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How To Make The Most Of Your Military Retirement Benefits: A Four-Point Checklist

By Christopher Flis, CFP®

As discussed in earlier articles, the U.S. Military offers excellent benefits when you retire from active duty. Part of my role is to help my Clients anticipate the challenges of retirement and plan for how the different pieces fit together. Military benefits are one important piece of your overall retirement plan, including other savings, investments, and income sources. This simple four-point checklist touches on a few critical pieces.

What Should I Do About The Survivor Benefit Plan (SBP)?

The SBP offers peace of mind by providing an income source for your spouse and other dependents after your death, up to a maximum of 55% of your base retirement pay. Should you choose to enroll in the SBP, you will contribute a portion of your retirement pay toward the premiums. To determine if the SBP is a good fit for you and your family, you need to look at factors such as the age and health of your spouse, other retirement benefits available, and your expected household income needs during the different stages of your retirement. The SBP is not always advantageous, but it should always be considered as a potential resource.

How Is My VA Disability Claim Going?

America has a long-standing tradition of taking care of those who have suffered injuries or illnesses serving their country. As I often stress with my Clients, VA Disability benefits are a bigger deal than Veterans sometimes recognize. Your retirement pay will be supplemented by disability pay, and the amount will vary based on your disability rating. You may receive disability benefits if you suffered from an injury or illness in active duty, or if active duty caused a preexisting condition to worsen. Time is of the essence when filing disability claims through the VA. I encourage my Clients to file early and get the ball rolling because claims processing can take time. Lastly, I cannot stress enough the importance of following up on the status of disability claims; log into your eBenefits account regularly and look for any notifications of additional information required. If you have suffered a disability in active duty, you deserve the compensation owed to you.

What Should I Do With My TSP Account?

The Thrift Savings Plan (TSP) is similar to a civilian 401(k) plan, offered exclusively to Federal employees. You may make contributions to the TSP from various sources—including your Base pay, Bonus, Special pay, and Incentive pay, but not any of your allowances. If you are not contributing 5%, then you are missing out on matching contributions, and I recommend taking advantage of this opportunity immediately. The first 3% of your contribution will be matched dollar for dollar, with a 50% match on the next 2% in addition to the automatic 1% contribution. One important note about Combat Zone pay: if you make contributions to your TSP while in a combat zone, I usually recommend making Roth contributions instead of traditional contributions. Since Combat Zone pay is tax-free (except for Social Security and Medicare tax), you will end up paying tax on your portfolio earnings if you make traditional contributions to your TSP while in a Combat Zone. The TSP has a simple set of investment funds, and part of what we need to consider from an allocation perspective is the timing of when you plan to begin drawing on the funds as an income source. The TSP is an overall excellent resource, especially when combined with your other retirement benefits.

Do I Need To Consider VGLI?

Veterans’ Group Life Insurance (VGLI) is a term life insurance policy, similar in benefit structure to Servicemembers’ Group Life Insurance (SGLI), which ends 120 days after retirement for most Service personnel. VGLI can be kept for life, and the premiums increase as you age. Competing life insurance policies available on the private market may offer more attractive options, so I always recommend shopping around. Military friendly providers such as USAA are a great place to start. Your insurability is going to be a major factor when determining whether VGLI is a good deal. Certain injuries and illnesses may disqualify you from many private sector policies. If you are not certain whether you will take advantage of VGLI, bear in mind that if you secure coverage, you can cancel it later, but if you wait more than 240 days after retirement to apply, you run the risk of being denied coverage.

Conclusion

Retirement planning is a complex process, and the different retirement benefits offered to Veterans will need to work together. As a 20-year Veteran of the U.S. Navy myself, I have a passion for helping other Veterans navigate the transition from active duty to life after retirement, which for some may mean a second career. If you would like to get a better understanding of how I can help you make the most of your Military retirement benefits, schedule a Q&A call or contact us at chris@resilientam.com or (901) 318-3423 to go over any specific questions you may have about your situation.

About Christopher    

Christopher Flis is founder and financial planner at Resilient Asset Management, a fee-only Registered Investment Advisor (RIA) based in Tennessee. Chris graduated from the United States Naval Academy with a bachelor’s degree in computer science, earned a Master of Science in Computer Science from the University of Minnesota, and attended flight school in Pensacola, FL, launching a fulfilling and distinguished military career. Chris spent 20 years in the Navy as an F/A-18 Strike Fighter Pilot, which included tours in Japan, Australia, and California, combat missions in all areas of the Persian Gulf and Afghanistan, and time spent as the Executive Officer of Naval Base Guam and Director of Navy Casualty in Millington, TN. When Christopher was ready to make a career change, he turned to a passion he held since high school when he attended a lecture on personal finance and started managing his own investments. He earned his Certified Financial PlannerTM (CFP®) designation and now combines his passions and experience by serving military, retired military, business owners, and retirees. Chris provides comprehensive, customized financial services, helping his clients overcome their challenges and take opportunities so they can achieve financial independence. 


Chris lives in Downtown Memphis with his wife, Christine, and his son, Emerson. He is an avid runner and when he is not jogging for exercise, he is usually chasing his son around or walking his 3 dogs. To learn more about Chris, connect with him on LinkedIn.