Financial Planning for Veterans

A sad fact in life is that men and women who serve the country in the military are often targeted by predatory lenders and unscrupulous salespeople who invest them in bad investments, burden them with unnecessary debts, and destroy Their credit-if not their financial life. If you are about to leave the military, some financial planning on your own or with the help of a professional adviser is essential to protect yourself and get the most from your veteran benefits . Here are some tips that should help.

Key points

  • Veterans are entitled to a wide range of financial benefits from VA and other sources.
  • These benefits include funds for education, healthcare, life insurance, low-interest mortgages and retirement income.
  • Veterans are also common targets of scammers, so they should remain vigilant to protect their interests.

Use and protect your veteran benefits

If you are a relatively young veteran, such as in your 20s or 30s, or if you are an older veterinarian, your financial planning needs will be different. This is also true for veterinarians who are married or unmarried, or with or without children.

One of the reasons why veterans are attractive prey for crooks is all the financial benefits they are entitled to. These are some of the veteran benefits you may be eligible for and how to get the most out of them:

Your educational benefits

According to the current two versions of the GI Act, veterans are eligible for educational benefits: Montgomery GI Act-Active Duty or GI Act after 9/11

Montgomery GI Act-Active Duty (MGIB-AD). To obtain education and training funding through the Montgomery GI Bill-Active Duty (MGIB-AD), you must have served at least two years in a specific period of time and meet the other criteria listed on the VA website. In most cases, you must also pay a total of $1,200 to the education plan during the service.

If you are eligible, you can receive financial assistance for up to 36 months. As of October 2020, the maximum monthly benefit for full-time students is US$2,122, for a total of US$76,392 for three years.

The GI Act after 9/11. This version of the GI Act specifically targets veterans who served after September 10, 2001. Depending on the length of your service, you currently pay up to 100% of tuition and fees at public colleges and universities, and up to $26,042.81 per academic year at private and foreign colleges, for a total of 36 months. In addition, you may be eligible for housing allowance and book and supplies allowance.

If you intend to take advantage of your GI bill benefits, you will need to use objective resources (such as the Department of Veterans Affairs’ GI bill comparison tool) to research potential schools, rather than relying on the school itself. Some of the schools that are most actively marketing themselves to veterans are not good choices. In particular, it is well known that the degrees and other certificates offered by many for-profit universities are basically worthless in the job market. As we all know, they encourage veterinarians to increase additional debt by accepting student loans.

Your medical benefits

As a veteran, you are eligible for VA healthcare, but usually you must register to participate. VA’s medical benefit package includes a wide range of services, from basic preventive care to specialist care, surgery, mental health services and prescription drugs. If you meet the income requirements, this insurance is free, but some services and drugs may require out-of-pocket expenses.

Retirees and their families are also eligible for insurance through the Defense Health Agency’s TRICARE program. There are several different plans to choose from, and the cost varies according to the plan you choose.

Your loan benefits

Veterans who want to buy, build, or repair homes to live in or refinance existing mortgages can qualify for Virginia’s home loan guarantee program, subject to certain income, credit, and service period requirements. The program helps veterans obtain veteran loans from private lenders such as banks on more favorable terms than elsewhere. This may include lower interest rates and transaction costs, no down payment, and no mortgage insurance. You can get more information about this program on the VA website.

The Consumer Financial Protection Bureau recommends that veterans be wary of VA housing loan scams, which usually start with unsolicited phone calls or emails from people claiming to be affiliated with VA or other government agencies. VA stated that if you have any questions about the legality of hanging up, please call the department directly at 1-800-827-1000.

Your life insurance benefits

If you had group life insurance (SGLI) for veterans before you retired, you may be eligible for group life insurance for veterans ranging from US$10,000 to US$400,000, depending on the amount of your SGLI insurance. Before you turn 60, you can also increase your coverage by $25,000 every five years—up to $400,000. The premium depends on your age and the amount of insurance.

Veterans Group Life Insurance is a term life insurance that can be renewed as long as you are alive. This is a useful feature in case you have health problems in the future that prevent you from insuring.

To be eligible for VGLI, you must apply within one year and 120 days after discharge. Please note that during the first 240 days of this period, you do not need to prove that you are healthy, but you will be fine afterwards.

Also keep in mind that while VGLI may be your most affordable insurance option, it may not be enough to meet your family’s insurance needs. Therefore, you may want to supplement it with another policy from a private insurance company at some point.

Your retirement benefits

Once you are 65 years old (or earlier if you have a disability), you are eligible for the VA’s veterans pension. Eligibility depends on your income, net worth, and whether you meet the active service requirements. In some cases, the surviving spouse and unmarried dependent children are also eligible for VA pension benefits.

Depending on when you entered the service, you may also be eligible under the military’s mixed retirement system (for people who joined on or after January 1, 2018) or the traditional High-3 system (for people who joined before January) ) Obtained pension benefits. 1, 2006, and did not switch to the hybrid system before the 2018 deadline).

The hybrid system, or BRS, combines a traditional fixed-income pension with a fixed contribution plan, similar to a 401(k), called a Thrift Savings Plan (TSP). The traditional pension is available after 20 years of service, while the TSP (which you and the government pay together during your service) is fully vested after two years. You can start withdrawing funds from your TSP when you are 59½ years old without tax penalties.

High-3 is a fixed-income pension plan that provides pension benefits after 20 years of service. This benefit is equal to 2.5% of your average base salary for the three highest income years, multiplied by the number of years you have served. So, for example, if you have served for 20 years, you will receive benefits equal to half of the average maximum salary (2.5% x 20 = 50%). The longer you serve, the greater your pension.

Bottom line

Many veterans who serve our country receive financial and health benefits in a military environment throughout their lives until retirement. Life outside may be very different, with new opportunities and new rules. It may be beneficial to get help in the transition of programs funded by the Department of Defense (such as Military OneSource).


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