NEW YORK, NY / ACCESSWIRE / November 22, 2024 / Leaving military service for civilian life can be a massive financial change. You suddenly become responsible for many aspects of your financial life the military used to handle.
Fortunately, veterans can access veteran-focused financial services and benefits through governments, non-profits, and for-profit institutions. From savings accounts to veterans' life insurance, these benefits can help veterans adjust to the financial responsibilities of civilian life.
This article will explore different ways veterans can create financial security for themselves and their families.
1. Increase Your Savings
A healthy savings account is a cornerstone of financial security. So, taking steps to increase savings is a smart move for veterans.
First, save at least three to six months in an emergency fund. This emergency fund can help you cover unexpected costs, such as car accidents or job loss, without incurring debt.
After you have enough in your emergency fund, identify your other savings goals. For instance, if you have kids that you plan on sending to college, review your options, such as tax-advantaged 529 plans or Coverdell Savings Accounts.
When deciding where to open accounts, look for military-focused banks and credit unions. These may offer unique benefits to their veteran customers or members, such as competitive interest rates on savings. Some of these institutions are for veterans only, which may lead to even more exclusive benefits.
2. Get a Life Insurance Policy
Life insurance can help veterans protect their loved ones, creating financial security and added peace of mind. If you pass away, your loved ones can use the benefits to help replace your income and pay off debts.
As a veteran, you can access coverage through Department of Veterans Affairs programs, such as the Veterans Group Life Insurance (VGLI) program. This program offers a wide range of death benefits and lets you apply once you have been out of the military for one year and 120 days.1 Visit the VA's website to learn more about veterans' life insurance and see your options.
Veterans aren't just restricted to VA benefits, though. Shop life insurance policies from different companies to find the best fit.
3. Maximize Your VA Benefits
The VA offers a range of benefits to US military veterans. These include, but are not limited to:
Healthcare: You can get free or reduced health services, such as preventative care, inpatient hospital services, and emergency care.
Education: The VA can help you pay for education costs with several programs, collectively known as the GI Bill. These programs may help cover a substantial amount of tuition and fees. They may also offer a housing allowance, book stipend, and relocation assistance.
Disability compensation: The VA may pay tax-free compensation to veterans for service-connected disabilities. You must have been discharged under conditions other than dishonorable conditions to qualify.
Dependent and survivor benefits: The VA has several programs that can provide financial benefits to dependents and survivors of veterans. For example, the Dependency and Indemnity Compensation program can pay a monthly benefit to eligible spouses of veterans who passed away during active service.
Pensions: Certain veterans may qualify for specific pension plans under the VA. For example, low-income veterans 65 and older may qualify for a tax-free pension from the VA.
Job training and placement: Vocational Rehabilitation and Employment VetSuccess helps veterans with service-connected disabilities prepare for, find, and maintain suitable employment. This includes job hunt training and vocational counseling, among other things.
Organizations like the Wounded Warrior Project can help you navigate the VA process and maximize the benefits you deserve.
4. Use Veteran-Focused Financial Services
Veterans have access to various services that help make achieving financial goals easier.
For example, VA loans help veterans buy, build, or repair homes. They are offered through private lenders but backed by the government, allowing the lender to provide low interest rates and remove down payment requirements.
Veterans looking to start or grow their businesses can use Patriot Express loans through the Small Business Administration. These loans may offer low interest rates and amounts up to $500,000, helping veterans invest in their businesses at more favorable terms. Plus, Patriot Express applications offer streamlined paperwork and faster approval times.
Private and public institutions may provide specific financial services for veterans as well. For example, veterans can apply for grants to cover basic daily expenses or scholarships to attend college.
5. Minimize High-Interest Debt
High-interest debt can occupy a significant portion of monthly income, making it harder to cover expenses and save for the future.
Make a plan to pay down the debt. Here are two common strategies:
Debt snowball: Pay off debts from smallest to largest principal balance. This helps build momentum but doesn't offer as much in interest savings.
Debt avalanche: Pay off debts from highest to lowest interest rate. This builds momentum more slowly but can save the most on interest.
Consider nonprofit credit counseling services if you believe your debt is too significant to pay down. Some credit counseling services exist specifically to help veterans manage and reduce their debt.
6. Plan For Retirement Adequately
Planning for retirement is vital to helping veterans create lifelong financial stability for themselves and their families.
Start with your workplace plan, such as your 401(k) if employed. These let you contribute a certain amount of pretax dollars and enjoy tax-deferred growth. Plus, some employers match your contributions up to a portion of your salary, accelerating your savings.
Consider your military retirement plan, too. Once you leave the military, you can no longer contribute to your Thrift Savings Plan but can roll it into an Individual Retirement Account (IRA).
IRAs may offer more investment options than the limited selection of funds in a TSP. You can invest in stocks, bonds, mutual funds, ETFs, and other securities.
The two main types of IRAs are available:
Traditional IRA: Contributions are tax-deductible, but retirement withdrawals are taxed as ordinary income.
Roth IRA: Contributions are not tax-deductible, but qualifying retirement withdrawals are tax-free. You can withdraw contributions at any time without tax or penalty, but early withdrawal of earnings may incur taxes and penalties.
Charting Your Path to Financial Stability
Shifting to civilian life can be a financial shock but following a few strategies can help smooth the transition and secure your family financially.
Start by bolstering your savings and paying down high-interest debt. Ensure you're maximizing your VA benefits and exploring other government and nonprofit financial services for veterans. Finally, make sure you're saving adequately for retirement.
Consider working with a financial advisor with experience serving veterans. The right professional will understand the unique challenges and opportunities you face and can help you design a plan that creates a financially stable future.
1 U.S. Department of Veteran Affairs - Veterans' Group Life Insurance (VGLI). Updated: Sept. 24, 2024. Accessed: Oct. 10, 2024.
https://www.va.gov/life-insurance/options-eligibility/vgli/
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.
Aflac life plans - 68000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. 65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations, and exclusions.
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