In honor of memorial day, I thought this would be the perfect opportunity to offer up some financial advise for those of you who’re getting ready to retire as well as those still serving who’re interested in planning for the future:
Amendments to Pension Rules Looming Large
The proposed changes will allow people who’ve served less than the 20 year minimum to collect a pension, so those who’re honorably discharged, like famed sniper Chris Kyle can leave the service with at least something to help them transition into civilian life.
The proposal to change the military retirement system hasn’t taken effect yet, but it looks like it will. Most financial advisers with experience advising vets claim that these changes won’t affect current veterans. However, it never hurts to expect the worst.
However, the link in the previous paragraph states that in order for these changes to be enacted, those who have served their two-decade minimum would need to give up 20 percent of their pension. There are no firm answers to how, or if this new system will unravel.
Requirements to Receive a Military Pension
Military pensions are for those who served for 20 years or longer. At the 20 year mark, you’ll earn half of your active duty pay. The pension would increase by 2.5 percent a year for years spent beyond 20 (eg., 30 years of service would be 75 percent of final active pay).
That pension is akin to a savings bond. It will likely be safe and secure for as long as you live. If you enlisted and retired after 20 or 30 years of service, it can be like having a $1.2 million bond investment portfolio.
Veterans should carefully consider what state they want to hang their hat in, though. Some states tax pension earnings, while others do not. Visit Veteran’s United to see which do and which do not.
Vietnam veterans could be eligible for care and compensation for a disability.
For example: To those Vietnam veterans who were exposed to Agent Orange, there is a massive list of conditions that are known to be caused by exposure. Many of which are automatically presumed by healthcare workers to be an effect of this heavily toxic herbicide, meaning compensation isn’t terribly difficult to get in most cases.
Social Security and Special Earnings Credits
If a veteran served on active duty from 1957 through 2001, special earnings credits could be applied to their record for Social Security purposes. This would help qualify for Social Security or increase the amount of the benefit.
For service from 1957 through 1967, the Social Security Administration adds the extra credits to your record when you apply for Social Security benefits. For service from 1968 through 2001, there’s no action required. The credits are automatically added to the veteran’s record.
Here’s a breakdown of the credits a veteran can expect; dependent on when they served:
- 1957 through 1977: You’ll be credited with $300 in additional earnings for each quarter in which you received active duty basic pay.
- 1977 through 2001: For every $300 in active duty basic pay, you’ll be credited with an additional $100 in earnings (up to a maximum of $1,200 a year).
Healthcare: TRICARE or Medicare?
Veterans with service-related disabilities are entitled to care at VA facilities. For veterans who have served at least 20 years in general, the military health care provider is TRICARE. At age 65, plan to migrate from TRICARE to Medicare.
Life Insurance Recommendations for Aging Veterans
Health veterans who opted for Veteran’s Group Life Insurance (VGLI) through the VA when they left the service should consider the alternatives. This is because VGLI insurance can get expensive as you continue to age.
If you’re in good health and have no pre-existing conditions that can hamper your ability to get civilian coverage, you can almost always do better than with VGLI.
VA Guaranteed Mortgage
A VA guarantee on a mortgage could help a veteran purchase a home in retirement. To receive this, a Vietnam veteran would have had to serve at least 90 days on active duty between August 4, 1964 and May 8, 1975. Visit VA.gov for more information on your eligibility. You can download the necessary application forms from there too.
Families should be aware that a veteran may be allowed to be buried in a VA national cemetery. This link on VA.gov lays out all the requirements necessary to be eligible.
Word of Caution About VA-Targeted Scams
Financial scams abound everywhere, not just for VAs but everyone. However, Veteran’s Affairs warns all vets to be cautious when they’re called or approached by anyone claiming to be a member of the VA services. This goes triple for anyone who’s asking for your personal or financial information.
Nobody will ever mail you or call you from the VA asking for your social security number — ever. If you’re contacted by someone claiming to be from Veteran’s Affairs, ask for their extension number and what department they’re from and call them back using the appropriate number listed on the IRIS homepage or visit your nearest Vet Center and talk to an actual person.
Thanks so Much for Your Service!
Memories may fade, but you’ll never be forgotten.
Main Image Credit: TBO.com