Veterans: Don’t Let VA Myths Ruin Retirement

There’s an astonishing amount of misinformation swirling around how veterans should approach retirement planning. It’s a topic where outdated advice, incomplete data, and outright myths can derail years of careful saving. How do we cut through the noise and start building a secure future?

Myth #1: Your Military Pension or VA Disability Will Be Enough

This is perhaps the most dangerous myth I encounter when working with veterans. Many believe that their military pension, especially after 20 or more years of service, combined with potential VA disability compensation, will automatically cover all their retirement needs. They often cite stories of older veterans who “made it work” on their pension alone. I’ve had clients, particularly those separating after 10-15 years, look at their projected pension and think, “That’s a good chunk, I’ll be fine.”

But let’s be realistic. The average military pension for an enlisted service member retiring after 20 years in 2026 is roughly 50% of their base pay. For an E-7 with 20 years, that might be around $2,500-$3,000 per month before taxes. While certainly helpful, try living comfortably on $3,000 a month in a place like San Diego or even Atlanta, especially with inflation eroding purchasing power. According to the Bureau of Labor Statistics’ Consumer Price Index (CPI) data, inflation has averaged around 3-4% annually over the last few years, meaning what $3,000 buys today will buy significantly less in 20 years. Your pension might have cost-of-living adjustments (COLAs), but these often lag behind actual inflation for certain goods and services.

VA disability compensation is also a critical component, and it’s tax-free, which is fantastic. However, it’s designed to compensate for service-connected conditions, not to replace a full income. A veteran with a 70% disability rating might receive around $1,600-$1,800 per month in 2026, depending on dependents. Add that to a pension, and you’re looking at maybe $4,000-$5,000 gross. Still, for a couple, or someone with significant healthcare costs not covered by TRICARE or VA healthcare, this might not be enough to maintain their pre-retirement standard of living, let alone enjoy the “golden years” they envisioned. My firm, for instance, often advises veterans to aim for at least 80-90% of their pre-retirement income to maintain comfort, and that usually requires more than just a pension and disability. You need to supplement it.

Myth #2: You Can’t Start Retirement Planning Until You’re Closer to Retirement

“I’m only 30, retirement is decades away. I’ll worry about it later.” This is a classic trap, especially for younger service members. The idea that you need to be nearing the end of your career to begin seriously thinking about retirement is financially catastrophic. The single most powerful force in wealth creation is compound interest, and it needs time – lots of it.

Consider a young Marine Lance Corporal, let’s call him Alex, who starts contributing to his Thrift Savings Plan (TSP) at age 22. If Alex contributes just $200 a month to the C Fund (which tracks the S&P 500) and earns an average annual return of 8% (a reasonable historical average for the S&P 500 over long periods), he would have over $350,000 by age 52. If he waits until age 32 to start, even contributing the same amount, he’d only have around $140,000 by age 52. That’s a staggering difference of over $200,000, simply due to a 10-year delay.

The TSP is an incredible tool for veterans. It offers low-cost index funds and the ability to choose between traditional (pre-tax) and Roth (post-tax) contributions. For those under the Blended Retirement System (BRS), the automatic 1% government contribution and up to 4% matching contributions are essentially free money. Leaving that on the table because you think you’re “too young” is financial malpractice. I always tell my clients, the best time to plant a tree was 20 years ago; the second best time is today. The same applies to your retirement savings.

Myth #3: All Financial Advisors Understand Military Benefits

This is an absolute falsehood, and it’s a critical point for veterans. Just because someone holds a “financial advisor” title doesn’t mean they comprehend the nuances of military retirement, VA disability, TRICARE, the Blended Retirement System, or even the intricacies of the TSP. I’ve personally seen veterans receive terrible advice from generalist advisors who, with good intentions, steered them away from optimal choices simply because they didn’t understand the unique veteran benefits landscape.

For example, a traditional advisor might recommend rolling over a TSP into an IRA without fully understanding the TSP’s incredibly low expense ratios (often less than 0.06% for index funds) compared to typical IRA options. Or they might not factor in the tax-free nature of VA disability when calculating income needs, leading to over-saving or incorrect investment strategies. A few years ago, I had a client, a retired Army Colonel from Fort Stewart, come to me after a local advisor suggested he liquidate his TSP and put it into a high-fee annuity. While annuities have their place, this particular one was completely unsuitable for his situation, and the advisor clearly hadn’t considered the Colonel’s existing pension and VA benefits. It took a lot of work to untangle that mess.

