.And, um, the thing that he told me that I was, I knew, but I was startled to hear the numbers, there’s about $250 billion that come out every year in VA veterans benefits. It’s coming to the veteran community, right?And, um, the benefits that you receive change based on the state you live in. So if you live in Pennsylvania, they don’t tax retirement benefits from the military. If you live in Maryland, they do. If you live in other places, they do. So I think.You need to look at the state you’re a couple of years before you’re about to transition, you need to look at the state that you’re about to leave from. You need to understand what that ramp looks like, and you need to figure out what, what will get you what you need based on both your age, your VA benefits, your earned benefits from your military service, and your healthcare benefits essentially. So I think, um, that’s a, there aren’t a lot of great places to do that at. I think it’s wise to have an advisor, a financial advisor to help you navigate that.
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Dan, we’re gonna take a short break. When we come back, we’ll pick up more on the topic of healthcare benefits. So don’t go away. Can’t wait. Welcome back to Decoding Retirement. I’m talking to Dan Koons. He is the co-host of Warrior Money.Uh, Dan, before the break, I said I wanted to talk more about healthcare. Um, and when we were talking about what we would talk about today, you mentioned that one reason that you wanted to stay in the, in the reserves is because of the healthcare benefits that would be available to you when you left the service. That’s a big deal for many folks. Yeah,
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mostly actually, so I, I mentioned this earlier, like most of my mentors in service have told me like you really wanna stick around and your healthcare benefits because they all last with you for the rest of your life, and, um.That is the number one.Benefit that’s consistently reinforced me from the folks that have retired and they realize that they’re in their 60s now and they’re really, really glad that they did this extra 7 years. Uh, it’s not the pension checks necessarily, it’s really the, it’s really the access to healthcare that they care about.
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So when I think about healthcare in retirement, a couple of things come to mind. One is that it typically represents anywhere from, say, 5 to 15% of your expenses in retirement, and it escalates as you age because of healthcare inflation and also because you need more healthcare. And the other is the massive amount of money that that equates to for some folks. So it could be on the order of $200,000 of healthcare expenses for the average civilian, but for you, it’s gonna be far less.
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Because of the benefits of, yeah, yeah, totally. That’s the, and then that’s why I was surprised to hear with the, the disability that, that was, that’s a feature that’s been talked about quite a bit. I’m gonna have to look into that a little bit more. Um,
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well, it’s a long-term care insurance.
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Yeah, that’s, that’s, that’s one of the ones that I’ve been, I’m gonna, I’m gonna look into that because I, I hadn’t heard that before. That’s one of the perks that’sVery known and very
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valuable
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andvery valuable
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when you think about like people who might need long-term care whether it’s a nursing home or assisted living, those policies pay for a lot of the care. Yeah,
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and that’s, I’m gonna have to look into that because I, I, I, I’m, that was actually brought up multiple, that’s been brought up multiple times as one of theQuiet benefits that you don’t realize that you need that become very valuable as you get older, as youage.
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Yeah. When, when you think about healthcare in retirement, what are the things that you worry about or don’t worry about?
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That’s a great question. What do I worry about? Um,I’m kind of in the middle of, I’m like in the middle of aging, I guess. I don’t know how, I don’t know, I don’t know
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how you haven’t even put your face into an aging gap.
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Yeah, I don’t know how, I don’t know how else to say this. So I, I gotta give you just like the lens of what I worry about now or maybe your
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retired. No, I’m gonna say
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what I, what I worry about, right? I, I worry about the collective miles that I’ve been put on this vehicle since I was 18 years old or 15 years. I don’t even know how old I was. Like I,I, I remember spraining my ankle multiple times on ruck marches. I remember jumping off the top of or gently gliding down an armored vehicle. Like you don’t gently glide down anything. These are just hard, they’re hard things. Uh, I remember playing sports. I remember PT where you’re just kind of, you’re running 58 miles, and it’s just what you do. And you, you just don’t know. I’m what I’m learning is you, you don’t know what you injured.That your body was just strong enough to compensate for when you were young, that becomes apparent as you get older. And I, I, that’s what I worry about. Like I, I’m worried, like I’m starting to see my friends, their, their backs are starting to get sore, their shoulders are starting to give out, or their knees are starting to give out or hips.And that it’s looking to me like it happens earlier, and it’s just a collective tear, wear and tear that you put on your body. That’s what I worry about with the things that I, that I know I messed up my elbow. I know that I messed up my thumb. I know I messed up my shoulder. I know I did those things.I’m expecting those things, but I’m not ready for my left knee to start hurting, and I just don’t know. I don’t know where that’s gonna happen at. I don’t know how it’s gonna impact my quality of life.
