REAL TALK FOR TRANSITIONING VETERANS WITH NIK FIALKA

Tim:[00:01:08]Well welcome, to another episode of the Pilot Money podcast everybody, we are glad you’re here. Today’s episode we are talking about military transition and why as a retired veteran, you may not be as behind the eight ball as you think. So today’s episode, this conversation I actually had with Nik Fialka earlier this year on his show, is ready for pushback. And Nik was gracious enough to allow us to use this. Because the information is still. Right and it still stands, and we just had our tag here recently. And so, I know the hiring slow down is likely on everybody’s mind. It looks different than it has been in the past two years.

[00:01:47]Things are just reverting to the mean and I thought that the discussion that we had earlier this year was just timely and appropriate. So for those that are regular listeners to the show welcome back, thanks for supporting the show. For new listeners welcome aboard, we’re glad that you’re here, my name is Timothy P Pope. I’m a certified financial planner, specializing in the planning needs of the professional pilot. Guys in case you missed it in the last episode the name of the show is changing so that is still TBD, we’ll announce that when we finalize the name. Maybe you have an idea of what the name should be, pilotmoneypodcast@seterainvesters.com . Send us a note, that email will be in the show notes. So without further ado let’s jump into today’s episode with Nik Fialka.

Nik:[00:02:41]Alright everybody, this is Timothy P Pope, financial planner. He is with me today as he is many times during the year. I like to spend some time with Tim throughout the year to talk about finances and what pilots should be thinking. And today we are talking about the military side of the house. And people that are leaving the military, whether you’re retiring or whether you are going to go ahead and pull chocks early and get to the airlines and pursue that dream. And so, Tim, thank you so much for joining us. I’m really excited to have you back, my man. Nick, glad to be back.

Tim:[00:03:17]Always good to see you and talk to you. And by the way, congratulations on a rockstar 2023 over a hundred episodes in one year. That’s incredible.

Nik:[00:03:28]Yeah, man, what a year, hundreds of thousands of people listening to this show. And I’m thankful for every single pilot that does. And you are now internet famous too, because not only are you the guest on just about every pilot podcast in the sphere, but now you have the pilot money podcast. Talk to me about the money podcast.

Tim:[00:03:36]Yeah, thanks for that. So pilot money podcast, we just launched in January and it’s specific. Yeah. As the name suggests, and it focuses on all things, financial planning for the professional pilot, right? So you guys do have unique careers. You have unique earning potentials. Your contracts are unique to your airline, right? And so your benefits, and it’s great because you’ve got this mortgage board of, Hey, I’ve got good income plus benefits as well. What does this mean for me and my family? And that’s what the pilot money podcast does is help you to ask yourself the right questions to say, Hey, what does this mean for me? Yeah,

Nik:[00:04:24]Yeah that’s so good. It is so good. You have this toolbox of things. You need to get yourself a headset. You need to get your bag together, but you also need to get your financial life in order. And that’s one of the things it’s easy to overlook because it’s a little bit of a blur when you are just diving into something that is new and all of a sudden they’re paying you for it and it’s totally brand new and especially for the military folks.

Right. So what are the things that people are thinking about and maybe succeeding in or not succeeding in when it comes to leaving the military?

Tim:[00:04:55]Yeah. So good question there. And I think maybe. I will start with just kind of a lot of patterns that I see with guys going through military transition. When you think about flying in the military, we’re always comparing ourselves to somebody else or something else. Right? And so obviously when you find the military, your paycheck, right? You’re going to be making less than the guys and the girls on the commercial side of the house. Okay, so that’s, that’s one thing. The other thing is you’re likely going to have moved a lot. So what that means is if you’re married, your spouse has chosen to work less to support the family and your career as you guys move from place to place.

