Vets: Are You Losing Money To These Finance Myths?

There’s a shocking amount of misinformation floating around about personal finance, and veterans are often targeted. Are you falling for these common myths that could be costing you money?

Myth 1: VA Disability Means You Can’t Get Other Benefits

Many veterans mistakenly believe that receiving VA disability compensation automatically disqualifies them from other government programs like Social Security Disability Insurance (SSDI). This simply isn’t true. While the VA and Social Security Administration (SSA) are both federal entities, they operate under different guidelines and eligibility criteria.

The VA compensates veterans for service-connected disabilities, regardless of their ability to work. SSDI, on the other hand, is for individuals who are unable to work due to a medical condition. A veteran can receive both, provided they meet the eligibility requirements for each program. In fact, having a VA disability rating can sometimes help with an SSDI claim, as it provides documented medical evidence of a disabling condition.

Don’t leave money on the table. I had a client last year, a former Marine, who was convinced he couldn’t get SSDI because of his VA benefits. After reviewing his situation and helping him navigate the application process, he was approved and saw a significant increase in his monthly income. The Social Security Administration has a tool on their website to help determine eligibility.

Myth 2: You Should Always Pay Off Debt as Quickly as Possible

While being debt-free is a worthy goal, aggressively paying down debt at the expense of other financial priorities can be a major mistake. The common advice to “pay off all debt ASAP” often overlooks the importance of having an emergency fund.

Before you throw every extra dollar at your student loans or credit card balances, make sure you have a solid emergency fund in place. Aim for at least 3-6 months’ worth of living expenses in a readily accessible savings account. Why? Because life happens. Unexpected medical bills, car repairs, or job loss can derail your finances if you’re not prepared.

If you have a choice between paying off a credit card with a 20% interest rate versus a student loan with a 3% interest rate, then yes, pay off the credit card. But if you are choosing between paying extra on a mortgage at 2.75% (a rate that many veterans locked in a few years ago) versus having an emergency fund, I’d suggest holding off on that mortgage. A Federal Trade Commission (FTC) article has advice about paying down debt.

Here’s what nobody tells you: A small emergency can quickly turn into a financial crisis if you don’t have a safety net. Consider exploring debt relief options if you’re struggling.

Myth 3: Your Credit Report Is Only Important When Applying for Loans

Many people only check their credit report when they’re about to apply for a loan or credit card. But your credit report is far more important than that. It’s a reflection of your financial health and can impact everything from your insurance rates to your ability to rent an apartment.

Ignoring your credit report is like ignoring a check engine light in your car – you might get away with it for a while, but eventually, it’s going to cause problems. Errors on your credit report can lower your credit score, leading to higher interest rates, denied applications, and even difficulty finding employment.

The FTC recommends checking your credit report at least once a year. You can get a free copy from each of the three major credit bureaus – Equifax, Experian, and TransUnion – by visiting AnnualCreditReport.com. Review it carefully for any inaccuracies or unauthorized accounts, and dispute any errors immediately.

We ran into this exact issue at my previous firm. A client, a retired Army sergeant, was denied an apartment because of a collections account on his credit report that wasn’t his. After disputing the error with the credit bureau, the account was removed, and he was able to secure the apartment.

Myth 4: The Thrift Savings Plan (TSP) Is the Same as a 401(k)

While the Thrift Savings Plan (TSP) and 401(k) plans serve the same basic purpose – providing a way to save for retirement – there are some key differences that veterans, especially those transitioning to civilian life, need to understand.

One major difference is the contribution limits. In 2026, the TSP contribution limit is $23,000, with a catch-up contribution of $7,500 for those age 50 and over. While 401(k) plans often have similar limits, some employers offer matching contributions, which can significantly boost your retirement savings. For more information, see our article on how to maximize your TSP.

Investment options also differ. The TSP offers a limited selection of funds, primarily index funds that track broad market indexes. 401(k) plans, on the other hand, often offer a wider range of investment options, including actively managed funds and target-date funds.

Carefully consider the investment options, fees, and employer matching contributions when deciding how to allocate your retirement savings. If you are a veteran who is also a federal civilian employee, you may be able to contribute to both the TSP and a 401(k).

Myth 5: You Don’t Need a Financial Advisor

Some veterans believe that they can manage their finances perfectly well on their own, without the need for a financial advisor. And while it’s certainly possible to do so, the reality is that most people can benefit from professional guidance, especially when dealing with complex financial situations.

A qualified financial advisor can help you create a personalized financial plan, develop an investment strategy, manage debt, plan for retirement, and navigate other financial challenges. They can also provide objective advice and hold you accountable for reaching your financial goals.

Of course, not all financial advisors are created equal. It’s important to find the right financial advisor who is trustworthy, experienced, and has a fiduciary duty to act in your best interest. Ask for referrals, check their credentials, and interview several advisors before making a decision. Many organizations offer resources to find a qualified financial advisor. The Certified Financial Planner Board of Standards is a good place to start.

I had a client, a former Air Force pilot, who was initially hesitant to work with a financial advisor. He was convinced he could handle everything himself. However, after a few years of struggling to manage his investments and retirement savings, he decided to give it a try. With the help of a financial advisor, he was able to create a comprehensive financial plan, diversify his investments, and significantly improve his retirement outlook.

Don’t let misinformation derail your financial future. Start by debunking these myths and seeking out reliable information and professional guidance to make informed decisions. You can also read about busting myths and building futures.

Don’t just passively accept financial advice. Take active control of your finances by educating yourself, questioning assumptions, and seeking out personalized guidance. Your financial future is in your hands.