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Top 10 Money-Saving Military Benefits For Families

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Steve Pomeranz, military benefits

Veteran’s Day has come and gone and I feel especially thankful for all who have served and continue to serve in the military… many sacrificing their daily lives at home and many putting their lives at risk to keep us safe and strong. I thank you all for your service.

I started to think about the financial challenges one must encounter as a service man or woman and I wanted to see if there were any military benefits or compensations for these challenges in terms of special financial benefits that the government may have created.

the government offers military families a list of financial benefits that I hope our service members know about

And thanks to Kiplinger Magazine I found a list of military benefits that most of us don’t know about and I even hope our service members know about. Here’s a sampling:

Let’s start with savings and retirement plans:

In the Government’s retirement plan, the so-called TSP Plan, a service member can invest up to $18,000 in 2015, and if they’re receiving tax-free income while deployed, they can increase their contributions to $53,000 for the year.

And now the government has given them access to a Roth Retirement Plan. This ROTH acts like a regular one in that all of the earnings are tax free, which is like a Roth IRA for the rest of us – but without the income restrictions.

An additional ROTH benefit service members can get occurs when they receive tax-free combat-zone pay. Because there is no income tax on their pay and their money can go into the Roth tax-free, contributions go in tax-free and their earnings come out tax-free. That’s a nice touch.

Talk about savings; The government also gives service members a 10% Guaranteed Return on Savings. That’s right, a 10% Guaranteed Return on Savings!

Here’s the direct quote from Kiplinger: “The military’s Savings Deposit Program lets deployed service members invest up to $10,000 in the program each time you are deployed. You receive 10% annual interest, compounded quarterly; the program lasts for up to three months after your return.” Also, any increase in this tax-free take-home pay can be stashed in this 10% interest savings plan.

Remember the G.I. Bill? Well, it still exists and offers free college for yourself, your spouse or your kids. This post 9/11 GI Bill covers the full cost of in-state tuition and fees at public colleges for up to 36 months (four academic years), or up to $21,085 per year for private colleges and foreign schools. You’ll also get a housing stipend and money for books and tutoring.

The money may be used for undergraduate or graduate programs, or for certain programs at vocational and trade schools. And one of the best features of the Post 9/11 GI Bill is that longtime service members may transfer their benefits to a spouse or children.

Inexpensive Life Insurance

The government also offers Service members one of the lowest-cost life insurance programs available. The cost for coverage is only 7 cents per $1,000 of coverage per month, which translates to $336 a year for the maximum $400,000. Life Insurance is guaranteed regardless of your age, health or likelihood of being deployed. Service members can also get $100,000 in coverage for a spouse for as little as $60 a year if he or she is under age 35.

Here’s one that’s a little more subtle but can be helpful. If you maintain a legal residence a state that has no or low income taxes and are deployed out of that state, service members will still be taxed according to their place of legal residence. This rule can shield them from taxes despite the fact that they are living in another state. This applies to the spouse as well if both have to live out of their state of legal residence.

When it comes to buying a home being a veteran enables you to buy a house with literally no money down. Plus they will not have to pay Private Mortgage Insurance which will save thousands of dollars. One caveat to any no money down loan is that even a slight dip in the value of your home will cause you to be “upside down” meaning you will owe more than the home is worth and financially speaking that is no place you want to be.

Another big perk for service members is the tax-free housing allowance. This is a monthly subsidy covering all or part of your monthly rent or mortgage payment as long as you’re in the military.

The amount of the subsidy varies by your rank, where you live and whether you have dependents.

And did you know that The Service Members Civil Relief Act enacted in 2003 provides a host of other benefits as well? This law was initially enacted back in 1940 but goes back as far as the civil war to address the issue that soldiers back then were not paid well and had trouble with their financial obligations. The law prevented them from being sued or forced into bankruptcy or foreclosure.

Here are a few current Special benefits for service members:

  1. There are legal benefits which include an interest-rate cap of 6% on any loans taken out before you were called to active duty.
  2. This cap is especially helpful for members of the Reserves who are called to active duty and have to take a pay cut when they leave their regular jobs. This is not automatic… you have to apply to the lender for this benefit.
  3. This law also gives you the right to terminate an apartment lease if you have orders for a permanent change of station or are deployed to a new location for 90 days or more.

And finally, each branch of the military has an emergency-relief fund that offers small, interest-free loans for emergencies. Credit unions on base also offer short-term loans at reasonable interest rates. Some even offer small emergency loans to members of the military with little or no credit check.

Once again, thanks to all who serve and have served. Thank you for protecting us and keeping us safe and strong.

 

I've been an investment strategist and adviser for over 35 years, leading with a mission of unbiased advice to educate and protect listeners on my weekly radio show on NPR affiliates nationwide. I have been named a “Top 100 Wealth Advisor” by Worth Magazine and “Top Advisor” by Reuters.