[00:05:42]Or maybe they’re not working at all, so you’re feeding a family a lot of times on one income, and you’re also saving for retirement on one income. And then you’re very cognizant of the fact that, hey, you know what? If I was at the airlines, I might be making more. Right? So all of that rolls together. And so then guys are coming out thinking or feeling like, Hey, I’m really behind, I’m really behind on the eight ball when it comes to establishing my family financially or saving for retirement. And the one thing that I’d say is, hey, if you were retiring after 20 years of active service, you’re going to get military retirement, like the pension. So we can calm down. It’s going to be okay. Great. So you’ve got military retirement. You know, you probably have some VA income because of a disability rating in the future.

[00:06:33]You can look forward to social security as well. So as a planner, I look at all these things. I’m saying to myself, okay, these are guaranteed income streams. And when we think about retirement planning. That’s what it’s all about. The reason that you’re saving so much in your 401k or your Roth IRA, or you’re happy about your 17 percent non elective contribution. The reason that you’re, that we do all those things is that when you stop earning income, we can turn that into an income stream for you. So your military pension, your VA income, your social security all add up to be guaranteed sources of income. And so you may need less. In your retirement accounts in order to be okay. So, you know, you asked, um, so I’m going to pause because I want to come back to that question about, you know, what am I seeing in terms of folks being successful or not being successful? I mean, we just pause there any question on that?

Nik:[00:07:28]Yeah. I also think about. So when I started in 2001, 1 of the things that was brand new. Was the thrift savings plan and we call it TSP. That’s our, we give acronyms to everything. Cause we’re not smart enough to really remember what the real words are. So a thrift savings plan is basically similar to 401k, right? They have these funds and you can take a portion of your earnings and put them and savings pre tax.

[00:07:56]And hopefully people have started doing that right when they first jumped in and got into the military and you elected whatever percentage of your income. And you have just for the past, however many years, you haven’t even noticed it and your lifestyle is adjusted to, and you have a solid saving habit that you have had over maybe as little as like 10 ish years. Maybe as many as 30 years, like that habit Is one of the things everybody always talks to you about about financial planning is you have to build those habits early and you already have this one established. Right? And so the threat, I think, is once you jump to the airline world, whatever professional aviation thing you’re going to, you have to reinstall those habits so that you don’t feel that bite early.

[00:08:43]It is. Invisible to you that you are just saving. And so I don’t know, for me, when I got out, I left all my TSP stuff where it was. You think people should like convert that to

401ks or Roth IRAs and stuff like that? Or do you feel like that TSP fund is a smart move to keep there in the long term? How do you go about without all the caveats are like, Hey, this isn’t financial advice, but what do you have that conversation about?

Tim:[00:09:07]Yeah. So that’s a question we get often is, Hey. I’ve separated from service. What should I do with my TSP? And it’s interesting. Like if you go out on the internet, there’s a lot of folks that they love to hate the TSP, right? And there’s some advisors that’ll tell you like, hey, let’s go ahead. You’re leaving the military. Let’s go ahead and roll that TSP over. And I’m here to say not so fast, right? Because the investment options in the TSP are pretty straightforward. You got the CISF G fund, right? So those are going to track major, um, market indices. And in my experience, they do it with very little tracking error, and then the costs are low as well.

[00:09:53]And so for me, that’s a, that’s a really good thing, right? The other investment options that you have are the life cycle funds inside the TSP. And you know, when I work with clients, we’re usually using some of the others, like the ones that I just mentioned, as opposed to the life cycle fund. But if you’re doing this on your own, the life cycle fund works. We’ll do it for you. And so the reason that I’m not in a big hurry for you to move your TSP over is twofold. One, if it’s not broken, don’t fix it, right? Because the TSP can track its benchmarks with very little tracking error. So, and then the other reason that I’m not quick to have folks roll it over is because as a professional pilot, you will get to a point in your career If you haven’t already, where you earn too much money to contribute directly to a Roth.

