When you’re a service member, you know that you and your family are going to face some unique financial challenges. Unlike most workers, it is very difficult for the spouse of a family member to grow their own career. For that reason, it is even more important to know your benefits and plan for your financial future.
Here are the five key benefits that you need to know about in order to protect your financial future as a service member.
The Five Important Benefits for Service Members
1. Thrift Savings Plan
While it might seem like retirement is a long way off, you need to start saving for it now. The earlier you start contributing to your retirement account, the more money you will have by the time you retire.
It is important for the financial stability of your family that you have a retirement account as Social Security and pensions won’t cover everything. One option for you is to invest in the Thrift Savings Plan, also known as TSP, which is made available to you through the government.
Service members have access to making contributions to the TSP. The tax benefits are the same as if you had a 401(k) in the private sector. After you set up your account, your contributions will be automatically deducted pre-tax from your paycheck.
For more information on the TSP, visit www.tsp.gov.
2. Savings Deposit Program
The Defense department’s Savings Deposit Program (SDP) can help you save money for big purchases such as down payments on homes and vehicles. After you’ve been deployed to a combat zone for at least 30 days, you can participate in the DD’s SDP.
You will earn a 10% interest rate on deposits up to $10,000 while deployed and up to 90 days after your return.
3. Post-9/11 GI Bill
This bill will pay the full cost of your in-state tuition in public universities for four years, or a maximum amount for other accredited schools. However, if you don’t need this entitlement, you can actually transfer these unused benefits to your spouse or child.
To do this, you will need to have served 6 years and be committed to serving 4 additional years after the benefit transfer has been approved. Your dependent or spouse can use these benefits up to 15 years after you leave the service.
To learn more about these benefits visit www.benefits.va.gov.
4. VA Home Loan
If you get a VA loan to purchase a new home, you won’t have to have a down payment, which can greatly reduce the financial stress on first-time home buyers. You also won’t have to pay mortgage insurance.
These loans are offered by private lenders, not the government, but the VA guarantees a portion of the loan, which helps you get favorable terms and lower fees. However, you should always compare different home loan rates to ensure you’re getting the best one.
For more information on VA loans visit www.benefits.va.gov.
5. Servicemember’s Group Life Insurance
The SGLI prigram ensures that you have affordable life insurance coverage for yourself and your family. You can even transfer your policy to a Veteran’s policy when you leave the military. However, it is important to compare rates and coverage to make sure you are getting a package that suits your family’s needs.
For more information about life insurance programs visit www.insurance.va.gov.