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So those are like invisible changes. There are some changes. I’ll, I’ll put another invisible change in there, which, which would be concussions. We talked about that earlier too, and people don’t even know that they’re being exposed to, uh, traumatic brain injury, uh, over time.
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you know, it’s, it’s funny when you say that like I’m, I think about all the times you’reYou’re shooting a 50 cal and you get jostled around in the top of the vehicle, or like you’re not you’re not shooting a 50. You’re, you’re maneuvering in the top of, in the turret of a Humvee, there’s a 50 cal, you get jostled around, you bang your head this way, or you, you hit the back of your head, you’re wearing, you’re always wearing a helmet, but even though it’s like small impacts matter, and then when you do your training, and when you do your combatives, and when you do the things that are kind of contact or violent in general, um,You just don’t know what that aggregates to. You don’t know the small collective small things and what they turn into over time. And I, I, I wonder, I wonder where that all goes and like our, our, our, our health is getting, our healthcare is getting pretty good, medicine is getting pretty good.I don’t know how you fix that problem.
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Don’t look at
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me. I don’t know how you fix that problem. I don’t know how you fix it. So
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that’s an invisible problem, right? I mean, things like PTSD or, or maybe the visible problems are easy to deal with. I have a, a, a friend who was in the military. He’s now, uh, outside in a civilian job, but he’d suffered hearing loss from having, you know, shooting.
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That’s super, that’s super common, right.
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So he’s out on disability for hearing,
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super common. It’s, it’s, uh, you’re, you’re hearing your knees and your ankles, at least from, from my, my, my like knees, ankles, and back. Like it’s like it is, it is a, and then, um, visible for everybody that’s not in your bedroom. Sleep apnea is a thing. Like there’s a whole bunch of these other things that are pretty symptomatic of service.
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So as you think about all that and then someone needing to access the healthcare system
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100%, and then that goes back to the original question though, like.Do I want to go, if I’ve got a bad back or a bad shoulder, do I feel like I need to go to a central facility in some city, or can I go to the primary care doctor that accepts my insurance next door, or a telehealth because I know I have an issue, right? Um, I, I, I think the math, and it remains to be seen how we manage costs and cost structure.As our population ages in the 25 years of GWAT experience we have, there’s a lot of people that went through a long time worth of needing care, and that’s going to be a lot of folks that are coming out over the next 20 years that need some sort of VA benefits. It’s a lot of
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folks. So I don’t know what the life expectancy is of military personnel compared to the civilian population.But, uh, those in the military have, uh, what are called the SGLI benefits or survivor benefit plans. Maybe talk about that and how that can play into someone’s financial, you know, picture. Yeah, I
22:58 spk_0
mean, so there’s survivor benefits if you die in service. That’s, um, there’s, uh, when I was in 2020 or $400,000 was the in-service benefit contribution. Then there’s also in private insurances, the SGLI that you’re talking about. So I, I had.And you always up it when you’re about to go, we’re about to mobilize, but like I.You always have the option to up, up that within when you’re in service, uh, healthcare lifetime benefits after your service, I’m not aware of them. Yeah.
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So for someone in, in the service, it’s really vital that they have this because this is one of the basic building blocks of a financial plan is the, I mean,
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even, even worse, it’s like if, if you think about a mobilization, you’re not sure you’re going to come home, it’s how your family takes care of you. Like it’s not, it isn’t, it is part of a financial plan more, uh, appropriately, it’s like if a bad day happens.Which is a higher probability and you’re not insurable from a private insurance company, the government’s going to insure you so that your family gets to take care of. Like, I don’t know how many State Farms that are going to insure you your lifetime benefits if you were to go to the middle of Fallujah in a bad, bad time, right? The government will step in and make sure that you have the insurance to be able to provide.Something for your family in case you, in case you pass, yeah,
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and the, the rule of thumb, at least in the civilian world, would be 5 to 7 times your annual income, say, for instance, um, I’m not sure if that’s what the, what you’re getting, uh, a benefit for.