[00:10:48]Okay. And Roth, the Roth election wasn’t available in the TSP before 2012. So, like yourself, you started in a 1, so all that money, right, was pre tax. Now they have Roth, but chances are you’ve got a little age on it, right? You’ve got these pre tax dollars. So if you roll that over to an IRA and you make too much money to contribute directly to a Roth, you are going to slam shut in your face what’s called the backdoor Roth strategy. And matter of fact, um, the pilot money podcast, I just went to a deep dive of, hey, you’ve earned too much to contribute to a Roth. What should you do now? So for those two reasons, not to slam the backdoor Roth shot. And then also because the investments in the TSP are effective. I’m a fan of the TSP, right? I will say, if you are just totally bent on rolling it, you can either roll just the Roth portion or you can go to a new 401k with your employer, but I wouldn’t make a piss stop at an IRA.

Nik:[00:11:43]Yeah, it’s funny as an airline captain, right? I have been thinking a lot recently about. The proper ways to manage your savings. You can always find something stupid to spend your money on, but I also have the five kids. So I talk with them about the importance of that. And my oldest Frasadi, we just yesterday in the car had a conversation about, cause he’s got some index funds and stuff like that, that he loves watching. And we went through the SMP and what companies do I own? And we went through and I saw like. Alphabet and meta and all the things. And he said, Oh man, this is, this is awesome. And yeah, you get to participate in, in this big, huge global economy. Um, but the, um, being able back to my point about being able to find the smartest ways to make your money work for yourself, because unlike every other job, the door closes at 65, like that door is closed.

[00:12:38]And so you’re either. Have chosen wisely, or you have decided that you’re going to need a, another job, probably be an assembly instructor or something like that after, uh, the airlines, uh, say sayonara, whether it’s 68 or whatever it is, that’s it, should I wait as I’m getting out of the military? You know, there’s a lot of things going on, right?

About six months prior, probably, I don’t know, 18 months prior is when they start doing all their VA disability work and all that stuff. There’s a lot going on, a lot thinking about a move, thinking about getting ready for an airline interview and this, that, and the other to get on your calendar, I’m sure it’s hard. We actually have talked about how, how, you know, you, you can’t just like, I want to talk to Tim on Tuesday. Like, you know, you got to actually look into the future because everybody wants to talk to you. So what do you tell the guys and gals getting out?

Tim:[00:13:28]Yeah. So good question. So. I tell them this, look, if you need financial planning and you need help with the transition and then with all the new airline things, there’s like a blackout window where you don’t want to be talking to me. And so what I tell folks is you want to start our relationship. At least 3 months before your transition, or at least 3 months before your class date. That’s going to give you time for us to go through the planning process, check the cash flows, project income differences, allow you to spool up because on day 1, you know, your election benefits and so on, your union benefits, all these things that as a military aviator.

[00:14:10]It’s going to be brand new to you, right? So at least three months before, if you miss that window, then I tell folks after training, because training is all consuming for you guys. And you don’t want to be talking to me and going through all the financial planning process. In fact, you won’t do it. You might start it and then say, hey, we need to hold off. So I just tell folks in front, like, look, come back after training. The few times that we chat with our clients while they’re in training is usually like hey, can you confirm that these benefit elections are correct? And this is what I want to be doing. But then you guys go back to study, but you know that you are certainly leaving.

[00:14:50]Okay. So, in that case, that’s okay. We could still start the relationship, right? And hopefully they’re working with you and your team at Spitfire to land their dream job. Right. Now, I love that part of the intro, by the way, thanks, Kate. I love that. So, but it would be okay. Let’s start the relationship. But if you’ve got a class date, like we don’t need to be talking a week before you start or a month before you start. It’s just not going to, you’re probably not going to get out of it what you want to get out of it. Cause it takes time.

Nik:[00:15:23]Okay, Tim. So with military retirement. And there’s a lot of things going on to military retirement, right? Like if you’re a reservist and you retire out, you don’t join the check of the month club until you turn 60 or somewhere close to there. And, but if you do have the active duty retirement, you kind of get it from day one, what are the things that kind of each group should be thinking about there?

