Articles by Ryan Guina

Ryan is the founder and editor of this site. He is a writer, small business owner, and entrepreneur. He served over 6 years in the USAF and also writes about money management, small business, and career topics at Cash Money Life.

You can find him around the web at, Ryan Guina on Twitter, The Military Wallet on Twitter, and on Google.

Military Forcing Some Officers to Retire with Enlisted Pay

Very few military members remain on active duty long enough to earn a military pension. The latest numbers show that only about 17% of servicemembers reach the full 20 years required for an active duty pension. It’s a wonderful achievement and a testament to the hard work and dedication it takes to make a career of the military.

That’s why it’s disheartening to read about certain service members who are being forced out of the military due to Force Shaping. It’s difficult for anyone who is forced out of the military, particularly when they have chosen to make it a career.

Officers forced to retire with enlisted pay

Some officers are being forced to retire before reaching enough service time to retire as an officer.

Some military members are being forced to retire early under the TERA program. This is unfortunate, as many retirees under TERA wish to complete their full 20 years of service and receive their full pension (retirees under TERA take a reduced pension equal to the number of years served * 2.5%, times a reduction factor based on the number of years they retired early).

But there is one class of servicemembers who arguably have it worse than others: some officers are being forced to retire from the military, but they don’t have the minimum service time to retire as an officer.

Rules for Retiring as an Officer

The normal rules require military members to serve 10 years as an officer to be able to retire as an officer. However, due to Force Shaping, there is currently an exception written into Title 10 of the US Code (the law that governs military pay and benefits), that allows service members with only 8 years of service as an officer to retire as an officer. Here are the applicable laws (note: these showcase the Army laws, as this is affecting more Army members than other services; the laws for the other services are similar):

  • Title 10 U.S. Code section 1370: “a commissioned officer […] will “be retired in the highest grade in which he served on active duty satisfactorily, as determined by the Secretary of the military department concerned, for not less than six months.”
  • Title 10 U.S. Code section 3911: “the Secretary of the Army may, upon the officer’s request, retire a regular or reserve commissioned officer of the Army who has at least 20 years of service computed under section 3926 of this title, at least 10 years of which have been active service as a commissioned officer.”
  • Title 10 U.S. Code section 3911: “The Secretary of Defense may authorize the Secretary of the Army, during the period specified in paragraph (2), to reduce the requirement under subsection (a) for at least 10 years of active service as a commissioned officer to a period (determined by the Secretary of the Army) of not less than eight years.”

But there are many officers being let go just shy of the required 8 years. In some cases, officers are allowed to get a waiver to extend their service up to 60 days or so to reach the required service time. But others aren’t so lucky, and are being forced from the service just short of reaching the requirement time served to retire as an officer. In fact, some of them are  just months shy of reaching the required 8 years.

And the difference is huge.

Impact on Retirement

There are two major impacts on retirement. The first, is these servicemembers retire as enlisted members, not officers. Their paperwork and retiree cards will be in the enlisted ranks. The other impact is to retirement pay.

The immediate impact on the pension is obvious – these soon-to-be-retirees will be earning substantially less in their retirement checks than they would have had they been able to serve an additional year or two. I’ll give an example in just a moment. But here is the worst part: these servicemembers’ pensions will be paid based on their previous enlisted pay.

Using High-3 rules, you have to go back to their highest three years of pay at their enlisted ranks. So not only do you have to take away their Officer Pay as though it never happened, these servicemembers’ pensions will be based on old pay scales at their previous rank. To add insult to injury, these servicemembers are artificially held at their last pay grade. So someone who served as an E-7 is forever an E-7 for pay and retirement purposes, even if they became a Captain.

Let that sink in a moment. These servicemembers didn’t have the same opportunities for promotion through the enlisted ranks. Its very possible many of these officers would have been able to promote one or two times as an enlisted member. Some of them may have been able to max out their pay scale and become E-9’s.  But they weren’t given that opportunity.

Reduced Pension for Enlisted Vs. Officer:

Here is a sample based on an E-7 pay grade and O-3E at 20 years service (7 as an officer)*.

  • Enlisted Base Pay (E-7, 18-20 years service): $4,323.90
  • Enlisted Retirement: $2,161.95
  • Officer Base Pay (O3-E, 18-20 years service): $6,726.00
  • Officer Retirement: $3,363.00
  • Difference: $1,201.05 per month

As you can see, there is a large difference – an approximate cut of 35%.

*These numbers are actually rough estimates. High-3 rules average the pay for the last 3 years of service at the highest grade held. So it would be an average of these salaries and the preceding two years.

The primary benefit these servicemembers received for being officers was increased pay while they were officers (increased base pay and BAH, however they had reduced BAS and were required to pay for all uniforms out of pocket).

Additional Reading on This Topic

Being forced out of the military is difficult for anyone, regardless of how long you served. There are many who are lucky, and are simply able to retire with full benefits, even if they were forced to retire earlier than they wished. Others may have to retire with a reduced pension under TERA rules. And then there are the unlucky few who rose from the enlisted ranks, answered the call to become an officer, and were later forced out before they could retire as an officer. This is an unfortunate situation, and unfortunately, one I don’t have answers for.

Here are some additional articles about this topic:

News Reports Blast Veterans for Triple-Dipping Benefits

Military and veterans benefits are often seen as overly generous by those who don’t understand what it takes to earn them. While it is true that some military benefits are generous, servicemembers have to go through a lot to earn them.