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Mine was 2000 to $400,000 but it’s based on the different levels of it. So I, I don’t know what it is now, but that was what it was when I was younger.
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Uh, Dan, we’re gonna take another short break and when we come back we’re gonna talk a little bit more about VA benefits. OK, sounds good. Don’t go away. Welcome back to Decoding Retirement, talking to Dan Koons. He’s the co-host of Warrior Money.Uh, Dan, I, I said, uh, before we took a break that I wanted to talk about VA benefits a little bit more, and my understanding is that there’s, uh, uh, VA disability ratings that
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people
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need to
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be familiar
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with. What are those? Yeah,
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good question.
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Uh loss. I wouldn’t pass a test on this,
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by
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the
24:59 spk_0
way.Your veteran audience is gonna know who this is, but for everybody else, uh, I mentioned earlier that like you hear when your hearing goes, your ankles, your hips, your knees, uh, your disability rating is what gets you on a scale of.Uh, how much benefit you get from the VA. So if you’re a 100% a service disabled veteran, that means that you’ve hit enough points in the way that they assess disability ratings for you to qualified at 100. There’s a bunch of people that do 50, there’s a bunch of people that have different, uh, degrees of it. I’m not always familiar with all the tiers of that. I don’t know what sleep apnea gives you versus what hearing loss gives you versus, but it’s the collectiveness.It’s my buddies, it’s the collective brokenness that you got while you’re in the military that comes together to contribute to your VA benefit, your, your VA disability rating. Um, if you’ve lost a limb, you’re like there are certain things that you know you’re going to be 100% benefits for. Uh, the most important part of this is making sure that you’ve established connection to service for the injuries or symptoms that you have, so that if it worsens over time.You can go get your benefits re-examined to look at a higher level of your, what your VA benefits should be.
26:14 spk_1
So I guess that leads to the next question is how does someone go about maximizing their disability compensation. It would be to sort of document all that.
26:21 spk_0
Yeah, while you’re in er when you’re in service, I had a bunch of NC, uh, non-commissioned officers that would tell me, uh, hey man, like anything you do, make sure that there’s paperwork for it anywhere.And sprain your ankle and get, just get the doctor’s note, right? Like just have, have a record of it. Um.So that’s the first thing.The second thing isUh, any American Legion will help you.The American Legion will help you navigate your veterans’ benefits. And there’s a host ofUm, private companies, private and nonprofit entities that will also help you profit and for-profit, profit and non for profit entities that will also help you navigate your VA VA disability benefits. And so I think the number one thing is like, don’t go alone if you don’t have to. Document what you need, reach out to the American Legion or any other benefits of and be good steward of that.Make sure that you’re suspect skeptical of who you go to, but make sure that you’ve documented what you needed to and make sure you go to the right sorts of reputable places to get your benefits.
27:28 spk_1
I’m sure there’s an appeal process.
27:30 spk_0
Oh, and that’s part, frankly, that’s part of the reason why I think you should, my opinion is have somebody that does hundreds of claims do it instead of you that does one and get, get somebody that knows how to do claims to godo the claims.
27:41 spk_1
Yeah, this may be your first time, but you want someone who’s done it 1000 times. Yeah,
27:44 spk_0
I’dreally rather have that because they’ll they’ll have all theThey’ll have all the relationships. They should have all the relationships with the liaison office and be able to manage that way.
27:52 spk_1
Um, so the other thing about disability, um, benefits is that sometimes people are receiving both military retirement and disability. How does that work?
28:02 spk_0
They’re two different buckets of money. Uh, yeah, two different buckets of two different, um.Two different things, right? You get your, your you get your military retirement. That’s the pension that we described as it relates to your time in service, and you get the blender and the non the non-blended or defined benefit plan. Um, your disability rating is a completely separate VA benefit that you’ve received or you’ve earned because of thePhysical work that you did in the military, that’s a whole separate rating and a whole separate, uh, allocation of dollars than what your military benefit, your military retirementis.
28:35 spk_1
Any, any thoughts about how people coordinate those two benefits or just you get them and youget them?