Tim:[00:15:48]Yeah, so I take this first, right? So. With the military retirement, as we mentioned before, that helps with that retirement income stream. So if you’re active duty and you’re getting it now, and then you’re going to add your 121 job on top of that, that just increases your taxable income at the federal level. There’s some states that will not tax the military retirement. That’s absolutely nice. So if you’re getting that, you can reinvest those dollars or you can use those dollars to support your lifestyle. And then if you’re getting a little bit later, so reservists or national guard age 60, like you mentioned, it’s still a powerful benefit.

[00:16:25]Right? So if you think about for easy math, let’s use 5,000 a month is what the retirement is going to be. I like to track a withdrawal rate on a retirement portfolio of about three and a half percent. I know as your planner, I can sleep at night knowing that. I am not concerned at all about you ever running out of money ever. Okay. At a three and a half

percent withdrawal rate. So if you’re getting 5, 000 a month, that’s your equivalent of about a 1. 7 million portfolio. So, and so as we were talking about earlier, the reason that we put all this money in the account is so we can create an income stream in retirement. Right? So that can help folks think, Hey, I’m behind the eight ball.

[00:17:15]You add up your military retirement. You add up your VA income in your social security. You’ve got these three streams of income. The other thing that I would tell you guys to think about, though, is as you prepare to take your military retirement, you might want to think about the survivor benefit. Okay? Yes, there is a cost to that. But if your financial profile is close or similar to what I described earlier, you moved a lot. Your spouse decided to support your career. Maybe they worked less or not at all to care for the kids, things like that. It’d be terrible if you had no survivor benefit. And if something happened to you, you predeceased and then that money just stopped. Right? And so, you know, you want to be thinking about survivor benefit. And if you don’t take it. Then get a value on the pension and do the appropriate life insurance. You’re still going to have to pay a premium.

Nik:[00:17:54]Yeah, that actually lands a little close to home. My grandfather, he worked for general electric for ever, and he received a pension from the company and he passed away much younger than his wife. And my grandmother, like we were able to, she had dementia and all the things, and we were able to support her and find care for her based on that survivor benefit. And that, man, if we didn’t have that, man, it just would have been a lot more, a lot of things to jump through a lot more difficulty, like that you wouldn’t have to do if you already had it.

[00:18:33]And I don’t want, like, it’s always something that is. Hard to think about getting old, dying, all the things, but being able to being able to look past just this dollar value to understand what is best for you and your family. I think that’s so important. What about VA disability money? Right? Because you get, for those of you that are early on in this process, when you are looking to get out of the military, you can apply for a VA disability payment. Disability benefits. And all of this is based off of kind of how you got beat up in the military and how, how broken they made you. And there’s some serious, serious cash involved in this that can be, and there’s also like secondary and tertiary benefits that are just really, really super. So what do you talk to people about with going down the VA path?

Tim:[00:19:25]Yeah, well, the VA with your disability rating and that income. I hate that you beat up, right? The other thing though, is those benefits are tax free. Okay. And, and we like that, that tax free money is powerful. And we didn’t even talk about the fact that when you’re active and you’re serving, you guys usually have entitlements that result in more tax free income that you’re going to get than on the outside. Right? So you kind of get whacked a little bit when you come out, but that VA income is tax free and there’s a lot of, this kind of bleeds into the education. There’s some States that if you have a VA disability rating, that will then help out with education for your dependents. Right. So there’s a lot of strings to pull on the VA disability.

