These challenges can result in financial mismanagement, both during service and immediately following, that can cost veterans. Paying off debt, fighting the effects of fraud, and trying to build up some savings can take many years, leaving veterans insufficiently prepared for and therefore vulnerable when they retire. A lot of the resources here are geared towards helping veterans minimize debt and maximize savings so that they are well-positioned for retirement.
While the exact services offered frequently evolve, the good news is that there are options for veterans and their families to find support. But assumptions about what services are available may be mistaken. Reaching out the groups listed below could uncover additional resources offered by these organizations, or by ones they recommend.
While this piece does not aim to provide any financial advice, it does aspire to share resources to connect veterans and their loved ones with professionals who can provide assistance or further information. It also might help introduce the names of some programs and services to guide further inquiry.
How to Use This Guide
This guide is designed to help U.S. veterans and their families navigate the resources available to them to get their finances under control and to save for retirement.
Last updated: 2/20/2020
How Prevalent is Financial Difficulty Among Veterans?
Veterans are sometimes at a competitive disadvantage when it comes to finding a job and settling down. They might have sustained injuries during service and have to deal with the consequences, sometimes unaware of the range of government and private services available to help support them. Further, veterans can be the target of fraud due to limited financial knowledge, debt burdens, or struggles with mental health. Their loved ones may want to help but might not know where to start in building an adequate support system to help their veterans through.
The data on how veterans fare financially in comparison to their civilian counterparts emphasizes these challenges further. According to the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation, veterans are:
- 9% more likely to engage in problematic credit card behavior (carry balance, get charged late payment fee, etc.)
- 40% more likely to be behind on paying for their homes
- 28% more likely to have made a late home payment
There are also differences within the veteran community that can influence the severity of a person’s hardship as well as the support available to them. Various aspects of the veterans’ experience in service can affect the obstacles they face as well as some of the resources available to them, including:
- their branch of service
- their length of service
- the length of time the veteran has been out of the military
- the age at which the veteran enlisted
- whether the veteran is fully retired
Homelessness is one pervasive issue in the veteran community. According to the National Coalition for Homeless Veterans, homeless veterans make up roughly 11% of the homeless population. Homeless veterans also tend to be younger than the overall veteran population, and are more likely to suffer from disabilities, mental illness, and/or substance abuse issues. It is critical to look for resources that can help with these issues in parallel to financial help and financial literacy education.
Fraud is yet another issue faced frequently by veterans. A survey from AARP found that veterans are targeted for consumer fraud more often than civilians. Specifically, the survey found that 16% percent of veterans have lost money to fraudsters compared to 8% of nonveterans, making veterans twice as likely to fall victim to financial fraud. A whopping 78% of veterans reported being targeted for scams in the past five years that specifically targeted their status as a vet.
Common Obstacles Faced by Veterans
As touched upon earlier, veterans may face a number of unique challenges upon retirement from duty. Adjusting back to life as a civilian can be difficult. Their experiences in the military, combined with the potentially limited civilian education and “conventional” work experience they have, may result in a competitive disadvantage when trying to apply to a job, get back in school, or just settle down into a regular routine—all of which impact their financial stability.
A strong understanding of the challenges faced by veterans—and the specific problems each challenge poses—can help pinpoint the types of resources that could be most helpful.
- How moving affects financial health: When veterans and their families move around a lot, it can be difficult to establish roots in any one place. The spouse’s career might have suffered from the constant moving; he or she might have been passed up for raises and promotions, and lifetime earnings might be lower as a result. Additionally, the family might have had trouble developing a social life and support network in their community.
- How to settle down: To decide where to settle down, veterans should consider factors such as where their extended family lives, where is familiar and/or comfortable to them, and where they can find opportunities for the types of careers or education that interest them and their families. To ease with the transition, the military offers relocation services.
- Some other resources specific to this obstacle include:
- VA Relocation Assistance – This resource has some details on the federal programming available to assist with relocation and beyond, as well as what specific resources to look at for further support based on the military branch of service.
- “Family Assistance,” “Family Services,” and “Family Resources” – Search for each of these phrases to find what’s available near you, since it can vary extensively not just by state but also county and city. Multiple tiers of local programming may exist to assist families with everything from financial aid through planning. These can also help provide veterans with support and counseling in working through issues like financial health.
- Local VA Services – Some benefits offered to veterans may vary by state, and so it’s worth the time to visit a local office and talk through what’s available.