28:40 spk_0
I have a whole lot of opinions about that. Um, maximize your VA benefits, your VA benefits. Don’t leave anything on the table there.Um, your pension, you’re gonna, if you’re a reservist or guardsman, you have to wait until you’re 59.5. If you’re a traditional 20-year, you’re gonna get it as soon as you retire, so you’re gonna get your benefits almost immediately. If you’re a reservist or guardsman, try to get good years at the end of your career to, to reduce the age, because every good year you have reduces your age from 59.5 down to a younger age. So you get like, if you do the last 5 years of your career on active duty.You’ll shrink that from 59.5 down to 54.5. So you can optimize that way.Um, and then also make sure that you’ve contributed to TSB and then roll it over into a, a, a traditional brokerage account or IRA account,
29:29 spk_1
yeah.Uh, I’m, I’m curious, uh, there’s another thing. People serve for 20 years. They come out at whatever age 55 or whatever age they might come out at, and they go into civilian life and get another job. So talk a little bit about this notion of, uh, how does someone maybe build their resume to, to enter the civilian workforce, and,
29:51 spk_0
we talk aboutthis all the time on Warrior Money, um.I, we, we say, we often say, we often hear that if you’re waiting for your retirement to think about what your plan is for post-retirement, you’re waiting way, way too long. You should wait, you should start thinking about your post-retirement transition 2 to 3 years prior to transitioning out of service.Uh, and then what we talk about is like if you’ve lived a life of service, where do you wanna live? Like, what do you wanna, like, where, where do you want home to be? Was it one of the duty assignments that you loved? Was it, is an area where your family was that you want to move back to your family? Is it Florida because you hate the cold weather? Like what, where do you want to live and what do you wanna do? And then once you’ve done those sorts of things where you think about the structure where your life is gonna be, then you start to think about like, what is my.And this is the hardest part. What is the truth? What is my purpose? What, what do I wanna go serve? Because it’s really hard to go from feeling like you’re serving or something, serving something bigger than yourself to being in your condo in Florida. So finding that purpose is what we talk about and you have to do that.A couple of years in advance of your retirement from the service.
30:58 spk_1
When you’re in the service, do you think that someone should, if they have the foresight to think about what knowledge, skills, and abilities I need in order to get transition to that.
31:07 spk_0
Everybody should do that. We talk about that. We talk about transitions all the time. Like, I, I’ve actually been super privileged to know a lot of people that have started their second careers while they were in their last year or two of the military. You can get a waiver. You can get a waiver.And the waiver says, hey, we know you do OB other, other business activity, um, and you’re cool with it as long as it doesn’t conflict with your job, you’re good.And a lot of the most successful people I know, um, in the transition have something else that they, I would consider, like, we call it a side hustle, but it’s something else that you do. And we live in a world, I think you and I would agree, like,It is not enough just to have one job for one employer. You need to have other opportunities to engage because you just,You just, you just don’t know. You just don’t
31:55 spk_1
know. So in some cases, uh, someone might have the opportunity to go back to school while they’re in the service and acquire a degree perhaps that they might need to
32:03 spk_0
10%. 100%.There’s a vocational rehabilitation program where you get paid to learn a skill that you need to be able to move into the skill set that you’re required after the service. There’s also the GI bill, which is the traditional, the traditional path of paying for one another.Um, and I think like that those combined paths let you do a lot of really interesting technical skills things as well as education things and um parlaying or extending your service into the next level of education is like a requirement. We talk a lot about that on Warrior Money, um.It is, it doesn’t make a lot of sense to me for a junior military officer to leave in their mid-twenties.Want to go into business, never have any business experience and not go to business school for 2 years. Especially if the military wants to pay for it. It’s a benefit you get. It’s a benefit you earned. Go get the, go get the credential, go learn what you need to learn. Network your way into the next job and then transition that way.
32:58 spk_1
And, and that’s no small task, right? I’ve got my day job and then I’ve got to go to school. So I’m, I’m full tilt.
33:04 spk_0
Yeah, I would, I would say though that we, we have a lot of examples of your more senior military officers, you’re enlisted.Going and getting their executive MBA or part-time MBA. And most of them already have a bachelor’s degree by the time they get senior. Um, your earlier folks, like the transition of not doing an MBA but preparing for it while you’re in service, then transitioning right into the NBA program and then doing two years full-time NBA.It’s a really good transition for somebody in their mid-twenties to figure outwhat
33:33 spk_1
that
33:33 spk_0
looks like.
