Veterans and Retirement Planning in Greeneville TN

Veterans and Retirement Planning in Greeneville TN

American flag flying on flagpole with foggy backgroundVeterans have many decisions to make when planning for and entering retirement. These include selecting a Social Security claiming strategy if eligible, determining what type of employment (if any) to pursue when leaving the service, and whether to elect a survivorship option when receiving a military pension, among others. Many of these decisions involve complex considerations and can have a significant impact on your standard of living. As a result, working with a financial advisor can benefit veterans who would like help analyzing these and other planning options.  

When selecting an advisor, there are a number of factors to consider, including how the advisor charges fees, their approach to financial planning, and whether they are a veteran themselves.

Chapter 1

Working with a Fee-only CERTIFIED FINANCIAL PLANNER™ Professional Who is also a Veteran

silhouette of military members entering an airplaneWhile financial advisors from all backgrounds can provide veterans with solid advice, there are advantages to working with an advisor who is also a veteran. One advantage is the shared experience you and a veteran advisor will have in common. This can provide your advisor with a better understanding of your financial situation and goals. 

An advisor who is a veteran themselves is also more likely to be knowledgeable about military pensions, healthcare, and other financial aspects of retiring as a veteran. In addition, some advisors who are veterans offer discounts to veterans. At Sapiat Asset Management, for example, we offer a veteran fee discount to all active duty, national guard, reserves, and honorably discharged veterans. In Greene County, TN there are currently a handful of veteran advisors, but at Sapiat Asset Management we are the first independent fee-only advisory firm.

Another important consideration to keep in mind when choosing a financial advisor is how they charge fees. Choosing a fee-only advisor enables you to work with a financial professional whose compensation is aligned with your best interests. An advisor who charges fees by the hour or as a percentage of assets under management (AUM) benefits when your finances improve, either by being retained for further hourly work or by increased AUM-based compensation as your assets increase in value.

Advisors who charge commissions, on the other hand, are compensated based on the number of transactions in a client’s account. This can create a conflict of interest as their compensation increases as the number of transactions rises, whether or not the trading they do is in the client’s best interest.

Chapter 2

Comprehensive financial planning

When preparing for your retirement and other financial goals, one advantage veterans and current service members have is an understanding of the importance of planning. Military institutions and military personnel keenly understand that planning is key to achieving almost any goal. Careful planning goes a long way towards increasing a mission’s chances of success.

When it comes to financial planning, one mistake many people make is to plan for their goals in isolation, rather than taking a comprehensive approach. This type of “siloed” approach, where goals are considered in isolation, can be counterproductive; planning for one objective without taking into account how it will affect your overall situation can negatively impact your ability to achieve multiple goals.

For instance, if you set aside funds for retirement but also plan to purchase a house at some point without funding that goal, it can place you in a difficult position down the road. When the time comes to buy a house, failure to have built up savings specifically for this purpose could make raiding your retirement savings the only source of funds for a down purchase.

A better approach would be to set up separate savings pools for both retirement savings and a future home purchase. This gives you visibility into the amount available to spend on a home without dipping into your retirement funds. You could still pull funds from your retirement savings if you wanted, but planning for such options in advance enables you to make more informed decisions about your finances.

Comprehensive financial planning helps you prepare for a wide variety of financial situations. Areas typically covered by this approach include:

  • Evaluating your cash flow for budgeting purposes
  • Planning for retirement
  • Acquiring sufficient health insurance
  • Evaluating disability and life insurance options 
  • Estate planning
  • Planning for major expenditures such as purchasing a home or funding a child’s college education
Chapter 3

Investment Management

stack of coins in foreground with clock in background to symbolize savingsA key component of reaching your financial goals is the investment performance of your savings. This is especially true in the case of retirement, given that funds set aside for this purpose often have decades to grow before they need to be used. Over long periods of time, a small difference in investment results can turn into a big difference in the amount of funds available to fund your retirement lifestyle.

Given the importance of investment management to reaching your financial objectives, it’s crucial to pursue an approach that optimizes your ability to achieve the type of returns necessary to do so within the context of your investment time horizon.

A financial advisor can help veterans plan their investment strategy in conjunction with their pension plan to identify any funding gap that needs to be made up from their own savings. This requires both estimating expected future expenses in retirement and calculating how much in savings is needed to provide income to supplement a veteran’s pension income.

Generally, investors can take on greater investment risk, or volatility, the longer they have to reach a goal. Because of this, when investing for long-term goals such as retirement, most advisors will recommend emphasizing higher growth investments such as equities (stocks). As you get closer to and enter retirement, it is important to consider rebalancing your investments to reduce risk, given that you have less time for your investments to recover losses in the event of a market selloff.

Many advisors who offer financial planning services can also help you manage your investments. When doing so, they will typically gather information about your financial situation and goals to help you build a portfolio designed to optimize your chances of success.

This process often involves the use of financial planning software that can analyze your current plans and estimate how likely they are to be successful, given historical investment results by asset class. This “stress testing” of your financial plan for goals such as retirement can be very helpful in the planning process. Financial planning software can test your expected results against thousands of historical return scenarios to calculate the probability of success.