Veterans Triple-Dipping BenefitsTake military retirement, for example. A military member can retire after 20 years on active duty, and pull down 50% of their base pay for the rest of their life. There aren’t many similar retirement programs anywhere in the U.S. But there is a reason it is so generous – it is incredibly difficult to achieve. Only about 17% of servicemembers remain on active duty long enough to earn a military pension. The job is difficult, and attrition is high.

Injuries sustained in the line of duty contribute to the low-percentage of military members reaching retirement. As military members, we work in hazardous conditions, both in and off the battlefield. Congress and the Department of Veterans Affairs recognize this. That is why they award veterans service-connected disability compensation benefits for injuries or illnesses that occurred or were made worse while they served on active duty. The disability compensation is awarded to servicemembers due to their reduced capacity to work. I don’t think anyone has a reasonable argument that this benefit isn’t earned.

So why write this article?

Because these are two of the three benefits that the Washington Times recently bashed in an article entitled, “Veterans caught triple-dipping on benefits.”

The third benefit? Social Security Disability Insurance (SSDI) benefits. This benefit is only awarded to severely disabled individuals who are unable to work. Individuals must have paid into the Social Security system to be able to receive this benefit. Because military members pay into the Social security system*, they are eligible to receive Social Security benefits, including SSDI. (Note: some military members may be eligible to receive Social Security Disability benefits for Wounded Warriors, which is a variation of the SSDI benefit specifically tailored to military members).

*Military members used to be exempt from Social Security contributions, but that changed years ago; military veterans who are eligible for Social Security may be eligible for increased benefits depending on when they served.

Is There an Issue with Triple-Dipping?

The Washington Times article is written as though veterans are scamming the American taxpayer. Just look at the title – Veterans caught triple-dipping on benefits.

Caught, as in they were doing something wrong. But they aren’t. Everything is within the scope of the law.

Let’s look at the three benefits again:

  • Military retirement: Is this an earned benefit? Absolutely. And I don’t think we need to go into any deep discussions about what it takes to earn a military pension. Fewer than one in five active duty members remain in the service long enough to earn it.
  • VA Disability Compensation: Is this an earned benefit? Sadly, yes. The VA wouldn’t award this benefit if it wasn’t “earned” through the injuries or illnesses sustained during the servicemember’s time on active duty. There are checks and balances in place to review the veteran’s claims, and the award is given based on medical evidence and decreased quality of life. No benefit is awarded as a hand out.
  • Social Security Disability: Is this an earned benefit? Sadly, yes. Similar to the VA disability compensation, the Social Security Administration has checks and balances to ensure someone is qualified to receive the benefit. People receiving SSDI don’t choose to get injured to the point of being unable to work.

The “Problem” with Triple-Dipping

The reason these veterans are receiving extra attention is because most people aren’t eligible to receive two forms of disability compensation. For example, there is a clause that prohibits people from receiving SSDI if they earn more than $13,000 a year. But Social Security rules don’t count income from military pensions or VA disability compensation. So some veterans who are receiving both a military pension and VA disability compensation may also be eligible to receive SSDI, even if they have income over the $13,000 threshold.

A Deeper Look at Triple-Dipping

The article went on to state, “nearly 60,000 triple dippers collected $3.5 billion in benefits,” and, “Of the $3.5 billion spent in 2013 on the triple dippers, $1.4 billion came from the VA, $1.2 billion came from the Pentagon, and $937.4 million came from Social Security.”

On the surface, that is a huge number. But the article went on to quote two specific examples:

Veteran 1: A 54-year-old who retired in 1997 after 20 years in the military, who had lung disease, vascular disease and lost use of his feet, collected $122,887 in benefits in 2013 — nearly three times the $43,808 someone of his pay grade would have made in the military.

Veteran 2: Meanwhile, a 59-year-old who retired in 2004 after 26 years, who lost his feet, is blind in one eye and has renal problems, collected $152,719 in 2013 — more than twice the $72,824 salary of someone at his final military pay grade. Most of his benefits — $85,958 — came from VA disability, while $46,396 was military retirement, and $20,365 was from Social Security.

These are serious illnesses and injuries.

What the article fails to mention is that Veteran 2 receives the maximum special disability award of $85,958. That is only given to severely disabled veterans who require full aid and attendance in their home. In other words, the money is to be used for home nursing care.

The funds aren’t going into the veteran’s bank account. They are being used to provide health care for service-connected injuries.

Budget Cuts Are Important – But Find them Elsewhere

I know the government is trying to balance the books and cut redundancies. But I think they should look elsewhere. The thing is, veterans rely upon their earned benefits, and in the case of the veterans called out by the Washington Times, these veterans are simply trying to hang on to life.

Are there some veterans who game the system? I’m sure there are. But the vast majority of veterans simply want to receive the benefits they earned. They aren’t getting rich off the fat of the land. They don’t want to be labeled as freeloaders. They simply want to go on with life. And for those who are so severely disabled that they can’t work, or that they require hospice care, I think that is the least we can offer them. Without the vitriol and politics, please. We owe them that much. And a whole lot more.

Story: Washington Times.

Additional Commentary: DisabledVeterans.org.

Podcast 008: Using Tuition Assistance Benefits and Taking Classes While on Active Duty

Today I’d like to tell you how I used the military Tuition Assistance Program to pay for my Bachelor’s Degree while I was on active duty. My goal was to achieve my Bachelor’s Degree by the time I completed my first enlistment. This would give me many options going forward: I could remain in the enlisted ranks with a complimentary degree, I could apply for a commission to become an officer, or I would have my military experience and a degree, and I could try my hand in the civilian world.

