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6 Biggest Mistakes Veterans Make With Their Money

If you avoid rookie errors, your money can last for decades after your military service

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Illustration: Paul Spella; (Source: Getty Images (2))
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You can subscribe here to AARP Veteran Report, a free e-newsletter published every two weeks. If you have feedback or a story idea then please contact us here.

Inflation, a possible recession and pandemic-related issues inevitably create financial concerns. Having served our country, veterans are worried about how their savings and benefits may be affected.

Some things are beyond our control, but there are concrete steps you can take to improve your financial situation. Avoiding doing the wrong thing is a good start. Here are some of the biggest mistakes veterans make:

1. Choosing voluntary repossession of a vehicle

Veterans who move and don’t take their car with them sometimes opt to return it to the original lender as a voluntary repossession, Annette Harris, a financial coach and Army veteran who served in Afghanistan and Iraq, told AARP Veteran Report.

This might impact your credit and ability to get a new loan for years to come. Instead, consider selling the car independently or through a local dealership.

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2. Disorganization and neglecting estate planning

Veterans often have everything squared away at work, but their homes and personal affairs can be another story. You need to have a plan for telling your loved ones what you have in case you die or are incapacitated.

Pamela Maass Garrett, an estate planning attorney and wife of an Army veteran, told AARP Veteran Report that you should assemble account statement pages and titles for every asset you own and put them in a folder. “Next, tell someone you love and trust where that file is,” she said.

“Families often lose these assets when their loved one passes. The Colorado department of unclaimed property has over $50 million, and the California department has over $11 billion,” she said.

3. Payday loans

About one in three veterans has trouble paying bills, especially in their first few years after retiring from service. But payday loans can be a slippery slope.

“Payday loan lenders are prevalent near military banks,” Harris said. “These lenders know that veterans will be required to pay these loans back if they want to maintain their security clearance and because they could also be subject to disciplinary action if they don't.”

But the “exorbitant interest rates” are punishing. Instead, veterans should budget carefully and realistically. “Evaluating your and your family’s income and expenses monthly can reduce the need to obtain an immediate fix,” she said.

4. Ignoring inflation in retirement planning

Through October 2022, the U.S. Bureau of Labor Statistics reported a 7.7% increase for consumers. Inflation is a major concern for many veterans.

Kevin Meehan, a financial adviser with Wells Fargo in Buffalo, New York, and a U.S. Army veteran, told AARP Veteran Report that this concern doesn’t always translate into action and that a goal-based plan that adjusts for inflation is essential.

He recommends telling your financial adviser, “I’m concerned about higher inflation now and potentially in the future, and I wanted to get a more detailed look at how that might impact my future spending in retirement and what changes I can make to help offset that.”

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5. That second vacation home

Many Americans aspire to be snowbirds, heading for warmer climes in the winter. Basic errors include not scoping out an area to see if it’s somewhere you really want to buy a home and underestimating how much you’ll make from renters in the off-season. People also tend to underestimate the upkeep costs of a house they aren’t living in. 

Spend extended time in an area you are considering, and think about periods in the year when rental bookings might not happen. Consider a condo complex, where upkeep is less of a headache.

6. Holding off on retirement planning

“People in the military don’t think about it until it’s sometimes too late,” Meehan said. If you haven’t started saving, he recommends at least a 3 percent contribution to your retirement plan, working up to 10-15 percent as you are able. Your future depends on it.

He would like to see more financial education in the military, including a mandatory plan so service members have to put savings aside during service (the Thrift Savings Plan is optional).

Bottom line

Money matters, especially if you want to live a long and fulfilling life for decades after your military service. Avoid the rookie errors.

You can subscribe here to AARP Veteran Report, a free e-newsletter published every two weeks. If you have feedback or a story idea then please contact us here.

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