(BPT) - There have been significant changes to military benefits over the last year affecting pay, retirement benefits, health insurance and GI Bill rules. The changes will affect different service members in different ways, but given that the global pandemic has affected almost everyone’s physical or financial health in some way, now is an important time to re-evaluate your military benefits.
“We usually think about updating our benefits only when there is a life change,” said Russell Simmons, Certified Financial Planner® at Charles Schwab and Army Reserve Soldier. “But the pandemic has altered life for many people, so consider the financial implications of your military benefits and any changes you may need to make.”
Simmons offers some easy ways to get started.
- Evaluate your financial situation: Start by meeting with a Personal Financial Counselor, a resource available to you at no cost while you are serving. They will help you create a budget, save for large purchases, build your credit, and plan for the future, including things like determining insurance needs and estate planning. This is especially important if you’ve had a life change — like a marriage, divorce, children, illness or death. Talking about money may feel uncomfortable, but the effect of not addressing these things can be devastating.
- Ask for help: Free help is also available to assist with taxes, individual and family counseling, financial counseling, and other miscellaneous personal needs. Take advantage of free legal assistance available through the Judge Advocate General’s Corps (JAG), such as drafting wills, powers of attorney and living wills. These are services that you would otherwise pay for out of pocket, so don’t leave money on the table. Military OneSource is a free resource to find experts, access financial tools like salary calculators, and find practical advice and information. The Department of Defense Transition Assistance Program (TAP) has information, tools and training to prepare you and your family for your military-to-civilian transition. Transition Assistance Offices are on most military installations in the United States and overseas. Each service branch has its own program.
- Understand your benefits: Research what benefits transfer with you after you leave the military, if and when the benefits expire, and what it will cost you to supplement those benefits in civilian life. Don’t forget to look at your eligibility for VA home loans, Post 9/11 GI Bill education benefits, and Blended Retirement System/Thrift Savings Plan (BRS/TSP) benefits, as well as health and life insurance options. Some benefits can be transferred to your spouse or children, including education benefits.
- Plan for retirement: Many people postpone planning for retirement, assuming they have time to plan. Don’t fall into the trap. Even 20 years of service may not get you where you want to be for retirement. The earlier you start planning, the better off you’ll be on achieving your specific retirement goals. There are online tools to help you understand your retirement benefits, how much you qualify for and at what age you’ll start to receive retirement income. If you were deployed after 2008, reservists may be eligible to receive benefits earlier than expected.
With the recent revisions to many military benefits, you may find that you are eligible for more benefits and financial incentives than you realized. But the benefits you have now may not be the same in the future, so it’s important to dedicate time each year to understand any changes (or work with an expert). Benefits vary based on where you are in your military career, and knowing what you should expect can help support your financial plan.
This information is for educational purposes only. It is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager. Charles Schwab & Co., Inc, Member SIPC.