My goal was aggressive. By the time I started working on my degree, I had been in for about 3 and a half years on a six year enlistment. That left me with two and a half years to complete my 4-year degree. In this podcast, I share exactly how I leveraged the Tuition Assistance program to accomplish my goal. I also discuss the military Tuition Assistance program benefits, eligibility, how to test out of college classes, and how to take classes while working a full-time military job.

Military Tuition Assistance Benefits

Tuition Assistance is one of the most valuable benefits you have available to you!

Whether you plan on making the military a career, you want to go from the enlisted ranks to the officer ranks, or you want to improve your prospects in the civilian sector, formal education is an excellent investment in time and money. And if you play your cards right, you can get most, if not all, of your degree paid for by the military.

In this episode I lay it all out on the line, starting with how Tuition Assistance benefits work, how to test out of classes, and the strategies I used to complete my Bachelor’s Degree while I was on active duty. I hope you’ll find this educational and inspiring!

Tuition Assistance – One of the Most Valuable Benefits Available

You don’t need me to tell you that a college degree is a valuable thing to have. It can help you promote within your military career, and it can help you in your post-military career as well. You may even decide to get a degree for personal knowledge. Whatever your reason, a college degree is a valuable. And getting it for free makes it an even better deal.

Here is one more value play many people don’t think about: Getting your degree now gives you the option to use your GI Bill later – either for yourself for a higher level degree, or you may even be able to transfer it to a family member. Being able to transfer your GI Bill can save you or your family members tens of thousands of dollars in tuition payments.

Who Can Use Tuition Assistance & When

Tuition Assistance is available to most active duty military members. In general, you must have served a minimum of 181 days on active duty before you are eligible for Tuition Assistance Benefits. However, it would be rare to join the military and start taking classes 6 months later. Most branches have a minimum service requirement before members can take classes. You usually can’t use TA while you are in an official upgrade training status, either. So that means you can’t use TA while you are in basic training, or AIT, or Tech School. You generally can’t use it while you are in an official upgrade training status beyond those schools either. There may be other minimum service requirements depending on your branch of service.

For example, Army policy prohibits Soldiers from taking college classes until they have completed 1 year of service after completing AIT (their tech school). They may also have to get supervisor’s approval before taking classes.

When I was in the Air Force, I wasn’t allowed to begin taking college courses until I had reached my 5-level status. To put that in perspective, I had 2 months of Basic Training, followed by 6 months of tech school. Then I had about a year of upgrade training where I learned my job and received my 5-level skill certification. So it was roughly 20 months into my tour before I was even able to take college courses. I actually didn’t start for over a year after that point. But I bring that up to illustrate how long it could take before you are eligible to begin taking classes.

If you aren’t eligible for Tuition Assistance benefits, it’s probably because you haven’t completed your initial training yet, or you already have a degree that is covered under Tuition Assistance (new rules often prohibit service members from using TA to achieve a lateral degree program or a lower degree than what you currently have).

Each Branch Has a Budget – and  Slightly Different Rules

Each branch of the military is given an education fund by Congress. How they use it is up to them. But I will tell you this benefit has come under the chopping block, and we have seen recent changes to this benefit as a direct result of budget issues (we’ll cover these later in this episode). In fact, Tuition Assistance benefits were cut from almost all branches during the sequestration. The benefit was later reinstated, but many people missed out on classes.

New rules limit the benefit on many levels, including who can take classes, when they can take them, which classes they can take, and more. The Marines actually offer their benefit on a first-come, first-served basis. Once they run out of funds, Tuition Assistance is done until the following year. So it makes sense to front-load classes in the hope of using your annual benefit and completing your degree more quickly without having to dip into your GI Bill or pay out of pocket expenses.

All of these limits sound draconian, but they aren’t. Tuition Assistance is still an excellent benefit.

How Much Does Tuition Assistance Cover?

In general, all branches except the Coast Guard offer 100% tuition assistance, up to a set dollar amount per credit hour – usually $250 per credit hour. The total amount one can receive in any given year or over their lifetime is determined by each branch.

The exception is the Coast Guard, which currently offers 75% TA, up to $187.50 per credit hour, for a total of $2,250 per year.

What Tuition Assistance Covers

Tuition Assistance can be used for approved college courses, certain exams (such as the GRE, GMAT, SAT, ACT, etc.), and for some professional certifications. Not all professional certifications are covered, there may be limitations on which programs you can use TA for, and limits on when you can use TA for a certification. For example, you may have a lifetime cap on the benefits you can receive for a professional certification. Or you may have an annual Tuition Assistance benefits cap that applies to both certifications and college courses. You will need to contact your education office for more specific information on what you can use TA for.

Also, the DoD no longer allows the Tuition Assistance programs to cover lab fees or certain course fees.

Tuition Assistance Reimbursements

A new DoD Instruction requires servicemembers to repay their branch of service if they fail to maintain satisfactory scores on the coursework. For example, you may be required to repay the cost of your classes if you earn a D or lower in an undergrad course, or a C or lower in a graduate level course.

Maintain good grades. The military retains the right to suspend your TA benefits if you don’t maintain high enough scores. You would then have to pay for classes out of pocket or use the GI Bill to bring your GPA up to acceptable levels before you would be eligible to receive TA benefits again.

