Focusing on the Financial Challenges of our Returning Veterans
While a veteran who returns home after military deployment is something to celebrate, it can be an extremely difficult transition for a soldier to make. And while most of us tend to think about mental and emotional challenges of our returning veterans, we have a tendency to forget that the financial impact can be just as devastating.
Here are just a few of the financial issues that returning veteran’s face and what they can do to cope:
1. No More Tax Breaks
Most military personnel receive a tax-free housing allowance. As a civilian they lose this federal tax break, and some may even have to resume paying the state income tax they avoided on active duty. So it’s important for returning veterans to consult with a tax professional to clarify the financial impact of losing certain military benefits and what type of income is needed to make up the difference.
2. Paying for Health Insurance
Unless they’re retiring from the military with over 20 years of service, returning veterans will be facing high health insurance premiums. Even if they have a job with an employer who offers health insurance, they’ll most likely have to pay part of the policy’s premium, as well as co-payments and deductibles.
Returning veterans should check their health insurance options carefully. If the veteran is unemployed or has a job with health insurance coverage, they may want to consider signing up for the Continued Health Care Benefit Program which provides up to 18 months of coverage while you’re in between jobs.
3. Dealing with Retirement Accounts
Veterans, who have a Thrift Savings Account for retirement savings through the military, may want to hold on to the account because it’s inexpensive to maintain. If not, there are plenty of options to consider, including rolling the account into an IRA or an employer-sponsored retirement plan. Because roll-overs can be complicated, it’s important to speak with an experienced investment advisor.
4. Lack of Emergency Funds
While in the military, jobs are stable and expenses are low. As a result, many veterans don’t have money set aside in an emergency fund. It’s best if they can put money aside before making the transition to civilian life, but if not, they should start setting aside emergency savings as soon as possible. Applying for a credit card to use in emergencies only is also an option.
5. Applying for New Jobs
While military experience can help launch a new civilian career, it can be tough for a veteran to know where to start looking for a job. A career coach can help veterans create a resume, practice interviewing, and develop networking skills.
6. Managing Debt
Some veterans may have large debts as a result of unemployment, not budgeting properly, or from unplanned expenses such as hospital stays or other emergencies. In these cases the first impulse can be to borrow more money. However, additional debt puts more strain on finances and can lead to even more serious financial trouble.
Developing a budget that clarifies income and expenses helps veterans know how much money is coming in, what’s going out and where any short falls are.
7. Finding the Right Resources
It’s important for veterans to be aware of the resources available to deal with the financial challenges of returning to civilian life. Reliable sources such as the VA and other accredited Veterans Service Organizations can be a lifeline to military personnel.
Some financial institutions, like Webster Bank, have special programs with benefits for active and retired military personnel. Webster’s Military Banking program offers special checking account services, business loan benefits, mortgage rebates and other discounts exclusively United States Military personnel. Learn more about Webster’s Military Banking program here, and let us know any questions in the comments below.
From everyone here at Webster, thank you for your service.