Let’s face it, maintaining annual dues is a hassle. As a former Commander and All American Quartermaster of VFW Post 8469 (http://www.vfwpost8469.org), I can attest that Life Memberships made my life and the Senior Vice Commander’s life much easier. We were able to better forecast membership revenue and focus our attention on yearly membership renewals. For me, as a VFW member, the amount that I paid for a Life Membership was worth it. Therefore when I saw that the American Legion was offering their Paid Up For Life Program, I was excited to unburden myself of having to pay for my American Legion membership every year.
Imagine my shock when after putting in my American Legion membership information, I found out that I would have to pay $1,399 (because paying the discounted $1,299 rate all at once is out of the question).
Now, don’t get me wrong. I am a big proponent in the belief that veteran service organizations like the American Legion, and Veterans of Foreign Wars have to remain financially viable for the present and for the future in order to support veterans, their families, and the military community. This means that I understand the need for modest increases in membership costs and reducing unneeded expenditures. However, I am shocked at the amount that the American Legion is stating must be paid by Legionnaires, who are 30, so that they no longer need to pay annually.
Some of you might be saying, “What’s the big deal? Paying $1399 when you’re 30 is a good bargain.” You might even be saying, “Quit your complaining. You should support the American Legion.” Well, while I agree that veterans should support organizations like the American Legion, I do not believe that we should just submit ourselves to an organization on the basis that it has been around for a long time and is here to serve our community. Every organization, regardless of its purpose, or the community that it serves must continually show itself to be of benefit to those who it seeks to become members and to those who are members. Every organization must provide value, whether tangible or intangible, to its members. Therefore, while I believe that the American Legion provides value to me and our community, I do not believe that American Legion’s Paid Up For Life Membership has much value for members of the American Legion. (unless those who pay the one time due believe that the money they will lose over time is worth the value of not having to remember to pay yearly dues, or that the money that they will lose is best kept and maintained by the American Legion).
Before you stop reading and try me for heresy against the American Legion and our veteran community, let’s look at the facts. Let’s look at how much money you will lose during the time that you are likely to be alive.
In order to begin examining how much money you will lose by joining the Paid Up For Life Program, we need to establish a couple of assumptions by which to forecast.
Annual membership costs vary across the country. However the variance is not so wide as to make forecasting and financial comparisons completely inaccurate.
The national American Legion does not raise annual membership costs yearly. Therefore it is safe to assume a staggered raise in yearly membership dues. Therefore two different Annual Membership Dues increases are assumed: a $5 raise in membership dues every 5 years, and a $10 raise in membership dues every 5 years.
The average yearly rate of return for the stock market is roughly 12% .
The current Risk Free Rate of Return as of this writing is 2.93%.
A 7% average yearly rate of return for the stock market was chosen at random.
Now that we have those assumptions, we can forecast and compare. After running the calculations, we come up with the following:
If you paid the $1,399 Paid Up For Life Program due and are currently 30 years old and invest in the stock market with a 12% yearly average return:
If you live until 70, you will lose over $100,000
If you live until 60, you will lose over $30,000
If you are 30 years old and invest the $1,399 in the stock market with a 7% yearly average return:
If you live until 70, you will lose over $16,000
If you live until 60, you will lose over $8,000
If you are 30 years old and decide that you wanted to put the $1,399 Paid Up For Life Program due into a “risk free” security (normally identified as US Treasury 10 Year T-Note):
If you live until 70, you will lose over $1,500
If you live until 60, you will lose over $1,400
So what do these calculations mean? Do they mean that you would be better off by investing the $1,399 and paying an annual membership to the American Legion? Possibly. Do these calculations mean that your family would be better off from you having invested this money and paying an annual membership to the American Legion? Probably. Do these calculations show that the Paid Up For Life Program is over priced? Only you can decide that for yourself.
What I can tell you is that based upon these calculations, the American Legion does not provide me with enough value that I am willing to forgo the ability to pass on $100,000 to my family when I die at 70 (God willing), when I can continue to pay my Annual Membership dues. I would rather invest the money, be better able to provide for my family, and then place the American Legion in my will at an amount less than $100,000.
But everyone must make his or her own decision. Everyone must take into account that it is possible that Annual Membership dues could rise faster and higher than estimated. Everyone must take into account how much value they place on not having to pay for their American Legion membership every year. Everyone needs to take into account whether or not they believe that the American Legion provides the value that they (and their family) are losing if they pay the $1,399 Paid Up For Life Program due.
We all need to make our own decisions. You now have financial tabulations with which to base your decision.
For those of you who want to see my calculation tables, I have placed them below:
Financial Assumptions Based on the American Legion Paid Up For Life Program Cost of $1399