Veterans Resources

When it comes to preparing for the golden years, veterans and their families have many resources at their fingertips. They include pensions, a civilian income, Social Security (or possible disability income), VA healthcare and tax-advantaged savings.

Find out what benefits are available to you and how eligibility is determined. By combining military offerings with Social Security income, savings plans and annuities you will be one step closer to handling your future expenses.

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    Qualifying for Military Benefits

    Military veterans may be eligible for tax-free monthly monetary benefits based on their current circumstances, discharge conditions and record of service. While the Department of Defense offers a variety of benefits to meet health and income needs, three of the most common are disability, veterans and retirement pensions.

    • Disability

      Veterans with disabilities related to a disease or injury that occurred or was exacerbated during active military service may be eligible for disability benefits. Benefits are available for mental and health conditions. The level of compensation is related to the degree and severity of disability. Medical records should show evidence of how the disability connects to service.

    • Veterans Pension

      The U.S. Department of Veterans Affairs (VA) offers a needs-based, tax-free paid benefit, known as the Veterans Pension, to qualifying applicants. Wartime veterans age 65 and older who have a limited income and cannot work may qualify. Veterans discharged under dishonorable conditions are ineligible. You must have served at least 90 days of active duty, including at least 1 day during a period of war time. The amount of benefit is based on yearly family income.

    • Military Retirement Pension

      Veterans who served in the military for 20 or more years are eligible for a retirement pension based on percentage of basic pay. Those who serve 40 years are eligible for 100 percent of basic pay. The factors determining the percentage of income you are reimbursed for are based on when you entered the military. Applicants may be part of the Final Pay, High 36 or Redux system.

    • Education

      Many former service members are eligible for money to put towards education. Eligible veterans can receive up to 36 months of education benefits under the Post-9/11 GI Bill. Benefits are available for 15 years since the last period of active duty of at least 90 consecutive days.

    Veterans and Social Security

    VETERANS
    Most veterans are eligible for both Social Security payments and benefits tied to their military service. As of March 2013, around 9.6 million veterans received Social Security benefits. The majority of beneficiaries served from 1955 to the mid-1970s (end of the Vietnam War). Qualifying for SS benefits requires working for a minimum number of years, although in some cases military pay may qualify for SS earnings during active duty or training.

    Eligibility

    Like all Americans, veterans can start receiving benefits at age 62. But the earlier you start getting them, the more the monthly amount is reduced. If you can wait until full retirement age, which changes depending on the year you were born, you can receive full benefits and income.

    Former service men and women can qualify for additional benefits. The SSA evaluates military records when claimants apply for benefits, and qualifying veterans can get a lifetime earnings credit for wages during service. Eligibility is based on length of service.

    Double-Dipping

    A veteran’s best strategy for a financially healthy retirement includes double-dipping, which means collecting veterans retirement benefits while still working full-time (or as a contractor) in the private sector. Critics of this practice argue that veterans are compensated enough without income from a second (or third) job, either in a civilian or government position. Others see the ability to earn extra income as a benefit of the hard years of service.

    Triple-Dipping

    If the retiree went into the military right out of high school, retired early and then landed a long-term job followed by another one, it’s possible that he or she could triple-dip. In addition, the Government Accountability Office reports that in 2014 nearly 60,000 disabled veterans received cash benefits from three federal programs simultaneously. Some received up to $200,000 in benefits from federal salaries, military pensions, disability income and Social Security payments.

    It’s legal to access benefits on multiple fronts like this, but this may eventually put a strain on disability programs and other government benefits.

    Taking Advantage of Veterans Savings Plans

    The federal government sponsors a special veterans savings and retirement plan called the Thrift Savings Plan (TSP). The TSP is a defined contribution plan, similar to 401(k)s.

    Established as part of the Federal Employees Retirement System Act of 1986, the plan includes tax incentives and professionally managed funds. Because this account is designed for long-term savings, it carries penalties for early withdrawals.

    Veterans can also choose a Roth-type TSP, which can include contributions from tax-exempt combat pay and can draw interest over a period of years.

    Pairing Pensions with Annuities

    Veterans preparing for retirement may purchase annuities to supplement their military benefits and future benefits like Social Security and pension payments. Annuity income provides tax advantages, a consistent and guaranteed stream of money and hedges the risk of running out of money late in life.