33:33 spk_1
So for someone who’s been in the military, they really never had to negotiate their salary. Once they get into civilian. They don’t even know what
33:39 spk_0
a salary is, let alone, like they know what they’re, they like, they, in the, in the military, you just, you just look at your paycheck. You look at your paycheck, you get, um, uh, learning, they, uh, leave an earnings statement, and, um, you look at that, it comes through.You’ve never worried about revenue in your entire, you don’t even know what revenue is. You don’t know what profitability is. You don’t know what operation, like, you don’t know any of your housing allowance is. Yeah, you know, you certainly know that. And to tell you the bad decisions that people make to increase their housing allowance, like that’s a whole different conversation. But you don’t know the kids are getting married to the wrong person. But like, yeah, a whole lot of things. But, but my point is like, you don’t know what you don’t know.You don’t know anything about, hey, maybe I’m gonna get laid off if we’re not hitting revenue numbers, or, hey, maybe I, we’re hitting revenue numbers, but our profitability isn’t good enough. So we have to be, like there’s so much stuff that you’re gonna learn that you can’t possibly know when you’re in military service.
34:36 spk_1
So when you think about someone entering the civilian workforce, acquiring negotiation tactics or
34:42 spk_0
know what to askfor.Even to know what to ask for, yeah, yeah, even not even getting a negotiation,
34:48 spk_1
butsomeone has to teach you how to do that and, as well as anything else, right? What, what is a management by objective or whatever.
34:54 spk_0
There’s agreat, there’s a great, uh, there are great organizations that’ll help you with those things like, like Vets in tech, Vets coding. Like there’s a bunch of organizations, and then even your career counselors at your different MBA programs at different schools, they’ll help you with some of those things, but like, so will your mentor network and everybody knows that you can reach out to somebody.
35:12 spk_1
Uh, you mentioned some employment resources. What about, uh, tax resources that people now need to figure out? Like, I guess I now have a W-2 and you know I’ve got a,
35:23 spk_0
there’s, um, I, I would actually, there’s a probably a good opportunity. There’s probably a good business opportunity somewhere in there to create like a nationwide veterans tax service that can look at your, all your different benefits packages, your state, your federal, and then bring them all together and optimize taxes. I personally as a tax planner.So I have an accountant, but I also have a tax planner, and I, I do that because I just have um.An awareness that my taxes keep getting more complicated and the tax code keeps changing. And I think that more and more senior folks, like, if you just have a job and retirement and then another job, most people just need a financial advisor to help them sort through a couple of information. They don’t want to make harder decisions, but if you start gettingDifferent income sources and different investments and different things and then then they start thinking through it from a tax plan perspective.
36:12 spk_1
Yeah, so we mentioned families a second ago, military personnel who have families while they’re in service. What challenges do they face from a financial perspective?
36:21 spk_0
Ohmy God, I mean, a lot of so many of them, um.Uh, so many of them. So the first that I think about is what happens when you’ve got child aged kids, I’m sorry, school age kids while you’re in the military, and even before that, like where do you.Take your kids to daycare. How do you pay for the daycare if it’s not provided by the military? Where do you find private daycare in Topeka, Kansas? Like, where, where do you do those things? And, um, how does your spouse work? What does your spouse’s employment look like? Like the spouse’s employment is one of the most significant issues in our dual dual income economy. 24% of spouses don’t have jobs, and I think the issue is.We haven’t createdWe’ve done, we’ve tried to do our very, very best, but the nature of service suggests that it’s hard to do in the first place. So the financial impact of asking spouses to do a lot, not unpaid, not having a great opportunity set to transfer skills between installations, moving every 3 years. Like there’s a lot of things that compound on it to make that a very hard proposition, which makes financial planning exceptionally hard because if 1 year you’ve got $800,000.The next year you’ve got 40,000 because your spouse loses, I’m just using easy numbers. It’s hard to predict sustainably for where that goes.
37:49 spk_1
Um, Dan, I’m gonna, we’re gonna take another short break and when we come back, we’re gonna talk more about families and special circumstances for military, so don’t go away.Welcome back to Decoding Retirement. I’m speaking with Dan Koons. He is the co-host of Warrior Money. Dan, we were talking about military families a second ago, and I, just a personal story. My sister was married to a service member for many years. He served in, uh, Desert Storm, and, uh, she moved every 3 years from Hawaii to Berlin to Frankfurt, and, uh, and she at the time.was uh, a, a day school daycare, uh, teacher and also raising a family and it was just hard because you were moving from one place to another and trying to get re-employed when you moved from one base to another and, and I could see firsthand the challenges that they faced as they were, you know, she was trying to, you know, be a contributing member to society by working and not just raising a family.
