There are a number of programs to help service members keep their finances in shape.
- The Department of Defense Savings Deposit Program makes it possible for service members to save while in designated combat zones and earn 10% on the first $10,000 they save during each deployment up to three months after their return.
- Active duty members of the military are eligible for retirement pay as early as age 37. The amount is based on a variety of factors. National Guard and Reserve members are eligible beginning at age 60 if they have 20 years of qualifying service.
- With the Thrift Savings Plan, service members can save for retirement using two options that are similar to traditional and Roth IRAs. Both choices allow them to accumulate earnings and interest tax free.
- Make tax-deduction contributions now and pay taxes on distributions in retirement (as is the case with a traditional IRA).
- Contribute now without any current tax advantage, but withdraw money without paying taxes on it in retirement (as with a Roth IRA).
- Under the Post 9/11 GI Bill, qualified service members or veterans can receive benefits they can use to pay for a wide range of training and educational assistance. There’s also online information on recent updates to this bill.
- Service Members’ Group Life Insurance and life insurance available through the Veterans Administration offer low-cost choices.
- Combat pay is not taxable, although including it in your taxable income could give you a greater advantage when you take the Earned Income Tax Credit.
- You get an automatic 180-day extension on the deadline for filing your tax return while in a combat zone.
- Members of the military can still deduct mortgage interest.
- The interest rate on any taxes you owed before joining the military can’t be higher than 6%. All tax liabilities are forgiven for service members who die while in a combat zone or supporting a combat operation. And the death benefit paid to the survivors of service members who die in a combat zone is not taxable.
- Those on active duty may be able to take withdrawals from their retirement accounts without facing a penalty.
- Members of the reserve get a tax deduction for certain travel expenses.
Health Care Benefits
Health care coverage is available for all branches of the uniformed services, as well as veterans and separating or retired service members (including their dependents, in some cases). For more information, go to:
- The Veterans Administration home loan program offers a variety of opportunities for service members, veterans and eligible surviving spouses to obtain loans at favorable rates. Find out more at https://www.benefits.va.gov/homeloans/.
- Service members not living in government housing can qualify for a tax-free housing allowance.
Benefits for veterans and their families include affordable health care, education and training, and burials and memorials. In addition, the Department of Labor’s Veterans’ Employment and Training Services (VETS) helps veterans find jobs and training, as well as offering other resources.