The men and women who protect our countries from threats both interior and external face a lot of risks. To give them some peace of mind, the service members are legible to several financial benefits. In this article, we will be outlining some of these benefits.
Guaranteed return on savings
As you know, military service members are deployed into combat zones that are highly risky and dangerous. To offset that risk, the military has in place the Savings Deposit Program. Every time a military member is deployed, he or she is allowed to deposit up to $10,000 in the program. The interest charged to this deposit is 10% annually, compounded quarterly.
The savings program lasts three months after the return of the service member from combat.
For a significant part of the population, most of your contribution to the Roth IRA is not tax-free. One of the financial benefits of a military career is a tax-free Roth system. Not only your contribution is tax-free, but your withdrawals are tax-free, too. We are talking about a double advantage.
As a service member, one no longer has to think about tuition fees for his or her children when college time comes. The Post 9/11 GI Bill provides that the full cost of tuition for the spouses or kids of service members will be fully covered. The Bill however has some rules and regulations to that effect.
If it is a public college, the tuition covered is up to 36 months, translation to 4 academic years. For foreign schools or private colleges, the terms are a bit different. What is covered by the bill is $26,043 per year.
When people consider how they are going to die, they think of how they will be able to provide for their beneficiaries even in death. Service members have access to the Service members’ Group Life Insurance. This insurance program only costs $300 per year, making it one of the lowest cost programs in the country.
State Tax breaks
The current jurisdiction allows for service members to have legal residence in a state of their choosing. For this property, they will be free from any and all income taxes. This rule applies even when the service member is forced to move to another state by military orders.
The benefits of State Tax breaks are enjoyed by the spouses of service members as well.
Legal protections and benefits
The provisions of the servicemembers Civil Relief Act give service members several special legal and financial benefits. One of which is a 6% interest-rate cap on any loans. However, this special rate applies before one is called to active duty.
A low-cost retirement savings plan
Military members are able to save into the lowest-cost retirement savings plan. To give you contrast, we can compare to the annual expenses that are charged to 401k plans. These can cost up to 2%. Contrast this to the estimated 0.068% charged to servicemembers for their retirement savings plan. It is one of the most significant financial benefits of a military career.