    Annuities buyers have choices to make:

    • They pick between immediate annuities (where payments start within 10 months) and deferred annuities (where payments start years after a purchase).
    • They can choose among fixed, indexed and equity-indexed income, impacting how interest accumulates.
    • They have options about providing for dependents. For example, with 100-percent joint life annuities, the monthly payments go to the owner until their death. At that point the payments are transferred and go to the spouse.
    • Veterans with TSP income or extra pension funds can use savings to purchase an annuity. Veterans may also turn to annuities is to allow them to put off drawing Social Security income to a time when they will receive the maximum monthly payout.
    Pairing Pensions with Annuities

    Providing for Dependents and Survivors

    The VA pays eligible survivors of those who die in the line of duty or from service-related injuries and diseases. This benefit, known as Dependency and Indemnity Compensation (DIC), can extend to parents of deceased service members.

    Another VA benefit available for survivors is the survivor pension program. This is for low-income, un-remarried surviving spouses and unmarried children of deceased Veteran with wartime service.

    Military employees have the option of paying premiums to participate in the Survivor Benefit Plan (SBP), an insurance plan that helps account for lost income when the service member dies. Eligible survivors receive inflation-adjusted monthly payments.

    The government also offers life insurance options for veterans, including Service Disabled Veterans Insurance, Veterans Group Life Insurance and Family (SGLI), TSGLI and Veterans Mortgage Life Insurance. These low-cost options allow veterans to provide financial security for dependents.

    Steering Clear of Scams That Target Veterans

    Avoid Bad Veteran Investments

    Avoid Bad Investments

    All veterans should watch for so-called financial professionals who try to pressure them into making investments, such as buying an annuity that’s not appropriate to their life situation. While annuities can be a useful tool for securing retirement income, they’re not a good fit for everyone.

    Some insurance agents and financial advisers push people to purchase annuities because they have extensive fees. These fees make the policy too costly (and make it a bad investment). In these cases, agents may recommend a less-than-ideal product and walk away with a commission.

    Prevent Income Penalties

    Another tactic to watch for is when an adviser seeks to portray a veteran as earning less money than they really do, thereby making the veteran eligible for tax benefits and low-income pensions. The falsehood manifests later when veterans want to access annuity funds only to find out their money is locked up – and can only be withdrawn after paying a large penalty.

    The National Association of Insurance Commissioners (NAIC) and other regulatory agents work to prevent agents from preying on veterans and exploiting their hard-earned benefits.

    Prevent Veteran Income Penalties

    Education Benefits for Veterans

    The Post-9/11 GI Bill provides educational benefits to those who were active duty for at least 90 days after September 10, 2001. Through the program, eligible veterans receive a tuition and fee payment made on their behalf directly to the school, a monthly housing allowance stipend as well as up to $1000 a year for books and supplies.

    In-state tuition and fees are covered at public degree granting school. A separate program called the Yellow Ribbon Program can also be used in the event a veteran has interest in obtaining a degree from a private or out of state school to help cover the difference in cost.

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    Advance from Benefits

    Certain companies offer pension advances – also known as annuity utilization contracts – to provide veterans with an immediate, discounted lump sum in exchange for future payments. The swap lets veterans handle bills and other time-sensitive needs, rather than taking out loans or missing payments.

    While the practice itself is legal, discount rates on these transactions may not be disclosed fully or may be confusing. Veterans can lose a significant chunk of their military benefits and be forced to go to court to get them back.

    Planning for Medical Expenses in Retirement

    Preparing your finances for retirement requires taking into account the increasing costs of medical expenses. Pre-retirees must plan not only for the cost of medical care to increase with age – based on added prescriptions and the need for more doctor’s visits – but also for the price of medical care to continue rising.

    Paying for medical insurance is another consideration, as premiums and deductibles can put a dent in retirement savings.

    Eligible veterans and their dependents have access to health benefits through the Department of Veteran’s Affairs. They are provided with hospital and outpatient care based on whether treatment is considered a “need.” VA healthcare will be based on factors including income level and length of service.

    A portion of savings from pensions, civil income, annuities and other retirement programs should be dedicated to making sure that medical expenses not covered by the VA are met.