Financial Advice for Military Families
May 23, 2022
Military life is often anything but typical. Deployments, relocations, training, and other unique situations are what make the military lifestyle exciting and rewarding, but also challenging. What military families do not need is the extra stress of managing their investments alone.
As you invest for retirement, save for college, or develop a trust for your family, having insights from a professional who provides financial advice for military families can help you stay on track as markets change and adjust.
What are some financial benefits of military service?
- Military Retirement Benefits. The military provides money for retirement through two key programs: The military pension and the Thrift Savings Plan (TSP).
Your military pension is based on several factors, including your rank and years of service, among other choices you make throughout your military career. However, you decide how much you save in your TSP. The military’s Thrift Savings Plan is one of the best retirement savings plans available. It allows you to choose from several mutual funds or an “L fund,” which makes more conservative investments as you get closer to retirement. The Department of Defense will also match up to 5% of your salary when you contribute to your TSP program. When saving for retirement, you should design a plan that will help you reach your financial goals. As you enter retirement, your investment strategy will change as you start to withdraw those assets.
- Education Benefits. Those who have served for at least 36 months since Sept. 11, 2001, have access to a very valuable benefit: The Post-9/11 GI Bill. The GI Bill can cover the full cost of in-state tuition and fees for a public college for up to 36 months (four academic years) or up to $17,500 per year for a private college or foreign school. Plus, long-time servicemembers can now transfer their benefits to their spouse or children. While this is an amazing benefit, it may not be enough to cover all of your children’s schooling, especially if they want to go out of state. This is an example of why financial planning is important even with military financial benefits. Consult a professional for military financial advice to help you create a plan that ensures you’re prepared to fund you or your family member’s dream college education.
- Life Insurance Benefits. Servicemembers’ Group Life Insurance (SGLI) is a program that automatically enrolls servicemembers in a life insurance plan with $400,000 of coverage unless you actively choose differently. While SGLI is an affordable term life option, a military insurance expert can help you determine if it’s enough coverage to protect your family if something were to happen to you, as well as identify policies that can help you build additional savings for your future. Not to mention, your SGLI coverage ends when you leave the military and it can be difficult at that point to replace it with a civilian option at an affordable price. That’s why it’s a good idea to secure supplemental SGLI coverage, while you’re still in, that will stay with you after you leave the military.
- Home Buying Benefits. One of the most popular VA benefits is the zero-down, low-interest VA home loan. Because VA Loans have unique requirements, it’s best to choose a lender that specializes in them, such as AAFMAA Mortgage Services LLC, a wholly-owned subsidiary of AAFMAA.
- Tax Breaks. Any time you serve in a combat zone, your combat pay is either fully or partially tax free. However, there are some other deductions and benefits to be aware of:
- Deadline Extensions: Some servicemembers, including those serving in combat zones, can get an automatic extension on filing their tax return and paying any taxes they owe.
- Moving Expense Deduction: If you are required to move due to a permanent change of station, you may be able to deduct some of your unreimbursed moving costs on Form 3903.
- Travel Deductions for Reservists: If your reserve-related duties require you to travel more than 100 miles away from home, you can deduct any unreimbursed travel expenses on Form 2106, even without itemizing your other deductions.
- Uniform Deductions: The cost of certain uniforms — including purchase costs as well as upkeep — can be deducted minus any allowance you receive to cover these costs.
How can a financial planner help with finances?
A professional financial planner with expertise in providing financial advice for military families can help create a financial road map for your family’s goals, determining where you are now and how to get to where you want to be in the future. Here are some things that a financial planner can help you with:
- Net Worth: What are your assets and liabilities, and how will those change over time?
- Cash Flow: Are you spending more than you’re earning, and if so, how can that be corrected?
- Insurance Analysis: Do you have enough coverage to support your family if something were to happen to you? How long does your current policy provide coverage? What if you or your spouse require long-term care? What if you become disabled?
- Education Funding: Do you plan to help provide for your children’s or grandchildren’s education, and if so, how much should you save?
- Retirement Planning: What do you want your retirement to look like, and how much will you need to achieve your goals?
What should you look for when choosing a financial planner?
It’s important to find a financial planner who can handle all the ups and downs of your military life and career. That means choosing a financial planner who understands the unique aspects and benefits of military life. You also want someone who both you and your spouse can trust.
With AAFMAA Wealth Management& Trust (AWM&T), you’ll work with professionals who have insightful experience providing military financial advice. AWM&T Relationship Managers work exclusively with servicemembers, Veterans, and military families to help them build wealth and preserve their legacy. Contact AWM&T at 1-910-307-3500 to get started securing your family’s financial future today.