Tuition Assistance Benefits for Each Branch of Service

Here are the current TuitionAssistance rules for each branch:

Testing out of Classes – CLEP, DANTES, & More

Another related benefit related to Tuition Assistance is college placement exams. These are tests you can take to test out of college classes and the cost is covered under the Tuition Assitance program. They can be a huge time- and money-saver!

Some examples of placement exams that you can take through the military include CLEP tests, or the College Level Examination Program, and DANTES Exams. DANTES is a DoD program, that stands for Defense Activity for Non-Traditional Education Support.

When I received my degree there was another program called Excelsior exams. The program is still around, but the exams are no longer free for military members. They can still be worth taking if it saves you from taking the actual college course. Just be sure to look at the CLEP and DANTES options first.

The tests work like this: you visit your Education and Training Office, sign up to take a test, and if you pass, you can receive college for the course.

A couple notes – these aren’t accepted by every college, but they are accepted by most community colleges and state schools, and by many private universities. They are also accepted by the Community College of the Air Force, which makes them popular for Airmen who want to receive their Associate’s Degree from the Air Force.

Before taking these exams, you want to make sure they are accepted by your school, and that they will work toward your degree plan. Some schools won’t allow you to test out of classes that are directly related to your major or minor. And some schools may only accept these test for elective credits. Other schools may have a limit to the number of credit hours you can transfer in, and another limit for how many classes you can test out of. I’ll share how I used these test toward my degree in just a few moments.

Test Taking Tips

Most people study for placement exams the wrong way. They go to the base library and borrow a study guide, which is usually just a few practice tests. They try to memorize as many questions as they can, then they take the test. It’s no surprise many people fail. You don’t learn anything from studying questions. You need to learn the material. The practice tests aren’t bad. Just don’t use the test alone and expect to pass.

I passed about 10 of these tests, and had zero failures. I also didn’t spend a dime on any training manuals. This isn’t because I’m exceptionally smart. I simply learned how to study for these exams. Here is what I did:

Each of these companies has an associated website. You can visit the site, search for the test you want to take, and look at the test information. The companies show the test name and how the test questions are broken up. For example, if you wanted to take a US History I test, it would give the breakdown as US History, 1500 – 1877. Here is the site.

  • 30% covers 1Early Colonization through the Revolutionary War
  • 70% covers the dates after the Revolutionary War through the end of the Civil War and into the Reformation.

There are further breakdowns on the page that list percentages of what the test covers, 35% covers political institutions and public policy, 25% covers this, 15% covers that, etc.

The page also lists 20 or so themes you need to know to pass the test.

Use this information as your study guide. Print out that screen, grab a spiral notebook, and spend a couple hours on Google and Wikipedia learning all the information on the study guide you just downloaded for free. Once you have a handle on the information, you can spend some time with the practice tests. Just don’t expect to pass the test with the practice tests alone. It probably won’t work well.

What Happens if you fail a placement test? The tests are free for active duty members, but if you fail you have to wait a few months before you can take the class again, and you may have to pay to take it. So be sure to know the material before you sit for the test!

Here are more tips for testing out of college classes.

Putting this all together

Now I’d like to tell you my story – how I used Tuition Assistance benefits to complete my Bachelor’s degree while I was on active duty.

I had been in the Air Force for 3 and a half years, which was just past my halfway point on my 6 year enlistment. I decided I wanted to complete my Bachelor’s Degree before my 6 year mark so I had options when it came time to decide whether or not to re-up.

Getting my degree was a great strategic move as it gave me the option of staying in the military as an enlisted member, the option of applying for a Commission as an Officer, or getting out of the service with my experience and a Bachelor’s Degree.

I had already completed one year of college when I joined the military, so at most, I was looking at taking 3 years of college to complete my 4-year degree. I knew about College Placement Exams, so I figured I had enough time to complete my degree if I got lucky and passed a few tests.

It actually took me just over a year and a half to complete my degree, and that included a PCS and two 4-month deployments.

Create an Education Plan – Then Execute

The first thing I did was visit the base education office to see my options. There were a couple colleges there, and I spoke with the representative from Embry-Riddle Aeronautical University. They have an excellent program, and they have satellite campuses on many military installations. I made an appointment with a counselor to get a degree plan made, and found out that a lot of my Air Force training would count as college credits toward either a technical management degree, or a degree in Professional Aeronautics, which is basically a management degree with a heavy emphasis on the aviation field.

Between my year of college and my military training, I had almost two years of credits on the books (the Air Force has  the Community College of the Air Force, which is an accredited community college). I also received college credits for professional military education, which was required when I became an NCO. With my credits, I needed to take just over 2 years worth of classes to receive my Bachelor’s Degree. The counselor was kind enough to show me exactly which classes I could test out of, and we made a list of the classes I would need to take to get my degree.

Armed with this knowledge, I scheduled some CLEP tests and studied them using the method I outlined earlier. I passed all of them.

As for the required courses through Embry-Riddle, I completed those through a combination of in-residence classes and distance learning while I was deployed.

Balancing School & Full-time Military Requirements

Embry-Riddle had a satellite campus on our base, which only offered night classes. I was single, and education was a priority for me, so I volunteered to work the midnight shift for almost two years while I worked toward my degree. I went to class from 5 – 9pm, had dinner, then went to work around midnight. I went to bed when I got home, then studied and wrote papers in the afternoon before going to class again. I worked with my supervisors to ensure I could remain on the midnight shift. They loved that because they had an NCO on the late-shift, and I loved it because it allowed me to take classes.

