The military face many unique financial challenges that most people do not face. However, they do have access to many special benefits, tax breaks, and legal protections.
Here is 10 Of The Top Financial Benefits Available To Service Members And How To Get The Most Out Of Them to improve your family’s financial future. The co-authors of this play, Kim Lankford and Lisa Gerstner, have first-hand experience: Kim’s husband was an Army medic for 21 years and deployed three times, and Lisa’s husband is an Air National Guard instructor pilot who has flown over 200 combat missions . Many of these resources and benefits have helped their families significantly over the years.
Low cost retirement savings plan
Service members have access to one of the cheapest retirement savings plans on the market. Savings plan funds charge annual expense ratios ranging from 0.049% to 0.068%. of assets – while annual fees and expenses for 401 (k) plans vary, on average, between 1% and 2%.
The TSP allows you to choose from five index-based mutual funds or a target date fund, which automatically becomes more conservative as your retirement date approaches. In 2021, you can invest up to $ 19,500 in the TSP – and up to $ 58,000 if you receive tax-free income during your deployment. You also have access to a Roth TSP, which is like a Roth IRA, but without the income restrictions. See www.tsp.gov for more details.
10% guaranteed return on savings
- The Army Savings Deposit Program allows deployed members to 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.
To put that in perspective: the average interest rate on a regular savings account these days is less than 0.1%. The SDP rate is more than 100 times higher.
Your take-home pay increases while you receive tax-free income while serving in a combat zone, which can help you afford extra cash in the PDS. For more information, see the Savings deposit program page on the Defense Finance and Accounting website.
Roth Tax Free Deposits
For most people, contributions to a Roth IRA are not tax sheltered. But for soldiers receiving a non-taxable combat zone remuneration, your money goes into the Roth tax-free, and your contributions and income are tax-free, a double taxation advantage that’s hard to beat.
You can contribute up to $ 6,000 in 2021 if your income does not exceed certain limits. And if your spouse is not working, you can also make maximum contributions on their behalf.
Free college for yourself or a spouse or child
- Post-9/11 GI Bill Covers Full Cost of Tuition and Fees at Public Colleges up to 36 months (four academic years) or up to $ 26,043 per year for private colleges and foreign schools. You will also receive a housing allowance and money for books and supplies.
The money can be used for undergraduate or graduate programs, or for some programs in vocational and business schools. And one of the best features of the post 9/11 IM bill is that long-serving service members can pass their benefits on to a spouse or children. Get more details on the post-September 11 GI bill on the Department of Veterans Affairs website.
Cheap life insurance
Members of the service have access to one of the cheapest life insurance programs available. Military group life insurance costs only $ 300 per year for up to $ 400,000 in benefits – regardless of your age, health, or chances of being deployed. (For comparison, a healthy 40-year-old man pays on average almost $ 500 a year for a private term insurance policy of $ 500,000 over 20 years, according to Policygenius.)
Service members can also get $ 100,000 in coverage for a spouse for as little as $ 54 per year if they are under 35 (more for older spouses). To see the Department of Veterans Affairs website for more information.
Statement of tax relief
The law allows members of the service to maintain their legal residence in one state even if they are stationed in another. Therefore if your legal residence (also known as domicile) is a state that does not have income tax, you may be tax-sheltered if you move to another state while on active duty.
A spouse who has the same domicile as a member of the military can also maintain this legal residence if the couple move to a new state by military order.
Special legal protections
The Military Civilian Relief Act provides special legal benefits to military personnel, including an interest rate cap of 6% on the loans you have taken out before you were called to active service. This cap is particularly useful for Reserve members who are called up to active duty and must accept a pay cut when they leave their regular job.
You should apply to the lender for this benefit, which is intended to help you if your ability to pay is affected by military service. The law also gives you the right to terminate an apartment lease if you have orders for a permanent station change or are deployed to a new location for 90 days or more. the Armed Forces Legal Assistance Office can help you with these requests.
Mortgage Loans Without Money
The military have access to VA loans, which allow you to get a house with no money (and no private mortgage insurance). To see the Department of Veterans Affairs for more information. However, if you put in little or no money, you could end up being upside down on your home if prices drop and you have to move.
Tax-free housing allowance
Another big advantage for members of the service is the tax-free housing allowance, a monthly grant that covers all or part of your monthly rent or mortgage payment while you are in the military.
To see the value of the grant (which varies depending on your rank, place of residence, and whether you have dependents), check your leave and earnings statement (your military pay stub) for your base allowance for the housing and other special benefits, or look at it. by rank and postal code at the Ministry of Defense BAH Calculator.
Low interest loans
Each branch of the military has an emergency relief fund that offers small interest-free loans for emergencies. Contact your base’s Community Services office for more details, or visit Army emergency relief, Marine-Marine Corps Relief Society, Air Force Aid Society or Coast Guard Mutual Assistance.
Basic credit unions 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 checks.