Nik:[00:20:15]Uh, yeah. And you should certainly look at those websites that talk about what states are most advantageous for disabled veterans, because it is all states are not created equal and I lived in Texas, which has stupendous benefits for people with a VA rating. And then I moved to Georgia, which you might as like it’s trash. It’s just. Comparatively, I mean, it’s disappointing. It is what it is. I hate to like be in some ivory tower, but Georga is really crappy when it comes to VA disability and like benefits associated with that. And so if you’re going to choose to live somewhere, some people I know choose to commute, some people live in Florida and commute to other states to fly. Primarily because of that. And we talk about, Anna and I talk about it all the time because I have my rating and I am certainly my

other buddies that are in other states are like, Oh, what about this? I’m like, no, not here in Georgia. So that’s important.

Tim:[00:21:19]Yeah.

Nik:[00:21:20]Some states are great. Uh, and I’ll leave it, I’ll leave it kind of that. All right. So the other thing that they have is GI Bill too. Right. Should they burn all their GI Bill on flight training? Should they keep it for their kids? Like, how do you make this decision?

Tim:[00:21:34]Well, so a flight training. So then that suggests that you’re a rotor guy and you need to transition, right?

Nik:[00:21:42] Or a never guy and never having flown guy.

Tim:[00:21:48]Or a never guy. That is also very fair. That’s a tough one because. Your ability to transition and go to the airline, stay healthy and fly the airplane. That is your primary wealth builder. And then eventually your wealth filter will be all of the great decisions and investments that you’ve made along the way. So when you put it like that, Hey, so they burn it on themselves to, for their own training, I approach that fairly circumspectly because of what I just said. You got to get it. You got to get to where you’re going. To support me on it. Now let’s assume that you’ve flown fixed wing and you’re going to the airlines and you have this GI and you could choose it to, you know, get a master’s for yourself or support your spouse or whatever. I will say that the GI benefit is extremely, the post 9 11 GI benefit is extremely valuable because it looks at paying for 36 months. Versus a dollar amount. So when we think about the cost of education and how that increases over time, it does something dumb. Like I hope it changes by time my two year old is ready to go.

[00:22:51]So, but cost of education has been skyrocketing over the last 20 years. So that benefit of 36 months. Is extremely valuable if you’ve got some kids to spread that around now, if you’re like me and Nick, we got more than one or two kids in tow, right? We’re probably still finding ourselves looking at 529 plans or the prepaid state plans, but I bring up, or you brought up the GI Bill and I’d say, hey, this is another tool in your toolbox. If you’re in the military, Yeah. You haven’t used it yet, and you’re thinking about your financial planning. You’re thinking about retirement planning. In this case, you’re thinking about education planning. This is another valuable tool. Don’t go to waste

Nik:[00:23:30]whatever you can pay for to make. Yes, I get it, if you are using the GI bill to make yourself more a better asset, you can get a better job because you use your GI bill. Then do it. If you’re doing it to just get a master’s to have a master’s and you’re already an airline pilot. I suffer to see the value in that. And so I’m not saying don’t do it, but I’m saying, take a broader look at the people that are attached to you and how, and especially if there’s a bunch of littles that you’re going to have to sort out and they all want to go to some school, like I look at mine. I’m like, all right, which one of you five is not going to be smart. That’s the one that’s going to get the GI bill.

Tim:[00:24:10]That’s funny. But to your point, I mean, I’ve heard of folks saying like, hey, you know, I’ve got this GI bill, but we’ve used it for my spouse to get a master’s degree. Yeah. Okay. Totally. Well, but I think that goes back to the point that you just made. It’s like, is that the best spend of the dollar?

Nik:[00:24:27]Yeah. Is it like, yeah, maybe that opportunity for that masters is really going to propel that person to much better income level. And then that’s, it’s a no brainer. So I’ll get off my weird soapbox and you guys can. Cast stones at me as you wish. Let’s talk about all the great benefits. Why should you join the military after you get out and you’re already, you’re disillusioned and you’ve got your tattoo on your shoulder that shows what you did in the military. One of the greatest things that I think there is, is the VA home loan. And I love that. You know, I love Marty Medvey and Trident home loans and they’ve helped me with my VA mortgages, but there’s some quirks in there that are really beneficial. Will you talk about that a little bit?