I also took online classes when I was deployed. We often worked 14 hour days while deployed, but there was always some down time here and there. I was an aircraft mechanic, an we had to ride the launch truck in case there were ay last-minute emergencies. Riding launch could take anywhere from 15 minutes, to well over an hour. Much of that time we were on stand-by. While everyone on the truck was cutting up or reading Maxim Magazine, I was reading about the history of flight or a book about aviation management. I also used my random days off to study and write papers.

Using a combination of my previous college credits, my Air Force training, taking placement exams, and taking classes through Embry-Riddle, I was able to complete my degree in about 20 months. It would have taken longer if I didn’t have the year of college already under my belt, but I also would have doubled-up on more classes and tested out of other classes. I’m confident I could have completed it in around 2, to 2.5 years.

Applying this to Your Degree

My situation was unique because I already had a year of college and I received a lot of credits for my Air Force Training. Your situation will be your own. So you need to be strategic with your planning.

I chose the degree that was best for me at the time. I had hopes of being an Air Force officer, so a degree in Professional Aeronautics was a great fit. It worked well with my experience and gave me options going forward. It was also the easiest for me to achieve because of the credits I received for my Air Force training.

You may or may not be in a situation where you can apply your military training toward your degree, but you should at least look into it. You should also look into testing out of classes. They will save you a lot of time, money, and heartache. Sit down with your guidance counselor and determine which classes you must take, and which you can test out of. It’s reasonable to test out of one or two classes per month if you keep to a schedule.

Here are more tips for taking classes while on active duty.

Final Note – You Must Maintain Your Military Standards

Finally, you need to maintain your work standards and be flexible with your work situation. Most units require a supervisor’s permission to take classes. They aren’t likely to give you permission if you are still in upgrade training or your work isn’t up to par. You also won’t be able to take classes if you have an unfavorable information file. So make sure you pass your PT tests, show up to work on time, and maintain the expected performance.

As to your work schedule, you may need to get creative. The classes offered on our base were in the evenings. So I offered to work the midnight shift in order to take classes. Things can get tricky if your only option is the day shift and your school only offers classes in the day time. If that is the case, you may need to get creative with scheduling and offer to work an extra hour here or there, eat a 10 minute lunch everyday, or take classes online. You might even consider attending classes at a different school. But don’t let those little details stop you from taking classes. Tuition Assistance is a very valuable benefit and achieving your degree can pay dividends long after your military career ends.

Here’s What Every Military Member Must Do to Secure Their Financial Future

Did you know that fewer than 1 in 5 military members stay in long enough to receive an active duty pension? Only 17% of servicemembers reach that milestone. Even if you do earn a military pension, it may not be enough to support you in retirement.

That means you need to plan your own retirement. A good place to start is with the military Thrift Savings Plan or an IRA. You could also contribute to a 401k plan after you leave the military, or start a taxable investment account. But where should you start? Which investments should you buy? And how do you measure your progress?

Military Retirement Planning

These are all great questions. Managing an investment portfolio can seem difficult, especially if you have more than one account. For example, my wife and I have an investment portfolio that contains two Roth IRAs, two 401k plans, two Thrift Savings Plan accounts, and a taxable investment account. In a perfect world, I would be able to consolidate those accounts, but at the moment, I can’t. So I need to find a way to manage them all without spending a lot of time or money. Thankfully, I recently found a free tool that helps me do just that.

Before I show you how I use the tool, I’d like to address some of the challenges many investors face when managing an investment portfolio. Then we’ll look at how to address those challenges so you can more easily adjust your portfolio, reduce your risk, and improve your investment returns.

Learn how to plan and manage your investment portfolio for free at FutureAdvisor.

Problems All Investors Face:

  • Asset Allocation (mix of stocks, bonds, and other investments)
  • Investment Fees
  • Taxes

Let’s take a brief look at each of these problems, then I’ll show you how I solve them:

Asset Allocation: Where You Put Your Money

Asset Allocation - FutureAdvisor

Proper asset allocation can improve your returns.

Asset Allocation is the mix of investments in your portfolio. This will often include investment types, such as stocks, bonds, Real Estate Investment Trusts, and other investments. The goal is to address your overall risk. I’m sure you’re familiar with the term, “don’t keep all your eggs in one basket.” This is where asset allocation comes into play.

Asset Allocation can be difficult when you have multiple accounts, such as my situation. One way to make this easier is to treat all of our investments as “one large bucket” instead of a bunch of small buckets. So if we decide we want an asset allocation of 70% stocks and 30% bonds across our entire portfolio, we can have some accounts that are 100% stocks or 100% bonds, so long as the overall portfolio averages out.

Investment Fees: When Less is More

Many people underestimate the importance of investment fees. A difference of only 1% can mean the difference of tens of thousands of dollars, or even hundreds of thousands of dollars in the long run. That is why my wife and I still have two TSP accounts – the TSP has some of the lowest fees you will find anywhere. It would cost us money to move the funds from the TSP to a new account.

One of the easiest ways to improve your portfolio’s investment returns is by slashing fees. Moving an investment from a fund with high fees to a comparable fund with lower fees can improve your portfolio’s performance overnight, literally saving you thousands of dollars. Check out this chart which shows how fees add up over time – it’s shocking!