- Salute – This program is one of many that helps veterans and their families with the servicemember’s transition back to civilian life, helping to fill in gaps that may arise including problems paying bills or securing transportation.
- Recycled Rides – Veterans may apply through one of the participating family assistance programs to receive assistance with transportation, including potentially a refurbished car. This can help provide some flexibility with where veterans and their families can live and work.
- Who is affected most: Those who enlisted young—right out of high school—may not have had the chance to learn how to manage their finances or their credit score. A service member who doesn’t have any urgent financial issues or doesn’t see debt as a significant problem might face a bad surprise upon retirement, when they realize that in retrospect they could have been preparing all along. Further, many military jobs require a security clearance; if a person is in debt, he or she might be denied that clearance and forced into early retirement.
- What to do: It’s important to develop good financial habits before problems become unmanageable. The Servicemembers Civil Relief Act (SCRA) protects active-duty service members from creditors. Once service members retire, they can seek out credit counseling if they’re in debt. Nonprofit counseling agencies are an option since they are often inexpensive or free, while sustaining a mission of keeping their clients’ best interests at heart.
- Some other resources specific to this obstacle include:
- Thrift Savings Plan – Since 2000, military personnel can enroll in the Thrift Savings Plan, a retirement savings plan available to federal employees. Once service has ended and no further contributions can be made, this can be converted strategically to an IRA; learning more about the options available for this, as well as consulting with a financial advisor, are recommended.
- Veterans Financial Coalition – Dedicated to both veterans’ financial education as well as consumer production, this coalition is comprised of multiple organizations that each have services dedicated to helping veterans.
- Military Saves – This nonprofit strives to help servicemembers and their families successfully manage their finances and ultimately build wealth.
- Consumer Finance Protection Bureau – This federal site contains resources for financial literacy, including a detailed section devoted towards credit cards.
Obstacle #3—Service members may have less say in the progress of their careers and their level of pay than civilians, as they are subject to the military’s linear promotion hierarchy and the federal budget.
- Disadvantages of military compensation: Pay raises and promotions follow a stricter path in the military. A service member’s pay is based on his or her rank, regardless of expertise, which is sometimes significantly lower than the pay he or she might receive outside of the military (think doctors, for example). Pay raises are subject to the budget allotted by the government. The progression through the ranks of the military is more regimented than a civilian career path, which has more variation; it requires a higher level of commitment, and a person cannot just quit if the position isn’t working out. A civilian can somewhat control the direction his or her career takes and negotiate for higher pay and a better title. Military veterans might not be prepared to take control of their careers and negotiate the positions and salaries they deserve, or to know where to begin in career advancement.
- Focus on the positives: Military personnel have access to a number of benefits that a civilian might not, including tax breaks that even the compensation playing field. They have health insurance options for which they incur no additional costs, housing, life insurance, education reimbursement, and more vacation time than the average American, not to mention the fact that they can retire with full pension after twenty years. It’s important for veterans to know their benefits and take advantage of what these benefits offer.
- Some other resources specific to this obstacle include:
- Career path optimization – Many online tools as well as in-person counselors are available to assist with translating military skills into competitive resume points, as well as to help map out civilian career paths.
- Use veteran small-business assistance – For many retired servicemembers, becoming their own boss and no longer having to take orders is extremely gratifying. There is federal and local programming in place to assist with this, although some veterans are reluctant to assert their merits and use it because they worry about accepting a “handout.” This is not a handout; this is a benefit offered to those who sacrifice their lives to protect their country.
- Salary negotiation tips for veterans – Civilian careers can seem like a free-for-all compared to the regimentation of the military. Negotiation is not only recommended, but required for success in civilian life, which this piece not only reinforces but also provides some starting points.
Obstacle #4—Finding a job and assimilating back into civilian life after active duty poses challenges. The training veterans received as part of their service may not easily translate into skills sought by civilian recruiters.
- Why finding a job is difficult: Veterans often struggle to find jobs that match their skills and interests. Additionally, veterans may have sustained physical or mental injuries during service, which can hinder their ability to find and keep a job. Some employers may not be able to empathize with what a veteran has been through, and the continuing effect it might have on the veteran’s life.
- Who is affected the most: While the overall veteran unemployment rate tends to be lower than the rate for civilians, and these rates were at a low as of May 2019, more recent veterans (those who served since September 2001) and veterans with disabilities tend to have higher rates of unemployment. Returning to civilian life during the financial crisis may have amplified the financial hardships faced by more recent veterans.