For instance, if you plan to retire in 15 years, the software would take into account the amount of money you plan to save to help fund your retirement, your current retirement savings, and expected future contributions and calculate how likely you are to reach your goal. If the expected results fall within the 90-95% likelihood of success range, you are likely on the right track. Higher than 95% may mean that you are saving more than you absolutely need to, and below 90% is typically seen as an indicator that you may want to reevaluate your plans and consider making changes to improve your chances of reaching your goal.

An important aspect of investment management, in addition to thoroughly evaluating your planned approach prior to investing, is monitoring your investments on a regular basis. Whether you are making investment decisions on your own or working with an advisor, it is vital to periodically review your investment allocation and results to make sure that your plans are on track. If a review determines that your investment results are falling short, you can take action to get them back on track, either by reallocating your portfolio or making changes to planned contributions.

Chapter 4

Retirement Planning for Veterans

Broadly speaking, veterans fall into the following categories.

They are:

  • Junior enlisted: This cohort joined the military early in life, often right out of high school, and are now becoming civilians for the first time upon leaving the military.
  • Senior enlisted: These individuals are leaving the service at the conclusion of their careers. While rules differ for the different service branches, generally, after 20 years of active duty, military personnel can enter retirement with a lifetime pension.
  • Disabled service members: Disabled members of the military receive payment based upon their disability. They enter into what is known as “disability retirement” upon leaving the service. Receiving this classification is based on the service member’s years of active service and, if this number is under 20, the member’s disability rating.
  • Junior officer: also known as Company Grade Officers, these individuals joined the military as young adults straight out of college and are now entering the civilian workforce as young professionals, junior executives, and small business owners.
  • Senior officer: also known as Field Grade Officers, these individuals devoted an entire career to military service, retire relatively young with a lifetime pension, and often begin second careers as DOD contractors or senior executives.

Each of these groups will have different financial requirements and circumstances. A financial advisor who works with veterans can provide advice for individuals in each of these groups tailored to their personal financial situation and the military benefits available to them given the type and length of their military service.

Veterans may be eligible for a variety of benefits depending upon their discharge conditions, service record, and current situation. Two of the most commonly used benefits programs are disability and retirement plans.

VA Disability

Veterans who have disabilities that are connected to a disease or injury that happened or was made worse during their active military duty may be eligible to receive disability benefits. Benefits are issued both for health and mental conditions. If disabilities contracted after separation from service are deemed related to disabilities suffered while in service, compensation may be available. Compensation levels are adjusted based on the type of disability. In some cases, further special monthly compensation may be paid to veterans who require extra assistance from an attendant or who have suffered a specified disability, such as loss of the use of a limb. 

Veterans Retirement Plans

The military retirement system was changed significantly beginning in 2018. The system had been strictly a defined benefit plan which required no participant contributions. Under the new system, members of the military must make contributions to the plan. Veterans and currently serving military personnel who were enrolled in the plan as of December 31, 2017, have been grandfathered and will still be covered by the old pension system unless they met certain qualifications and chose to opt-out of the old system and join the new one before December 31, 2018. 

Service members who joined the military after January 1, 2018, are automatically enrolled in the new plan, which is known as the Uniformed Services Blended Retirement System (BRS).

For information on the plan, the  BRS Comparison Calculator is helpful as are other BRS resource materials

The new system combines a downsized defined benefit pension plan with aspects of a defined contribution plan enabling both participant contributions and matching contributions by the government. This latter plan, called the Thrift Savings Plan (TSP), can be compared to a civilian 401(k) plan. Like a 401(k), it features tax incentives and professionally managed investment portfolios as well as penalties for early withdrawals. A Roth TSP version that enables contributions from tax-exempt combat pay is also available.

The new retirement system reduced the pension portion of the retirement plan by 20 percent and reduced the disability retirement calculation in return for the government offering a 5 percent match of TSP account contributions. This matching terminates after 26 years of military service. 

Participants in the legacy retirement system who have more than 20 years of military service are eligible for a pension that is calculated as a percentage of their basic pay. The year a veteran entered service also factors into how their pension amount is calculated, as changes to the system were made that apply to those who joined the military after September 1980 and August 1986.

Survivor’s Benefits

Veterans who receive a pension are automatically directed to the Survivor Benefit Plan (SPB) if married. This rider will pay 55% of a deceased veteran’s monthly pension to the surviving spouse for the duration of their lifetime. If you opt into the rider as a veteran, it will reduce your monthly pension by 6.5%. Additionally, the SBP is classified as taxable income by the IRS and in many states. 

Veterans receiving retirement pensions may want to consider declining this rider and using the additional income they receive as a result to buy a life insurance policy in order to provide funds for their spouse. Advantages to such an approach can include the following:

  • It may be less expensive
  • The life insurance policy will pay out a lump-sum death benefit that is tax-free to the beneficiary 
  • The death benefit amount remains constant as long as the policy remains in force

Another issue veterans should be aware of when leaving the service is that they have the right to roll over any funds they have in a TSP. Funds from these plans can be rolled into an individual retirement account (IRA) or a company retirement plan if you work in the private sector after leaving the military. 

