There are a number of benefits available to veterans, including some critical ones you determine toward the end of your service.
Military Times’s recent article entitled “Change of Mission: Understanding your VA benefits at separation” explains that failing to address these or making the wrong choice could cost you down the road or force you to leave a lot of money when you exit. Here are some major benefits regarding which veterans typically make consequential mistakes:
Post-9/11 GI Bill. If there is a chance that you’re not going to use the Post 9/11 GI Bill for your own education, be sure you transfer this to your immediate eligible family members. You can only do this while you are still in uniform, and it will come with an additional service obligation of four years. This represents a free college degree that could otherwise cost $100,000 (or more), if you fail to do this ahead of time.
VA Life Insurance. Your $400,000 of Servicemembers’ Group Life Insurance (SGLI) coverage ends 120 days after you separate. You can replace SGLI with Veterans Group Life Insurance (VGLI), and if you are retiring, you can sign up for the Survivor Benefit Plan (SBP), which passes on 55% of your pension to your surviving spouse or eligible beneficiaries. Note that if you’re healthy, you can find a cheaper policy with a higher payout from a private insurer. However, start the process WELL BEFORE you start file a VA disability claim. If you get this backwards, you could find yourself uninsurable, or your premiums will be extremely high.
VA Disability Claim. No one’s going to force you to file a claim with the VA. However, take the time to do this. It’s important to get any service-connected health issues and injuries thoroughly documented while you’re still in uniform. Otherwise, this could be a fight when you retire from duty. Make sure that your medical records are complete and accurate. When you’re six months from separation (no earlier), give a copy of your records to an accredited Veteran Service Organization (VSO) to represent you and assist with navigating the VA claim process (they do this as a free service). The VA will determine your disability rating after your separation, which could take a few weeks or months. Don’t count on getting a VA disability check for income, until after you get a rating.
In addition to taking care of the benefits above while you are still serving, here are some key limited enrollment windows for veterans benefits after you leave the service (R=Retirement, S=Separation):
R+90 Days: enroll in a TRICARE plan within 90 days after your retirement, or you’ll be forced to go through the process of requesting a retroactive enrollment.
R/S+120: SGLI coverage ($400,000) ends 120 days after separation. If you want to replace it with private insurance, do it way before dropping a claim with the VA.
R+240: if you sign up for VGLI within 240 days after retirement, you won’t need proof that you are in good health (no exam).
R+575: VGLI enrollment window ends at one year and 120 days after retirement (there’s also a 90-day COVID-19 extension).
R+365: the government will move your HHG within one year after retirement before you need to apply for an annual extension with your Transportation Office (limit of five extensions).
R+2-3 years: there’s one opportunity to disenroll from SBP between 24-36 months after retirement. Otherwise, barring a few life-changing situations, SBP is a 30-year commitment.
Reference: Military Times (Sep. 2, 2021) “Change of Mission: Understanding your VA benefits at separation”
Think Advisor’s recent article entitled “11 Scariest Retirement Statistics: 2020” says that there is a lack of preparation, savings difficulty and general uncertainty that American retirees are facing. Here are those scary stats:
1. Just a quarter of Americans are on a trajectory to maintain their lifestyles in retirement. The other 75% will need to work longer, move to lower-cost housing and cut spending to maintain their standard of living, largely due to the coronavirus downturn.
2. The Social Security trust funds would be empty by 2023, without the payroll tax. While President Trump let employers temporarily defer the employee portion of payroll taxes, he said the deferred taxes could later be forgiven, or the cut made permanent. When he signed the order, he vowed to “terminate the tax,” if reelected. Republican lawmakers subsequently debuted a plan to fund any shortfalls from the Treasury.
3. Social Security benefits will be decreased by 21% if the trust fund runs out. Congress will have to intercede, or it could happen 10 years from now, if not sooner.
4. Those born in 1960 will have a big problem because of the complicated formula the Social Security Administration uses to calculate benefits. Pre-retirees born in 1960 will see a nearly 15% cut to their lifetime benefits from Social Security when it’s time to collect. If the pandemic suppresses the economy into 2022, those cuts will impact more pre-retirees. The impact to their Social Security benefits will also be permanent.
5. The 2021 Social Security cost of living adjustment, or COLA, will be just 1.3%. Retirees should note that rising health care costs and a potential 6% increase in Medicare Part B premiums may absorb that benefit increase.
6. More than 50% of Americans think the economy is worse now than in 2008, with 51% of Americans seeing the COVID slowdown as worse than the 2008 recession. A survey from Edelman Financial Engines also found that 26% had withdrawn money from retirement or savings for living expenses.
7. About 60% of retirement savers have fallen behind, according to a TIAA study. Among these, 30% said it was directly due to the pandemic.
8. Internet searches for “move out of the U.S.” have increased 16 times. International Living magazine says it had seen the jump in search traffic around the phrase since May. A total of 20% of respondents in a survey it conducted also said they wanted to move due to the pandemic. However, just 45% cited a desire to save money.
9. Approximately 42% of investors sold stock, and most of them (88%) of them regretted it. In response to the drop in stocks in mid-March last year, 42% of investors in a survey by MagnifyMoney sold at least one stock and 24% sold all their holdings. About 69% of those who sold stock at the start of the pandemic greatly regretted it, and 19% said they were somewhat regretful.
10. Roughly 80% of older Americans don’t understand retirement planning and don’t know the basics of how to successfully plan for a financially secure retirement, according to a study by The American College of Financial Services. The survey also found only 30% of respondents had a plan in place to fund long-term care needs, and just one in four actually had long-term care insurance.
11. About 3 million workers may have been driven into early retirement due to the pandemic. From March to August of 2020, 2.8 million older workers might have been pushed out of their jobs prematurely, with economic turmoil and poor health making it hard for them to resume their careers elsewhere, according to by the Schwartz Center for Economic Policy Analysis at the New School. The report found that 38% of unemployed older adults stopped looking for work and left the workforce, and an additional 1.1 million were expected to do likewise.
Reference: Think Advisor (Oct. 30, 2020) “11 Scariest Retirement Statistics: 2020”