Financial Planning for Military Families: Honoring Service with Support

In recognition of Memorial Day, Harvard FCU is proud to provide tailored financial advice for active duty military personnel and veterans.   

Retirement Savings 

The Thrift Savings Plan, or TSP is a special investment and savings fund for federal employees and members of the uniformed services. Like other retirement accounts, such as the 401(k), a TSP is tax-advantaged—which means your money can grow while being subject to fewer tax deductions. Some money in the TSP is automatically deducted from your paycheck, but it’s also possible to contribute additional funds to this retirement account. You can read up on the TSP online to decide if it makes sense to take advantage of this retirement savings benefit.   

It's also important to know that people with a TSP can also open and contribute to an Individual Retirement Account (IRA) at the same time. Thus, active duty personnel have the opportunity to grow their retirement savings even faster, with multiple tax advantages, by opening a TSP and an IRA. There are also Roth options for both accounts, which confer tax advantages later, when funds are withdrawn, rather than earlier, when funds are deposited. The Roth option is designed for people who expect to be in a higher tax bracket later in life.   

Financial Preparation for Deployment  

If you’re preparing for deployment, take steps to ensure you won’t continue to pay for unused services back home. Call up your phone provider and let them know you’re active duty: most providers will help to pause your phone bills, and some may even offer additional discounts as thanks for your military service. The same goes for car insurance providers, who should be able to put your vehicle into “storage mode” so that bills won’t accrue when you’re not using the vehicle. Other “pauses” to consider include streaming services, grocery delivery services, and any other subscriptions you’re not planning to use while away.  

Managing Debt  

Members of the military with a high debt-to-income ratio could be rejected from certain jobs or even asked to leave a position. In other words: debt management is critical to service members. The good news is that there are a number of debt programs to support service members, including the Servicemembers Civil Relief Act (SCRA) which limits interest on loans; the Military Lending Act (MLA) which caps some loan interest rates; Military Debt Consolidation Loans; and lots more. Some lenders will also adjust interest rates if they’re informed that the borrower is active duty personnel. 

Active duty military personnel and veterans who belong to Harvard FCU can take advantage of the Credit Union’s Debt Consolidation Loan, or set up a free meeting with a financial counselor through the GreenPath Financial Wellness Program. Counselors can help Credit Union members develop a personalized debt management plan.  

Other Savings Tips 

Use bonuses and allowances wisely: aim to firstly pay off debt, before building an emergency savings fund and then putting money into a retirement account. And, consider moving your savings into the Department of Defense’s Saving Deposit Program, or SDP, which allows service members in designated combat zones to deposit up to $10,000 and earn a guaranteed return of 10% interest annually—far higher than what’s on offer via a standard savings account.  

Benefits for Veterans  

Veterans are eligible for a number of financial wellness programs and benefits—from life insurance programs, to pension payments, to mortgage assistance when buying a home. Head to benefits.va.gov/benefits to learn more, or schedule an appointment with a GreenPath financial counselor if you have specific questions about how to use veteran benefits to support your debt management, retirement planning, savings and more.