Tim:[00:25:10]Well, the VA home loan and the 0 percent right down payment.

Nik:[00:25:15]That’s right.

Tim:[00:25:17]That’s huge. That is huge. And now what I ask clients to do is ask themselves, I love this benefit, but I asked himself, like, hey, just because I can do 0 percent doesn’t mean I should. And that question has become increasingly more relevant now that mortgage rates have gone up. For sure. If this was three or four years ago, I’m sure you could do it. Right. But now that mortgages have gotten more expensive. I want folks to think about going into the next home. So when you have recently transitioned to the military, right? Like we said, you’ve worked with Nick and their, and his team, you’ve gotten your dream job. You’re moving in base. And you’re also on year one pay,

Nik:[00:25:58]man, that’s a tough time.

Tim:[00:26:01]Okay. That’s a really tough time. And my thought on the VA home loan is if all of those factors are true and the home that you’re buying is squarely within your affordability range, knock yourself out, use the 0 percent right? Cause it’s squarely within your affordability range. However, if that scenario is true and the only way that you can afford that home is with the 0%. Then I’m going to say, maybe let’s slow down, right? I’m going to want you to put some money down, maybe from a home that you just sold, um, to give yourself some more wiggle room. Or maybe we’re thinking about delaying the home purchase and we’re renting for a year or two. And I know a military guy wants to think about that. I talked to him all the time. They’ve moved all their careers. The spouses are done with moving. They just want to be done. I get that. But should I stretch myself and throw my eggs in a basket on year one pay? Or do I wait until year two, maybe year three and get the home that I’m really going to settle in. I’m really, you know, it’s going to be, you know, for me and my family kind of thing. So those are the things I think about when reaching for the 0%.

Nik:[00:27:12]The less financially burdened you are on your one pay, the happier the experience is going to be throughout that year. And further on, like living within your means is so, so important. And I talk about that often. And that year is 365 days long and every minute of it hurts when you are financially stressed and you don’t want to be thinking about that and hoping that the captain picks up dinner and you’re flying with me. She certainly is, but

Tim:[00:27:42]Well, there’s that. And. If you’re on year one pay, you are not furlough proof.

Nik:[00:27:47]Oh yeah.

Tim:[00:27:48]There’s things that are outside of your control that could put you in a really tight spot in this industry. Yeah. And so, you know, just from our risk management

Nik:[00:27:57]Also, you could not be successful in training and be looking for another job. I know plenty of people that have been in that situation and nothing is guaranteed. And you are on probation with that company. Maybe you make a bad Facebook post. Maybe you say something to somebody that rubs them the wrong way and they can cut you loose. And so you are being on probation is a no kidding kind of thing, and the furloughness of things. You don’t want to pull out that furlough flute and hear it singing your song.

[00:28:27]Right. Shout out to Max and Dylan. That’s right. So, yeah, man, that’s so important. And I want to circle back because you and I, for those of you watching this on YouTube, you probably saw a weird glitch where you had a conversation and then it kind of switched over. We had a problem with the recording and we were in this great part of the conversation about what’s going on at Southwest right now and Southwest, most of you probably know this just happened a day or two ago and we’re recording this, but most of you probably know that they’re not hiring this year and they have rescinded CJOs and they put people in the pool and 2024 is over. For people that were going to Southwest, much like the poor folks that are still in the pool at FedEx, whether they’ve moved on or haven’t moved on and not just people there that are waiting, but also people that are on your one pay that all of a sudden they hear the music has stopped and they’re going to be at the bottom of the seniority list for this foreseeable future, and so what do you say to those people?