- Some other resources specific to this obstacle include:
- Veteran and Military Transition Center – Sponsored by the US Department of Labor, this resource helps with employment, education, and even relocation guidance not just for service members but their families as well.
- Consult local universities and libraries – Typically labeled as resources for military veterans, these places offer up services, events, and local contacts who can facilitate career support and networking opportunities. Even resources noted as being for military students can prove useful; consult with the parent source of such resources, as they may have offerings for non-student veterans, or even resources for those seeking to go back to school.
Obstacle #5—Rollbacks of government programs that assist service members can have huge consequences. For example, the proposed rollbacks of provisions under the Military Lending Act of 2006 might expose military personnel and families to financial fraud, predatory loans, and credit gouging by catering to the interests of those groups.
- What does the Act do: Among other protections, the Military Lending Act caps interest rates on credit provided to military service members at 36 percent, polices the type of collateral a lender can accept from the service member, and provides legal protection for violations.
- Who is affected: The Military Lending Act protects active-duty personnel and their dependents. If provisions are rolled back, these service members are at a higher risk of financial fraud, which can follow them into retirement. Service members that fall prey to fraudulent attacks are likely to go into retirement with higher debt and a lower credit score, and they’re often more exposed to continuous and future attacks, since they’ve proven to be an effective target. Their ability to effectively assimilate into civilian life after service is made that much harder. Further, if a service member’s finances are compromised, he or she might lose security clearance and be forced to leave the military.
- The resources listed here can help—as well as any referrals they offer—but being wary of the reputation and track record of any service provider is recommendable. Referrals from respected bodies and individuals, reviews from real people, and carefully reviewing the terms behind any offers is recommended to help reduce risk.
- Mental health challenges: According to the RAND Corporation, about a fifth of Iraq and Afghanistan veterans suffer from PTSD or depression, and many also suffer from traumatic brain injuries. Only about half of these veterans seek treatment, and of those, only about half of them are treated adequately. These issues can be debilitating and prevent a veteran from being able to hold a job. Medical and psychological help can also be costly, which compounds the financial burden.
- Reasons for not seeking treatment: A veteran might be unaware that he or she has a problem that needs treatment or thinks it’s not severe enough to pursue. Of those who understand they have a problem, many find shame in seeking help, succumbing to the stigma or the idea of appearing weak. Others have trouble finding the information and services they need and don’t know where to turn; others still find that adequate services are located too far away to be feasible.
- The VA remains a strong starting point for considering services to treat health issues, although there are growing numbers of non-profit organizations dedicated to helping support veterans, including those who are disabled or who suffer from specific conditions. For female veterans, women’s health-specific organizations also exist.
Obstacle #7—Veterans are often the targets of financial fraud, commonly due to their service training, their military status and benefits, or the presence of negative life events.
- Types of fraud: Veterans often encounter fraud designed to pinpoint their weaknesses, such as schemes that offer tech support, debt elimination, discounted goods and services, and the opportunity to support fellow veterans through donation. Schemes often cater to the veteran’s specific situation and military benefits.
- Why veterans are at risk for fraud: Veterans tend to be more likely than civilians to take risks with their money in the hope it will benefit them financially. Veterans also have a high level of trust in fellow veterans, as opposed to civilians, and they’re more likely to donate money to help other veterans without investigating the charity or even knowing how to do so. Additionally, veterans tend to have experienced more negative life events (loss of a loved one, injury or illness, mental health issues, etc.) than nonveterans, a vulnerability that fraudsters are quick to take advantage of.
- The AARP has a very comprehensive yet concise resource to help avoid veteran fraud by highlighting the most common scams, what can be done to detect a scammer, and available resources to check the legitimacy of those offering services geared towards veterans and/or their families.
Obstacle #8—A high proportion of veterans experience poverty and homelessness when they return to civilian life.
- Who is at risk: Younger veterans make up a larger proportion of homeless veterans compared with their proportion of the entire veteran community. African American and Hispanic veterans make up a significantly larger portion of the homeless veteran population. A higher proportion of homeless veterans are male, but the rate for females is rapidly rising.
- Why veterans are so susceptible: Veterans with high levels of debt struggle to make ends meet and often find themselves homeless. Mental and physical health issues only compound this, since they might make it harder to keep a job, and medical costs might be higher. Additionally, successful fraud attacks can strip a veteran of his or her financial security.