You need an advisor who speaks your language. Look for certifications like the Accredited Financial Counselor (AFC) with military experience, or a Certified Financial Planner (CFP) who explicitly states experience with veterans’ benefits. Ask direct questions: “How familiar are you with the Blended Retirement System?” “Do you understand how VA disability compensation impacts tax planning?” “Can you explain the differences between TRICARE options in retirement?” If they hem and haw, find someone else. Organizations like the National Association of Personal Financial Advisors (NAPFA) or the Financial Planning Association (FPA) can help you find fee-only fiduciaries who legally must act in your best interest.

Myth #4: If You’re Injured, VA Disability Replaces the Need for Other Savings

While VA disability compensation is a vital safety net for many veterans, relying solely on it for your entire retirement income, especially if you have a significant disability, is a risky gamble. First, VA disability is not indexed to a “living wage” in the same way a pension might be. It’s tied to the severity of your service-connected conditions and the cost of living adjustments set by Congress. Second, your disability rating, while generally stable, can be reviewed and potentially changed under certain circumstances, though this is less common for long-standing, stable conditions.

More importantly, disability compensation doesn’t necessarily cover the increased costs often associated with certain disabilities. Adaptive equipment, specialized care not fully covered by VA healthcare (though VA healthcare is excellent, it’s not always comprehensive for every unique need), home modifications, and even transportation can add up. A 2023 report from the RAND Corporation on the economic well-being of veterans found that veterans with service-connected disabilities often face higher out-of-pocket healthcare costs and reduced earning potential post-service, making diversified retirement savings even more crucial, not less.

I often advise veterans with disabilities to prioritize establishing a robust emergency fund and then contributing consistently to their TSP or other investment accounts. Think of your VA disability as a foundational income stream, but not the entire river. You still need tributaries feeding into your financial reservoir.

Myth #5: You Can’t Afford to Save for Retirement While Serving

“I’m paying rent, student loans, supporting my family, and maybe even sending money home. There’s nothing left for retirement.” This sentiment is understandable, especially for junior enlisted members or those with dependents. However, it’s a matter of prioritization and often, a lack of awareness about how little it takes to start.

Even contributing just 1% of your base pay to the TSP can make a difference, especially with the Blended Retirement System’s matching contributions. For an E-4, that might be as little as $25-$30 per paycheck. Is that enough? No, not by itself. But it’s a start, and it builds the habit. Once you get used to that deduction, you can gradually increase it. A 2024 study by the Center for a New American Security (CNAS) highlighted that even small, consistent contributions by junior service members could significantly improve their long-term financial stability.

Consider this: if you forgo one fast-food meal a week and put that $15-$20 into your TSP, that’s $60-$80 a month you’re saving. That might not sound like much, but compounded over 20-30 years, it becomes substantial. My advice is always to automate your savings. Set up an allotment to your TSP the moment you get into uniform. You won’t miss money you never saw. And if you’re under BRS, contribute at least 5% to get the full government match – that’s a 100% immediate return on your investment, something no other investment offers. Don’t let the perceived “lack of funds” prevent you from participating in the greatest wealth-building tool available to you.

Myth #6: You Don’t Need to Plan for Healthcare Costs Because of TRICARE/VA Healthcare

This is another myth that can lead to significant financial strain in retirement. While TRICARE and VA healthcare benefits are phenomenal assets for veterans, they are not a “get out of jail free” card for all healthcare expenses. TRICARE, for example, has various options in retirement (TRICARE Prime, TRICARE Select, TRICARE for Life when eligible for Medicare), and each comes with its own premiums, deductibles, co-pays, and out-of-pocket maximums. These costs can change annually. TRICARE for Life, while excellent, requires enrollment in Medicare Parts A and B, which have their own premiums.

VA healthcare is also world-class for service-connected conditions, but for non-service-connected issues, there can be co-pays, and access might depend on your priority group. More importantly, neither TRICARE nor VA healthcare typically covers things like long-term care (nursing home, assisted living, in-home care for chronic conditions) which can be astronomically expensive. According to a 2025 report from Genworth Financial, the median annual cost for a private room in a nursing home is approaching $120,000, and even assisted living can run $60,000 a year. These are costs that can quickly decimate even a well-funded retirement.

My personal experience with clients from the Atlanta Veterans Affairs Medical Center has shown me that even with robust VA coverage, supplementary insurance or dedicated savings for long-term care are often necessary. We usually recommend that veterans factor in at least $5,000-$10,000 annually for out-of-pocket healthcare costs in retirement, even with TRICARE/VA, and then specifically plan for potential long-term care needs through insurance or dedicated investment accounts. Don’t assume your military benefits will shield you from every medical bill.

Starting your retirement planning as a veteran means taking control of your financial future, recognizing the unique advantages you have, and actively debunking the myths that can hold you back. It’s about leveraging your hard-earned benefits, starting early, and seeking out expert advice.