Investment Fee Comparison Chart

Keeping more of your money in your pocket now ensures a larger retirement portfolio.

Chart Assumptions: Two identical investment portfolios starting at age 25 with $10,000, annual contributions, a 5% annual return, and held until age 65. You can see the difference is over $250,000 – all from an additional 1% investment fee!

Taxes: Pay Now, or Pay Later

Tax efficient investments

Tax efficient investments save you thousands.

You will almost always pay taxes on your money. The question is when, and how much. Obviously the goal is to legally reduce how much you pay in taxes. That’s where retirement accounts such as 401k plans, Roth IRAs, the Thrift Savings Plan, and other retirement accounts come into play.

Some of these accounts, like Traditional 401k, IRA, and TSP accounts, allow you to contribute to your retirement fund before the money is taxed. It then grows tax-free until the day you decide to withdraw it in retirement, at which time it is taxed.

Roth accounts act the opposite way – you make contributions after your money has been taxed, then the funds grow until you reach retirement. Qualified withdrawals are tax-free. Which type of funds you place into each account can have a massive long-term impact on your investment portfolio’s performance.

Taxable investment accounts use funds that have already been taxed as income, the funds can be taxed as they grow, and you will pay taxes when you sell the investments.

How to Solve These Problems – Quickly & Easily

FutureAdvisorYou’ll notice I conveniently neglected to show you how to address these three major investment issues. I do it with a simple, and free, tool called FutureAdvisor.

Here’s how it works:

  • Sign up for a free account*
  • Connect your investment accounts to your FutureAdvisor account (don’t worry, they use bank-level security!)
  • Run the free Portfolio Analysis
  • Review the recommended actions based on your profile
  • Take action!

*FutureAdvisor is free, and there is no obligation. But they also offer a really cool premium version, which I’ll explain later. For now, I’ll focus on the value you can get from their free tool.

FutureAdvisor – Free Portfolio Analysis

I’d love to take a screenshot and walk you through the assessment from my investment portfolio, but that’s probably not the wisest thing to do. Instead, I’ll explain how it works.

First, open a free FutureAdvisor account, then choose your current age, estimated retirement age, and your risk tolerance (conservative, moderate, or aggressive). Here is a screenshot of the tool in action:

FutureAdvisor

Enter your age, retirement age, and risk tolerance.

You will see a recommended target portfolio including a breakdown of types of stocks and bonds (domestic, foreign, large cap, small, cap, and everything in between). You will also see the projected performance of your target investment portfolio (just understand that projections aren’t a guarantee of future returns).

Next, connect your investment accounts. When you connect your investment accounts, FutureAdvisor will compile a list of all your investments and take many factors into consideration, including:

  • The type of account (Roth, Traditional retirement account, taxable investments, etc.)
  • The asset class
  • Investment fees
  • and more.

Then, FutureAdvisor recommends certain actions to improve your portfolio and potential returns. For example, most of my investments were already in low-cost index funds and ETFs, which FutureAdvisor recommends as a way to control investment management fees. But my asset allocation needed to be adjusted based on my risk assessment.

So the FutureAdvisor tool showed me specifically which funds to sell from each account, and which funds to replace them with. This made it quick and easy to bring my portfolio into balance without worrying about getting my portfolio out of balance, or messing things up with taxes. Very cool for a free software program!

FutureAdvisor Also Works with the TSP

Thrift Savings PlanOne of the frustrations I’ve had with some investing software programs is they often ignore the Thrift Savings Plan. That’s not the case with FutureAdvisor. In fact, they recently updated their algorithms to specifically integrate the Thrift Savings Plan into their portfolio recommendations. This makes it much easier for military members and government employees to balance their portfolios, save on fees, and improve investment performance.

To use FutureAdvisor with the TSP, simply login to your FutureAdvisor account and enter your TSP login credentials. Again, FutureAdvisor uses bank-level encryption, so your information is safe. Once your data is synced, FutureAdvisor will perform a free portfolio analysis and make specific recommendations based on your situation.

FutureAdvisor Premium – Military Discount

As I mentioned earlier, all the previously mentioned features are free. This is the version I use to manage my investments. But I’m comfortable managing my investments and making trades on my own. If all of this is a bit over your head, or you don’t prefer to manage your own investments, then you may wish to consider FutureAdvisor’s premium service. Not only will they will perform all the same analysis for you, but they will make the trades for you. (The Premium Service also has additional features such as tax loss harvesting).

Military Discount. The good news is that FutureAdvisor is offering their Premium Wealth Management solution to military members and veterans for free for a limited time.

Here is the military discount currently offered by FutureAdvisor:

You must begin the Premium enrollment process before Dec 31, 2014 to receive the discount.

Additional Bonuses for Military Members and Veterans

FutureAdvisor has also created a series of educational tools that will be hosted on their website. These include some upcoming webinars on “Personal Finance for Military members” and also a “Train the Trainer” webinar to help train supervisors and field commanders to help them educate their junior members about personal finance.

And of course, the aforementioned Thrift Savings Plan integration. FutureAdvisor has integrated the Thrift Savings Plan accounts into their algorithm in order to provide the most comprehensive advice for service members. This includes in-plan recommendations for the TSP—something they haven’t done for any other clients.

Try FutureAdvisor for Free. Overall, I’ve been very happy with FutureAdvisor’s software. It makes it easy for me to see how well my entire investment portfolio is balanced, and helps me look for ways to manage expenses and keep more money in my pocket. Visit FutureAdvisor to learn more or to open a free account.