38:42 spk_0
It’s a, it’s a huge issue that we, that every person I know, well, first of all, um, I heard an amazing, uh,Anecdotal comment once about how umThere was an honorary dinner in Japan and one of the generals of the American forces came up to the wife of one of the Japanese generals and thanked her for her contribution to his service and it was one of the first times that, it was the first time anybody had ever done that to her, and she got emotional as a result of it and I um.I often see spouses of pretty senior, very senior military officers, and they’ve got the one, they’re the ones that you can tell they’ve got all these different notches on their arm. That’s all their mobilizations, it’s all the times they’ve been deployed, it’s all the work that they’ve done, and a whole bunch of ribbons.And, uh,And I think about like that, all those little ribbons were 6 months, 9 months, 12 months, 18 months, 24 months away from the family unit, and the spouse had to carry the weight for the entire time and like theThe contributions that our spouses give.is a remarkable feature of military service that I think you need to understand the nature of these folks.to truly appreciate how hard that is. Imagine you’re on a business trip for a week and your wife comes home and she’s ragged. Imagine 18 months of a business trip to a bad place where you might not be able to talk to that person all the time. You’ve missed birthdays, you’ve missed holidays, like.It’s a veryHumbling, kind of on a rant here, but it’s a very humbling.Like commitment that the that the the other half of the family makes.That we don’t talk about often enough. Like it’s not something.It’s not something that we say like we thank military spouses, we thank service members for their service, but we don’t always ask the following questions like, how are you doing? And oftentimes it’s a really challenging, it’s a really challenging, it’s a really, really challenging, um.Place the position to be in, especially when you’re already recognized.
41:04 spk_1
Uh, I’d like to take this moment to thank you for your service. Um,
41:07 spk_0
my, it’s my point. I thankyou
41:09 spk_1
and, and ask, how are you doing?
41:11 spk_0
Yeah, I appreciate that. It’s, it was the, um, it was, it’s been the, the best decision. I, I, uh.12 December 28th was the day I enlisted. Uh, it was the, it’s continuing. It is, yeah. It continues to be the best decision I’ve ever made. Um, it changed my life in more ways than I can count. I wouldn’t probably be here talking to you about this if I hadn’t made that decision. Um, I found my purpose. I found my community, I found my friends, I found my professional calling. I found all the things that you need to have a.Gratifying and satisfying life because I made a decision in my early twenties that pretty much changed the trajectory of the, the life that I was on. So it’s, it was the best decision I ever made.
41:57 spk_1
I, I come from a long line of service members, my dad, grandparents, all the way back to the Revolutionary War. Uh, and, but I’m a slacker. I, uh, the, the, the, uh, the draft ended in 75 or so, and so I never got a number and never went.But when I was contemplating a career change, I was actually, uh, thinking about, uh, enlisting and applying to go to the DNOs, which is the, uh, journalism school for the military out in, I think it’s Indianapolis or Fort Wayne, I forget exactly where, but I never, I never did it. I never, I never made the transition into military service, so I’m a slacker. I apologize. No, no,
42:31 spk_0
I just appreciate you having me on the show to talk about it. No, no, I, um.It doesn’t, it doesn’t work if people don’t.I, I mean this is like if you don’t pay your taxes.And you don’tUnderstand the value and the contribution of your like national security and protection. Like you, you, you’ve a grat the heart of gratitude, like that’s, that’s great. Like, not everybody has to serve, like, and not everybody that serves is needs to be honored at a put on a pedestal, but like we as a society have toBreak down the barriers between the people that serve, the people that haven’t served, and like, understand that we’re all on the same, we’re all on the same team. Like, we all want the same things. We want to be safe when we go to sleep at night. We want, uh, we want to be, feel like our, where we live is prosperous and wonderful and great. And I think that is what we all want at the end of the day. It’s just the matter of how we get there. Yeah,
43:24 spk_1
um, before the show, we were talking about your service both in the guard and the reserves. Anything about that that we haven’t touched on that we ought to?