Tim:[00:29:26]Wow. So that’s news that we’re dealing with on our practice right now. There’s a two pods come to mind immediately. One had his absent at Southwest. And then you hear this and it’s going to have to actually three come to mind. It’s going to have to pivot, right? One thing about doing some part 91 stuff, the other ones are not, we haven’t worked through it yet. And I think this just leads back to some of the conversations we were just having about risk management. Yeah. Right. Like, you know, you crawl, you walk, you run kind of thing. And the same thing, if you follow that process financially, I can’t guarantee in my industry, we can’t guarantee anything, but I assure you, your rewards will be sweet.

[00:30:08]So if you kind of understand where you are in your airline career and what that means financially for your. And then you behave accordingly and make decisions accordingly, leaving yourself lots of wiggle room when a Southwest stops hiring. You’re going to be able to pivot. Is it going to be a speed bump? Yes, but it’s not going to be at the end of the world. Right? And then another one that we were working through, we started in October or September or something sometime last year, and he started looking at 3 airlines applications in and 2 airlines kind of took care of themselves. Southwest being 1. And then that 3rd one is where he’s accepted a position and so we did all the work on the front end and we built in the contingencies and I think just like you here in investing. Hey, you know, diversify. I’ve heard you guys say on your show the time where you can just put in one app to your airline of your choice. That’s over and you’re going to have to put in multiples and then who calls you is where you’re going to pick up the phone. And that’s where you,

Nik:[00:31:10]Yes and I’m sorry if you don’t, uh, like if you really hoping to live in Fort worth and fly out of love field, it’s probably not going to happen right now. And, but the financial picture. It’ll be okay. Like this too shall pass. You just be pragmatic, be practical, like come into your family and find out the ways, like write your budget, figure out the ways you can, you can cut spending and see where it is and don’t do anything crazy. Don’t do anything dramatic. Call Tim, get on the schedule. You need to give him a couple of weeks heads up. He can’t talk to you today, but he’ll talk to you soon. Um, yeah Tim, I wanna make sure I’ve covered all the things we need to cover. What are we not talking about?

Tim:[00:31:52]Well, there’s just, there’s one more. Um, and it’s Tricare. Tricare, yeah. Yeah. I want, there’s something you wanna think about, particularly if you’ve done 20 years, right? Like you, the option, Hey, Tricare for life and things like this. And the premiums on TRICARE is pretty affordable and you know, it’s treated you well. And so that’s one of the questions, Hey, should I keep TRICARE as I transition out? And it really depends. Right. A couple of things that come to mind about what it depends on is, you know, what’s your family’s health care need, what’s the health care options at your new employer, and then where you live, do they have sufficient service providers that accept TRICARE that’s going to be going to work for what you need.

[00:32:35]So those are the things now, just know, if you elect to keep TRICARE, it’s going to make you ineligible for things like an HSA. Okay. And that HSA account, it’s the only account out there that has the triple tax benefit, right? When you put money in, it’s tax deductible. As you invest the dollars, it grows tax free. And then when you use it for qualified medical expenses, it comes out of the account tax free. So over a 20 year career, if you have a family, right, and you’re putting in 8,300 bucks, you know, that could be fairly substantial. Now, the thing is Tricare, It doesn’t cover long term care. So you talked about your grandmother having dementia.

[00:33:16]That’s our real thing. My mother in law has Alzheimer’s and lives with us. It’s a real thing, folks. TRICARE doesn’t cover that, but your HSA could pay for long term care policy premiums, right? So it’s just something that you want to weigh out where you are in your career, what your family’s needs are with your health care. I mean, if you’re at NetJets and your health care premium is zero and you have access to a lot to an HSA, it’s like Why am I not contributing to that? So, you know, it just, it just weighs it out. And it’s really, there’s when we think about personal finance, that’s the thing. It’s all personal. There’s a lot of like ratios and rules of thumb and all of these things, but it’s all personal. And it really revolves around you and your family and what your needs are. And, uh, to make it all work. So that’d be the last benefit that I’d say is, you know, is a pocket, uh, think something in your pocket there as a transitioning military. It’s a question we get all the time. Uh, and the answer is, you know, it depends on a number of things.

