Life after the military comes with several financial challenges for veterans today. Shockingly, financial worry has outweighed deployment fears for military families in recent years. The constant relocation, increasing reliance on unsecured debt, and trouble getting their finances in order are affecting the financial wellbeing of veterans across the country. While the recently signed “Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020” and other legislation aims to improve financial support for veterans, it has also brought the extent of current financial issues facing veterans into the limelight.
Veterans Are Ill-Prepared For Financial Emergencies And Their Future
The financial future for veterans and their families continues to look grim. Approximately 27.4 percent of actively serving military families have less than $500 saved for emergencies, according to the recently released Military Family Support Programming Survey. Retired veterans with pensions are no better prepared – 22 percent have less than $500 in emergency savings, while almost half of those without pensions have less than $500 saved in a rainy day fund. When asked about the causes of their low emergency savings balances, many veterans attributed their lack of financial literacy, access to financial tools, and high living costs to their unpreparedness.
An overwhelming percentage of veterans today remain uneducated on financial basics, including how to manage their credit scores after the military, how to create a household budget, and key considerations when securing life or health insurance. Not all veterans are eligible for insurance coverage under the Veterans Health Administration, which can contribute drastically to their financial costs. Additionally, constant relocation costs and challenges in securing suitable paid employment as a veteran often mean they are taking home much less than their civilian counterparts.
More Veterans Are Struggling To Buy A Home Of Their Own
Homeownership is a dream for many Americans – including military veterans. Yet, because of the increasing house prices and supplementary financial issues affecting America’s veterans, buying their own homes is beginning to look more like a distant reality. In good news, the homeownership rate among veterans was 76 percent in 2017, 14 percent higher than that for civilians.
Additionally, veterans are more likely to avoid foreclosures with a VA-backed loan. The program has a 1.98 percent foreclosure rate – the lowest for the last five years. Veterans can also benefit from VA home loans and grants to modify or refinance their homes – a welcome aid for disabled veterans. Lenders have also begun to offer specifically tailored home-buying financial tools, including a VA mortgage calculator to help veterans with their budgeting and search for the right home financing option.
The Building Veteran Debt Issue Continues Post-Military
Veterans are also more likely to accrue debt – and spend longer repaying it. In an NBC News article, it was revealed that 36,000 military members have reached out for financial help. Their debt to income ratio also tends to be 10 percent higher than their non-veteran counterparts. One of the largest reasons for this is the poor credit scores many military members are returning home to. After retiring, veterans have to grapple with rebuilding their credit scores, and due to the long-term effects, end up accruing higher interest rates.
Additionally, the lag between transitioning and securing civilian employment puts a huge financial strain on them. Many times, veterans find themselves turning to unsecured debt, including credit cards. Approximately one in four veteran families have more than $10,000 in credit card debt, and 10 percent owe more than $20,000. Veterans may also be more vulnerable to the credit industry during their careers. Their steady pay checks give the illusion of stability to lenders and access to credit card approvals. However, upon retirement, many of them find themselves with mounting debt to repay, and reduced income streams. Many non-profit organizations have begun to recognize this issue, and now offer credit counseling to veterans free of charge.
The new veteran support legislation will be a welcome change for many veterans facing financial hurdles today. Yet it will be a long road to restoring financial balance for the veteran population. It will start with improving financial education and access to the right resources for veterans to overcome their financial challenges. Improving the benefits program is just the first step towards a better financial future for America’s veterans.