Vets: Are You Ignoring These Retirement Risks?

Planning for retirement can feel like navigating a minefield, especially for veterans who often have unique financial situations and benefits to consider. Many veterans make avoidable errors that can significantly impact their financial security later in life. Are you sure you’re not making these same mistakes, potentially jeopardizing your hard-earned retirement?

Ignoring Inflation and Rising Healthcare Costs

One of the most common pitfalls in retirement planning, especially for veterans, is failing to adequately account for inflation and rising healthcare costs. What seems like a comfortable nest egg today might not stretch as far as you think in 10, 20, or 30 years. Inflation erodes the purchasing power of your savings, meaning you’ll need more money to maintain the same standard of living. The average annual inflation rate since 1913 is around 3.22%, according to the U.S. Bureau of Labor Statistics. Failing to factor this in can leave you short.

Healthcare costs are another major concern. Fidelity Benefits Consulting estimates that a 65-year-old couple retiring in 2024 will need approximately $315,000 (after tax) to cover healthcare expenses throughout retirement. This figure doesn’t even include long-term care, which can be incredibly expensive. Many veterans assume that their VA benefits will cover all their healthcare needs, but this isn’t always the case. While the VA provides excellent care, there may be gaps in coverage, especially for dental, vision, and long-term care. It’s wise to consider supplemental insurance options and factor in out-of-pocket expenses.

Not Maximizing Your Thrift Savings Plan (TSP)

For many veterans who served in the military or continue to work in federal civilian roles, the Thrift Savings Plan (TSP) is a cornerstone of their retirement planning. However, a surprising number of people don’t take full advantage of this powerful savings tool. The TSP offers several advantages, including low fees, a variety of investment options, and the potential for tax-deferred growth. One of the biggest mistakes is not contributing enough to receive the full agency match. This is essentially free money, and leaving it on the table is a missed opportunity. In 2026, the elective deferral limit for the TSP is $23,000, with a catch-up contribution of $7,500 for those age 50 and over. I once had a client, a retired Air Force officer, who realized late in his career that he had missed out on tens of thousands of dollars in matching contributions by not contributing enough to his TSP early on.

Another common error is not properly allocating your TSP investments. Many people simply put their money in the G Fund (government securities), which is very safe but offers relatively low returns. While safety is important, especially as you approach retirement, you also need to consider growth. Diversifying your TSP investments across different asset classes, such as stocks (C, S, and I Funds) and bonds (F Fund), can help you achieve a better balance between risk and return. Consider your risk tolerance and time horizon when making your investment decisions. If you’re unsure how to allocate your TSP investments, consider seeking advice from a qualified financial advisor.

Underestimating Retirement Expenses

It’s tempting to think your expenses will decrease significantly in retirement, but this isn’t always the case. While some costs, like commuting, may disappear, others, like healthcare and leisure activities, may increase. Many veterans also underestimate the cost of maintaining their homes, especially if they plan to stay in them for the long term. Property taxes, insurance, and repairs can add up quickly. I had a client last year who was shocked at how much it cost to replace the roof on his house in Marietta. He hadn’t factored in such a large expense, and it put a strain on his retirement budget.

Moreover, many people fail to account for unexpected expenses, such as car repairs, medical emergencies, or home renovations. It’s wise to have an emergency fund to cover these unexpected costs. A good rule of thumb is to have at least three to six months’ worth of living expenses in a readily accessible savings account. Don’t forget about taxes. Your retirement income, whether from Social Security, pensions, or withdrawals from tax-deferred accounts, will likely be subject to income tax. It’s crucial to understand the tax implications of your retirement income and plan accordingly.

Relying Too Heavily on Military Pension and VA Benefits

While a military pension and VA disability benefits can provide a solid foundation for retirement income, it’s a mistake to rely on them as your sole source of support. Military pensions are often less generous than they appear, especially after taxes and inflation. VA disability benefits, while valuable, may not be sufficient to cover all your living expenses, particularly if you have significant healthcare needs or other financial obligations. And here’s what nobody tells you: these benefits can change. Congress can alter the rules, impacting future payouts. While existing retirees are usually grandfathered in, it’s a risk to consider.

Furthermore, your eligibility for VA benefits may change over time. Your disability rating could be reduced, or your benefits could be affected by changes in VA policy. It’s essential to have a diversified retirement income strategy that includes other sources of income, such as Social Security, TSP savings, and other investments. Consider working part-time in retirement to supplement your income and stay active. Many veterans find that working part-time not only provides financial benefits but also helps them maintain a sense of purpose and social connection.

Failing to Create a Comprehensive Financial Plan

Effective retirement planning for veterans requires a comprehensive financial plan that takes into account all aspects of your financial situation, including your income, expenses, assets, and liabilities. A financial plan should also address your retirement goals, risk tolerance, and time horizon. Too many people approach retirement planning in a piecemeal fashion, focusing on individual investments or savings accounts without considering the big picture. I’ve seen this lead to missed opportunities and costly mistakes.

A comprehensive financial plan should include a detailed budget, a retirement income projection, an investment strategy, and an estate plan. It should also address your insurance needs, including life, health, and long-term care insurance. Don’t be afraid to seek help from a qualified financial advisor who specializes in retirement planning for veterans. A good advisor can help you develop a personalized financial plan that meets your specific needs and goals. We recently worked with a client, a retired Army sergeant, who was overwhelmed by the complexity of retirement planning. After working with us, he was able to create a clear financial plan and gain confidence in his ability to achieve his retirement goals. He started by using Mint to track his spending for three months.

Ignoring Estate Planning

Estate planning is often overlooked, but it’s an essential part of retirement planning, especially for veterans. An estate plan ensures that your assets are distributed according to your wishes and that your loved ones are taken care of in the event of your death or incapacity. A basic estate plan should include a will, a durable power of attorney, and a healthcare directive. A will specifies how your assets will be distributed after your death. A durable power of attorney allows you to appoint someone to manage your financial affairs if you become incapacitated. A healthcare directive, also known as a living will, allows you to make your healthcare wishes known in advance.

Consider setting up a trust to protect your assets and avoid probate. Probate is the legal process of administering your estate, and it can be time-consuming and expensive. A trust can also provide for the management of your assets if you become incapacitated. If you have minor children, you should also consider naming a guardian in your will. Don’t assume that your spouse will automatically be appointed as the guardian. It’s wise to consult with an estate planning attorney to create a plan that meets your specific needs and goals. In Georgia, issues related to wills and estates are often handled in the Probate Court of the county where the deceased resided, such as the Fulton County Probate Court.

Retirement isn’t a finish line; it’s a new chapter. Avoid these common errors, and you’ll be well-positioned to enjoy a secure and fulfilling retirement. The single most important thing to do right now? Schedule a consultation with a financial advisor specializing in veterans’ benefits within the next 30 days. Your future self will thank you. For more information, explore how to secure your financial future. It’s never too late to start planning.

Planning involves understanding investing for a secure future. Many resources are available to guide you.