Nik:[00:34:15]I love it, man. I love it. And you’re right. Personal finance is so personal and everybody’s got a unique case. So dude, thank you for coming and spending time with us. Thank you for what you do with the pilot group. We appreciate your knowledge and pilot money guy podcast, man. Check it out. If you haven’t already started listening, I know a lot of you do. It’s great. Just great information. I love it. And you’ll hear me and Anna, my lovely bride on there very, very soon.

Tim:[00:34:43]That’s right. Yeah. That we had a lot of fun recording that. So yeah, thanks for the shout out, uh, pilot money podcast guys, come check us out and thanks for having me on the show. I appreciate what you’re doing. It’s almost a public service, man. I was just, all of the Information aggregating that you’re doing for all the pilots. I talked to a lot of people who, uh, who’ve listened to your show and they reference you. So keep it up, man.

Nik:[00:35:07]I’m glad. I’m glad. All right, pilots. Thank you, Tim. You’re the man. We’re happy to have you. Thank you for being part of our little family. All right, Tim, I appreciate all this great information. I appreciate everything you’ve given to the pilot group that you are, um, always, always contributing to. I hear you on all the podcasts, you’re making your rounds in the aviation network, and now with the pilot money podcast. Which is my favorite financial planning podcast. It’s just great. I love watching and listening and hearing your cool guests and spoiler alert. Anna, my bride and I are on an upcoming episode. So definitely

tune into that. You’ll hear our terrible financial decisions. And, uh, so pilot money podcast. Pilot money podcast, pilot money podcast, Tim, you’re awesome. Thank you.

Tim:[00:35:58]Thanks, Nick. I waited three years to have, uh, Anna on the show. So I was very excited to have that. And your listeners appreciate it. So thanks for having me on. And I appreciate what you are doing for the pilot industry as well. So that brings us to the debrief section.

[00:36:14]The first thing I was you to think about, is that your military retirement is kind of like a super power right? So every 40,000 dollars that you’re receiving per year in pre tax income, is about one million dollars you don’t necessarily need in an investment income. So during the show I used a more conservative estimate, but you get the picture. That guaranteed income stream is money that you didn’t have save up in your TSP or airline 401K, to turn on for income for yourself. I would say be sure to solve for the survivor benefit for yourself. Right so rather you pay for the SVP, or you get independent life insurance policy, you wanna complete the diligence for your family. You wanna make sure it makes sense, the military retirement is a super power so think about it that way.

[00:37:04]The second thing I want you to think about is, make sure to use your tools wisely, so the VA loan is an awesome benefit and allows you to put down 0% as a down payment to get into your next home. Many of you after you retire, for the military, you are going to get picked up by the legacy carrier of your choice. Right, you’re gonna be at one of the bases, well maybe I wanna live here. Trades are coming down, which is a good thing. So the question is: should you move to your dream home, and use the 0% downpayment feature in year one, if you have your military retirement coming in? And the answer is that it depends. I agree with Nik, that the less financially independent that you are in year one, the happier the experience will be. And so this is another area where I advise clients, I say hey, let’s make sure this makes sense for you before jumping into it.

[00:37:52]The third thing that I want you to think about, is just a know before you go. Is how to transition out of the military into the airlines, business aviation, or whatever. Expect a higher effective tax rate, okay, eventually over time. Okay so when you’re in the military, you receive certain entitlements that require tax free money. Which is, we love that, we love tax free money. When you retire, usually you’re going to notice your paychecks don’t go that far. So BNJ, ESA, any other entitlements that you’d end up getting, your special pay that are tax free. You’re no longer getting that, which means a greater percentage of your dollars are getting taxed. And so as you look through your pay stub and you see all the deductions. You’re just going to notice that hey, it doesn’t necessarily go as far. So know before you go, expect that, and plan for that. So that’s gonna do it for us today folks, thanks for joining this episode of the Pilot Money podcast and we’ll see you on the next one.