If you have a TSP and are interested in receiving a guaranteed stream of income from the funds inside it, one issue to consider is that the qualified annuity you can purchase in the TSA does not include some of the features found in modern annuity contracts. Among these features are doubled payments for managed care, family income riders, etc.

When leaving the service, veterans should be aware that the benefits they are likely to receive in the private sector may not be as comprehensive as those offered by the military. It is also important for veterans to become familiar with the benefits offered by the U.S. Department of Veterans Affairs (VA), including VA mortgages and healthcare services. 

Veterans Social Security Benefits

view from behind of retired senior man sitting on a bench in a city with people walking by in the backgroundMost veterans are eligible both for benefits linked to their military service and Social Security payments. To qualify for these benefits, veterans must work for a minimum number of years. In certain cases, earnings from military service while on active duty or training might qualify for Social Security earnings.

Those who performed active military service during the period from 1957 through 1967 have had extra earnings added to their earnings record when applying for retirement benefits. Those extra earnings have already been added for veterans whose active duty occurred after 1967. Some disabled military veterans are eligible for Social Security disability insurance benefits. 

Veterans, like civilians, are eligible to begin receiving Social Security benefits when they turn 62. The earlier you start taking these benefits, the lower the amount of monthly income you will receive. As a result, it is worthwhile to evaluate your strategy for taking Social Security benefits to determine the approach that is best for you. 

Veterans may qualify for additional Social Security benefits. This is determined by the Social Security Administration (SSA), which looks at the military records of claimants when they apply for benefits. Veterans who qualify can receive a lifetime earnings credit for wages earned during service. Eligibility for these benefits is based on service length.

Other Planning Considerations for Veterans 

Veterans have the option of helping their financial situation by what is known as “double-dipping,” which refers to the practice of receiving veterans retirement benefits at the same time as working for pay in the private sector. 

We do NOT recommend annuities. Annuities are one of the worst possible investments available on the market and are the # 1 source of complaints to regulators due to their complexity.

A common retirement strategy is to retire from the military with 20-30 years experience at age 38-48. The veteran then goes to work for a state agency for the next 20 years, retiring at age 58-68. The state credits the veteran for federal service, so upon retiring from the state, the veteran owns a military pension AND a state pension. The pensions are in addition to the money the veteran saved in their TSP & state 401(k) plan. Done correctly, veterans can have a substantial retirement income (SSI + military pension + state pension) and substantial liquid assets (TSP + state 401k).

Eligible survivors of military personnel who die in the line of duty or as a result of service-related injuries and diseases are paid by the VA. This payment is known as Dependency and Indemnity Compensation (DIC) and can include the parents of deceased service members.

Survivors of service members may also be eligible for the survivor pension program. This is designed for lower-income surviving spouses who have not remarried and unmarried children of deceased veterans who have served during wartime.

Veterans can also purchase life insurance through the government, including:

  • Service-Disabled Veterans Insurance
  • Veterans Group Life Insurance and Family (SGLI)
  • Traumatic Servicemembers’ Group Life Insurance (TSGLI)
  • Veterans Mortgage Life Insurance 

All of these policies are a relatively low-cost way that veterans can use to provide financial security for their dependents. A $100,000 death gratuity is paid by the government to the next of kin when an armed service member dies on active duty or when traveling to or from active duty. This payment is also for family members of military personnel who die for other reasons, for instance, during training.

Veterans who are eligible, along with their dependents, can access health benefits via the government’s Tricare program. Eligible participants are covered for hospital and outpatient care on the basis of whether such treatment is classified as a “need.” VA health care is determined by such factors as income level and length of service. There are a number of options veterans and their families can select when deciding which Tricare plan works best for them. These plans can also be accessed by retired National Guard or reserve members.

Read our blog article: 5 Ways Veterans Can Plan for Retirement

Greene County Veteran’s Service Office

For veterans in the Greene County area, the Veteran’s Service Office located in Greeneville, TN serves as an advocate for veterans and can assist them and their dependents in getting the veteran’s benefits they are entitled to receive. These benefits include, but are not limited to:

  • Non-service-connected pension
  • Widow’s pension
  • Service-connected compensation
  • Educational benefits
  • Hospital eligibility claims
  • Ordering of deserved medal/ribbons
  • Proof of military service and other military records 

Office Information

101 Longview Drive
Greeneville, TN 37745

Inside the American Legion building.

Telephone Number
(423) 798-1707



For these and other strategies to plan for retirement, Sapiat Asset Management is at your service. We provide comprehensive financial planning, with a special focus on Gen X. If you feel you should be doing more for your retirement, we can help you get you on the right financial track.

We are the first fee-only fiduciary advisory firm in Greeneville. Contact us today for a complimentary consultation.

Sapiat Asset Management is a Fee-Only, Independent, Registered Investment Advisor (RIA), specializing in goal-oriented financial planning and investment management for Gen X Individuals & Families, their Businesses, & the Trusts that benefit them.