43:32 spk_0
Uh, service comes in a lot of shapes and sizes. So like if your audience’s grandkids are looking at serving or their kids are looking at serving or whatever, like, if your son or your daughter comes up to you and says, Daddy, I want to serve.My mom said, absolutely not. There’s no chance, no way, not my son. Uh, but I thinkAs a good first born son, I didn’t listen to her, uh, anymore, and I was like, yeah, I’m gonna go do this because it’s important to me. What I learned when I was there is that there are every, if every job, every institution is a platform to fulfill your purpose and your what you wanna do.The military is no different. You can serve in active duty, you can serve in the army, the reserves, or you can serve in a National Guard. National Guards at home in your home state, reserves can be anywhere. Active duty is where active duty is, and that’s just across all the different services.You don’t always have to be full tilt military if you want to be in the military. You keep your uniform on, you do your one week in a month, your two weeks in the summertime, and you call that a day as a reservist. And then if, if they need, if the country calls and they need you for something, you, you spin up and you go do it. Like you don’t, you can serve in a lot of different ways. And I think that’s really important for people to too late for
44:45 spk_1
me.
44:47 spk_0
Get you a waiver.We’llgive you a waiver.
44:51 spk_1
So I, I have to tell you a quick story. My son was thinking about enlisting in the military. We had all the recruiters come to our house and talk about what would happen. And, uh, at the time he was debating whether to go to the military or to go to college.And uh I thought, well, maybe a, a, a good option would be a military college. So we went up to Norwich University with him then we started the tour and among the things that they told him was that he would not be able to watch football on Sunday afternoons as a freshman, and that pretty much sealed the deal.
45:17 spk_0
Oh my gosh,what year, what year was that? That was,that was pretty painful.
45:21 spk_1
This was like 19 I don’t know it was 2014 maybe so he, uh, he, we stopped the tour halfway through
45:30 spk_0
that guy drove home. That is not gonna work for me.
45:32 spk_1
All right, so we’ve covered a lot of ground. I’m sure there’s some things we missed or just bears
45:36 spk_0
a wide range of conversation.
45:37 spk_1
I appreciate it, but anything that we missed or bears? No,
45:39 spk_0
it was a great conversation. Uh, the only thing that I would say is, um.A lot of people leave benefits on the table. They either leave them on the table because they don’t want to deal with the aggravation of pursuing them, or they don’t feel like they’ve earned them.Don’t feel that way. Like, go, go, go find somebody that can help you pursue your benefits. And just because you don’t think you’re broke today doesn’t mean you’re not going to be broke tomorrow. It’s like, like physically broke. So like go pursue your benefits that you’ve earned.And don’t leave things on the table because people do that all the time. So
46:10 spk_1
I mean people do it all the time, but it surprises me, right, when I, I think about my dad who was living in a retirement community and they had a, you know, a coffee klatch of people who would say this about Medicare or this is about Social Security. And so it always seemed like there was a peer group of people who knew what to do. I’m, I’m surprised that like there isn’t a, I mean,
46:28 spk_0
peer, I mean, that’s the purpose of warrior Money, right. So like there we’re like there’s a collective group of people that are out there that, but.In the military, we call it a sea of goodwill. There’s a lot of people out there that want to help people. It’s really hard to sort to.What is actually helpful. And then there’s still like that silent warrior type that doesn’t want help in the first place. That’s a very,Unique kind of group of people that’s really hard to reach. And then they’re the ones that I think that I’m most concerned about. It’s like, if you’reIf your care structure changes and you don’t know where to find care, and you’re the silent, the silent warrior type, where do you go find your care at? So that’s, that’s how I feel about that.
47:07 spk_1
I always think it’s helpful to show people, people who have done it successfully, and that gives them the roadmap and perhaps even the inspiration.
47:14 spk_0
Imean, I, how I, I never knew anybody who went to college, like I was, like, I didn’t have a huge, personally, I didn’t have a huge mentor network when I was young, so like.I had, the only way I knew was to emulate the people that I thought were successful behind me, learn in front of me, learn their pasts, make my own failures, and help people along the way, so.
47:34 spk_1
Dan, thanks ever so much for sharing your knowledge and wisdom. So, so that wraps up this episode of Decoding Retirement. We hope we provided you with some information to help you plan for or live in retirement. And don’t forget you can listen to and subscribe to Decoding Retirement as well as Warrior Money on all your favorite streaming platforms.
47:53 spk_2
This content was not intended to be financial advice and should not be used as a substitute for professional financial services.