The Military Wallet Podcast – Bringing You the Latest Updates in Military & Veterans Benefits

I’m excited to announce The Military Wallet Podcast! My goal is to bring you weekly podcasts to bring you the latest news and information in military and veterans benefits. For those who aren’t familiar with podcasts, you can think of it as an Internet radio show you can listen to on your computer, on a smart phone, tablet, mp3 player, or other devices.

The Military Wallet PodcastWe have a wide range of topics covering benefits programs for active duty members, retirees, members of the Guard and Reserves, veterans, and their family members.

Some of the topics we cover include military pay and benefits, military retirement pensions, VA Disability claims, VA Loans, GI Bill, Thrift Savings Plan, active duty benefits, veterans benefits, tips on transitioning from the military to civilian life, and much more.

Each podcast is accompanied on our site with a full length article – giving you a resource you can come to in print and audio.

Here are some recent podcast episodes:

Find us on iTunes and Stitcher Radio

You can subscribe to our podcast on a variety of devices, including anywhere you can use iTunes and Stitcher Radio. You can stream iTunes on your computer, from your iPhone, or iPod, and even from many new cars, which include iTunes in their on-board entertainment systems.

iTunes - The Military Wallet Podcast

Stitcher Radio is another service that allows you to take podcasts with you wherever you go. Stitcher can be used online, on your computer, or on a smartphone, including iPhone, Android, and Windows phones.

Stitcher Radio - The Military Wallet Podcast

Featured Guests and Topic Requests

I am happy to feature guests on our show. So far about half of the shows have been interviews. Would you like to share your story or expertise with our audience? Then please Contact me. We will touch base and see how we can make something work.

Is there a topic you would like to learn more about? Then please Contact me. I will see what I can do about covering the topic on a future episode!

How you can help: We would love it if you would give it a listen, and if you like it – subscribe and leave a review!

Thank you for your service!

Podcast 007: Planning Your Military Exit – Even if You Don’t Know When it Will Be

Have you thought about what you are going to do after you leave the military? Whether you’re one and done, or you stay in until retirement, you will one day leave the military. And the steps you take today can go a long way toward determining your post-military future.

The Military Wallet Podcast on iTunes

Subscribe to our Podcast on iTunes!

On this podcast, we interview Mark Deal, a former Nuclear technician in the Navy. He shares his story of self-development and planning for the future, even when he didn’t know what that future would be. In many ways, my story is similar to his, and I’m sure it will be similar for many of you.

Planning Your Military Exit - Even if You Don't Know When it Will Be

The big takeaway is this: “Develop a long-term path, and take short-term actions to get you there.”

Or, in military terms, “Determine your strategic goals, and take tactical measures to achieve them.”

There are many ways you can do this, and we’re going to go into more detail in the podcast.

Whether you are a Private in the Army, a mid-level or senior-level NCO, or a company grade or field grade officer, there is a lot of wisdom here. And the tips we discuss about education, training, and personal development apply to everyone at every stage of life – whether you are still in the military and contemplating your next move, or whether that ship has sailed and your military days are long over.

Planning Your Military Exit – Even if You Don’t Know When it Will Be

A successful mission isn’t successful if someone is left behind. That is why every special ops mission is planned with the exit in mind. How do we get in, accomplish our mission, and exfiltrate?

Your military career should be treated with the same care and end-goal in mind. Whether you serve 2 years on active duty, or 35, there are many steps you can take to prepare yourself for your next course of action, whether that is another career, or retirement.

With this in mind, Mark and I discuss the steps he took during his six-year enlistment that helped prepare him for his successful transition into the civilian world. After listening to his story, you won’t be surprised to learn he has been successful in business world as well.

Let’s look at Mark’s journey and some of his advice.

Do a Self-Assessment of Your Skills and Long-Term Goals

Give yourself options – in both your personal and professional life. Can you take steps in your career that will align with your long-term personal and professional goals? In Mark’s case, he was able to quickly qualify in his career field so he could use his off-duty time to pursue his long-term career aspirations. He didn’t have a career lined up while he was in the military, so he chose to pursue the study of classes that were in line with his military job. Mark studied classes related to mechanical and electrical engineering.

There are similar courses of action you can take, depending on your career field. For example, I was an aircraft mechanic. I knew many people who used their military training to get certified as an Airframe and Powerplant Technician (an A&P license is required by many commercial airline companies to work in aviation maintenance). There are likely similar certifications for many other career fields – computer and networking certifications, auto-maintenance, communications, and much more. Many career fields also have associated two- or four-year degree plans.

This is a great way to cover your bases and give yourself options. Had Mark chosen to remain in the Navy, he would have had a degree that was well-aligned with his career, making it easier for him to achieve an advanced enlisted rank, or pursue a commission had that been his desired career path.

Be productive with your time. Instead of using all of his downtime to play video games, or poker, he utilized his down-time to achieve his goals. For Mark, this meant taking classes while he was out to sea, while his ship was in dry-dock, and testing out of classes.

I took a similar path to Mark. I achieved my Bachelor’s Degree while I was on active duty. It was a lot of work – I volunteered to work the midnight shift for almost two years so I could attend night classes. I went to work right after class, went home to sleep, then studied for an hour or so before repeating the process. I also tested out of classes and took online classes while I was deployed.

