Benefits NMCRS Personal Finance — 06 November 2014

Screen Shot 2014-11-06 at 12.04.12 PMLast week a report came out from the Government Accountability Office (GAO) that stated in 2013, 60,000 military veterans received “triple benefits.” We will forgo the political ramblings from both sides of the isle to whether this should be allowed or not. However, let’s for a moment discuss where these benefits come from and why this completely legal; and from a military financial planning perspective, a very smart idea.

Military benefits are nothing new, in fact since the War on Terror began, Congress has allowed more compensation and better benefits integration for military veterans. The so-called “triple-dippers” are receiving a combination of military retirement, VA benefits, and social security. Before half the crowd calls foul and the other half calls fair, lets understand each of these benefits and see why “triple-dipping” is only smart integration of what the country promised our veterans.

Military Retirement is earned through various sources and circumstances. Traditional retirements are executed after 20 or more years of faithful service. Recently a program called Temporary Early Retirement Authority (TERA) has allowed some military members with at least 15 years of service to retire on a reduced benefit used as a “force shaping” measure. The other military retirement is a medical retirement, meaning the veteran suffered some sort of injury or wound in while service and cannot reasonably continue in their career path because of the resulting disability.

Veterans Administration (VA) disability benefits are earned when the service member suffers a permanent disability because of their service, called a “service-connected disability,” and are compensated for that disability through tax free VA disability payments. Veterans do not have to be retired from the military to receive these benefits. Every service member who leaves the military is evaluated for any service-connected disabilities and given a particular VA rating.

Social Security Disability benefits are earned through a myriad of qualifying disabilities and circumstances. The social security website SSA.gov explains eligibility as “…you must first have worked in jobs covered by social security. Then you must have a medical condition that meets social security’s definition of disability.” A military members pay is subject to social security and although the Social Security Administrations definition of certain disability are different than the VA’s, they still can align allowing the service member to legally (and rightfully) collect social security disability.

Ok, definitions over, now the integration piece. What the GAO report says buried in the data is that 4 out of 5 veterans who received triple payments had a service connected disability of 50% or greater. This means for those wounded warriors on the GAO’s radar, they have (by military and VA standards) lost 50% of their productive capacity because of their faithful service to our country. Many of these individuals on the list have suffered significant injuries, loss of limbs, eyesight, or mental function. Their ability to produce income and live a normal life has been significantly reduced. The integration of these benefits could not be more important for these brave men and women.

The important piece to understand here is that “triple dipping” should not be looked at as taking advantage of the system, but smart financial and benefit planning. The lesson here is that all matters of finance are integrated. The way you save for retirement affects your taxes, the benefits you receive from the government affect your retirement savings, your retirement savings affect your standard of living and estate 40 years from now. The integration of all finance is extremely important; there is no financial vehicle or plan that is in a vacuum. The integration of your military benefits is just a single component of your overall financial plan. However, integrating all your earned benefits to the maximum output possible is smart and necessary for financial success.

S/F

Capt. Jonathon Rowles (USMC, Ret.)

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