- What to do: Veterans in financial trouble should seek counseling as early as possible, to prevent debt from becoming unmanageable. For those who are struggling, government programs such as the Supplemental Nutrition Assistance Program (SNAP) provide essential aid. Veterans Affairs offers assistance to those who are homeless or at risk of becoming homeless.
- Some other resources specific to this obstacle include:
- National Coalition for Homeless Veterans – This group provides up-to-date coverage of news and policies that affect veterans, service providers that can assist with veterans’ challenges, and resources for veteran assistance.
- US Vets – This nonprofit is focused on facilitating the best possible transition back into civilian life for veterans.
- Volunteers of America – Among those they serve are homeless veterans, which this nonprofit seeks to take off the streets.
When to Seek Help
For veterans and civilians alike, it’s all too easy to ignore the warning signs and not seek financial help until it’s too late. Additionally, many veterans don’t know where to turn for help, especially since there isn’t a one-size-fits-all solution, and they need to seek services geared specifically for their situation.
- Seek help early: Missing credit card payments or falling behind on any sort of repayment is a warning sign that more severe financial troubles could follow. Debt often has a snowball effect; the deeper a person is in debt, the harder it is to get out due to high payments and high interest. Veterans can educate themselves on budgeting and managing money, or they can consult a nonprofit credit counselor to assist.
- Take control of debt: For those veterans already deep in debt, a debt management plan might be best. This plan is more drastic than simply money management; the debt management company negotiates with creditors to lower monthly payments and reduce penalties, usually settling on a multiyear plan for the veteran to pay off all debt.
Types of Veterans
Veterans experience a variety of challenges based on their age, their experience, the amount of time they spent in the military, their disability status, and the branch in which they served. Consequently, there isn’t a one-size-fits-all financial solution; veterans need access to the resources that will specifically benefit them. There are three main types of veterans, each requiring different retirement and investment savings plans.
This group of veterans joined the military young, often fresh out of high school. They have never known any other type of adult lifestyle, and so entering civilian life after service can be especially daunting. They don’t have a college education or any work experience and often have trouble finding a job and settling down.
Common financial problems
- High levels of debt and no savings: Younger veterans may have built up a lot of debt without necessarily realizing it while they were enlisted, while also lacking in savings.
- Financial illiteracy: Veterans who enlisted right out of high school may lack the basic financial education many civilians learn in college and through early employment. This could leave them prone to making uninformed financial decisions after returning to civilian life. The consequences can compound over time to draw them deeper into debt, which they have to face when they leave the service.
What to do
- Use programming designed for young vets: Younger veterans can particularly benefit from the GI Bill, which provides tuition and fees for their education. Additionally, the new Blended Retirement System (BRS) (for those who enlisted on or after January 2018) will be particularly beneficial for those who haven’t reached the twenty-year retirement benchmark. Under this system, service members can plan for retirement by contributing to a government-run 401K program while serving, and the government will match the contribution, up to 5 percent of the person’s pay.
- Develop financial literacy: Younger veterans should focus on building their financial knowledge so they can make educated decisions moving forward. With a basic knowledge of how to manage their money, they can develop a budget and a plan for paying off loans and debt, and they can start saving for the future.
These veterans have been in the military for the majority of their adult lives, often having achieved high-ranking and decorated positions. While regulations differ depending on the branch of the military in which a person served, twenty years of service allows a person to retire with lifetime pension.
Common financial problems
- Learning how to navigate benefits: Upon retirement, veterans are presented with a daunting amount of information and decisions to make on their benefits. Without guidance, it’s easy for veterans to make decisions that they later regret. For example, the Survivor Benefit Plan (SBP) is the military’s version of life insurance and provides a monthly income for spouses and/or dependents upon a veteran’s death, but the veteran must elect for this coverage upon retirement; he or she cannot just opt in later.
- Reintegration late in a veteran’s career can be jarring. It can be hard for older veterans to start anew so far into their careers, and they’re often passed up in favor of younger, more targeted job applicants.
What to do
- Understand military benefits: A veteran’s retirement pay and benefits depend on a number of factors, including years of service, the year the person entered the military, whether the person was active duty or reserve, the person’s disability status, and the type of retirement. The longer a veteran serves, the higher the retirement pay. Additionally, the year a veteran entered the military determines the pay system he or she falls under:
- Before September 1980: Final Pay retirement system
- Between September 8, 1980, and August 1986: High 36 retirement system
- After August 1986: You can choose either the High 36 or the Career Status Bonus/REDUX (CSB) system; High 36 is the default.
- Blended Retirement System (BRS): This system is new for service members that joined on or after January 2018.
Disabled Service Members
According to the U.S. Bureau of Labor Statistics, 25 percent of veterans had a service-related disability as of August 2018. Disabled veterans face unique challenges upon retirement. They receive disability retirement money, but this amount differs based on the years of service, the branch of the military, and the severity of the disability (disability ratings range from 0 to 100 percent).
Common financial problems
- Varying effects of disability: While the type and severity of disability varies, it’s often harder for a disabled person to find work after retirement, despite the fact that the Americans with Disabilities Act protects veterans from discrimination. More severe disabilities prevent the veteran from being able to work at all, which means they’re completely reliant on government benefits and any additional income generated by their family.
What to do
- Understand military disability benefits: Additional retirement pay for disability is based on the severity of the disability and other factors, such as whether the veteran has dependents to take care of.
- Seek help: Organizations like Disabled Veterans provide additional financial and personal support for veterans with disabilities and even sponsor community events.
Even more resources
What resources can a veteran turn to in order to become financially literate and stable? Getting a job, seeking further education, and consulting a credit counselor are good first steps, depending on the veteran’s interests and needs. Veterans, particularly those in debt, should learn how to balance a budget, manage money, and make smart financial decisions moving forward. The resources below, ranging from financial help to general reintegration assistance, can help veterans get started on their journey to financial success.
General financial resources
- Retirement planning: Learn how to prepare for retirement by taking advantage of the benefits available to you.
- Free credit report: Veterans should learn to keep track of their credit. This site offers one free credit report per year from each of the three major credit reporting companies.
- Mint, YNAB, and other budgeting tools: Keep track of all your accounts and expenditures, create budgets and financial goals, and see exactly where your money is going at a glance.
- National Foundation for Credit Counseling — This nonprofit organization offers an immediate plan for debt relief and instills the financial skills to prevent a veteran from falling into debt in the future.
- Debt relief — Veterans can get a handle on their debt with this range of solutions, depending on their situation.
- VeteransPlus — Veterans can take charge of their finances with the financial coaching and financial literacy courses and education offered through this site.
- Hands on Banking — This service, offered in partnership with Wells Fargo, offers financial resources specifically for military personnel and veterans.
- Understanding your military benefits — This resource is a landing page for exploring the various military benefits available to veterans. Another breakdown can be found here.
- Protect yourself against fraud — This site lists common fraud attempts that target veterans, so they know what to look out for, and offers guidance on how to avoid being duped.
- Federal Employees Retirement System (FERS) – This federal benefit provides basic benefits, Social Security, and Thrift Savings Plan (TSP). (This replaces the Civil Service Retirement Act (CSRS), for federal employees who began service before January 1, 1987.)
- Phased Retirement – This program allows individuals to work part-time jobs while starting to draw retirement benefits.
- Veterans Pension – Information about this pension can be obtained here directly from the U.S. Department of Veterans Affairs/
- gov on Military Pensions – A detailed breakdown of federal and state pension benefits available for military servicemembers.
- gov – More information can be found here on participating in a Thrift Savings Plan, investing, and planning for retirement.
- gov blog on making changes to your TSP – This government source provides an overview of what to keep in mind when considering making changes to a TSP.
- Relocation Assistance Program — Veterans can take advantage of this military program when looking for a place to live, facing financial issues, and navigating other reintegration difficulties.
- Transition Assistance Program — Before retiring or leaving the service, veterans can educate themselves on various aspects of reintegration by taking some of these courses.
- Job searching — This job search tool is specifically for veterans.
- GI Bill — Veterans who want to pursue further education can take advantage of the benefits offered to them under the GI Bill, including tuition reimbursement and money for housing, books, and fees.
Mental illness, homelessness, and poverty
- Veterans Affairs, Make the Connection — Make the Connection provides broad assistance for veterans transitioning to civilian life, with a focus on mental health and awareness.
- National Coalition for Homeless Veterans — This organization provides assistance for those in need; the website also keeps readers informed on recent related policy decisions, statistics, and grants and provides information on how to volunteer.
- Mental health support — This site serves as a guide for veterans who might not know how to combat mental health issues. It provides information, support, and stories of other service members and veterans who have struggled with similar issues.
- SAMHSA National Helpline — Veterans who are struggling with substance abuse or mental health issues and don’t know where to turn can call this hotline for help. The hotline directs veterans to the services they need.