Self-improvement isn’t limited to formal education. Mark also recommends loading a Kindle or eReader with books for your deployment time. You can always find a few minutes here and there to read. And an eReader is a convenient way to carry a load of books in a compact unit. This can include text books, non-fiction, self-improvement, and of course, entertainment. Personally, I like to read a non-fiction book, then follow it up with a good thriller – just to keep things interesting and give my mind a break.

Be intentional with your actions. We all have 24 hours in a day. And hopefully we have a lot of years in front of us. Mark’s advice: “Determine your long-term goals, and look at what short term actions you need to take to get down that path.”

strategic goals, tactical actions

Use your benefits and available resources to achieve your goals. Being in the military gives you access to many excellent resources. Mark mentioned he used Tuition Assistance and the GI Bill to help fund his degree both while he was in the military, and after he separated from the military. He also used a VA Loan to buy his first home, which saved him a lot of money on Private Mortgage Insurance. Here is a little more information about these benefits:

Start taking action today. I hope you find this podcast and information beneficial. The biggest takeaway is to take action, and the sooner the better. The earlier you begin working on your self-improvement projects, the longer you will have to reap the benefits.

Mark Deal, MBA

About Mark Deal: Mark is a former Navy Nuke.  He spent 6 years enlisted in the Navy with most time spent below the waterline on an aircraft carrier.  He now holds a BSEE and an MBA, but considers himself a reformed engineer.  He co-founded Foreign Investor Resource Group and is the host of the US Immigration Podcast.  Although he has enjoyed a diverse career track since he left the service, today we are going to focus on the early steps he took to help position himself for future opportunities.

You can find Mark on LinkedIn and Twitter @MarkDealMBA.

Podcast 004: Funny Math – VA Disability Ratings. When 30 + 20 Doesn’t Always Equal 50

The Military Wallet Podcast on iTunesIf I asked you the answer to 30 + 20, you would quickly tell me 50. And you would be right in just about every instance. But for veterans with service-connected disability ratings, the math doesn’t always work out quite so easily. In fact, 30 + 20 might only equal 44, which rounds down to 40. Or it might equal 48.4, which rounds up to 50. Confused yet? Welcome to the world of VA Math!

VA Math - combined disability ratings

Understanding VA math is essential for understanding your benefits.

The VA Service-Connected Disability rating system is complex. There are many reasons for this, and that’s a topic best left for another day, and another website. But there is one aspect I would like to address today: the somewhat confusing math used to determine the final service-connected disability rating awarded to veterans. This is the rating used to determine compensation payments and access to certain other benefits. It’s enormously important you understand how your rating is determined so you can make sure your benefits are calculated properly. The difference can literally be worth hundreds, or even thousands of dollars a year in compensation payments and other benefits.

Let’s dive in.

What Do Disability Ratings Represent?

The first thing to understand is what your disability rating represents. In short, the VA takes each individual injury or illness into consideration and gives it a numerical disability rating. Each rating is represented by a percentage divisible by 10 (ex: 10%, 20%, 30%, 40%, etc.). These disabilities are racked and stacked, then the VA does “VA Math” to determine your overall disability rate. We’ll get to the math later in this article.

A good way to look at this is to consider how the disabilities affect your ability to perform work and daily activities. To do this, the VA takes into account your overall efficiency after the disability or disabilities are considered. Let’s say you are a normal 40 year-old retiree with no major service-connected injuries or illnesses. Your efficiency would be rated at 100%. Now let’s assume you just retired from the military after 20 years of service and had some service-connected disabilities.

For example, let’s say you tweaked your knee while you were deployed and had arthroscopic surgery. You still have some pain and stiffness in that knee and the VA grants you a 10% service-connected disability rating. Assuming this is your only service-connected disability rating, your service-connected disability rating would be 10%. This is determined by looking at your efficiency, which is 90% (efficiency rating of 100, times 10% disability rating = 10%. You subtract 10% from 100% and end up with 90%). The math is simple when you only have one disability rating to consider. We’re going to come back to the math in a moment because it changes dramatically with each new service-connected rating we consider.

More than one disability rating? Each injury or illness is rated by itself, without consideration of other illnesses or injuries, unless they contribute to further injuries. We will also need to take into consideration whether or not the injuries are bilateral, which means they affect limbs on both sides of the body (for example, disabilities on both arms, or both legs). All of your disability ratings are listed in descending order, then the VA math begins.

How the VA Rates Multiple Disabilities

The above example covers the most basic situation – a single disability rating. In the previous example, it seems like you can just subtract the 10% from 100% and come up with 90%. But notice that we didn’t do the math that way. Things get more interesting when you have more disability ratings. Let’s run through an example, building on the previous profile.

Example profile: We’re going to stay with our example of a 40 year old military retiree. Above we said he had a disability in his knee. Let’s add a few conditions and do some math.

Let’s say our retiree has the following service-connected disability ratings:

  • 30% rating for a back injury,
  • 20% rating for right shoulder injury,
  • 10% rating for his right knee, and
  • 10% for hearing loss.

Now for the math: The VA uses a descending efficiency scale for its calculations. The VA will rate each injury or illness, giving each a numerical rating. When it comes time to determine the overall rating, the VA will start with the highest rating, then work its way down. You start with an efficiency rating of 100, then work your way down. Each new disability gives you a new baseline.

We start by racking and stacking the disabilities.  In the example above, we have ratings of 30%, 20%, 10%, and 10%. We start with the 30%, then factor in the 20%, the 10%, then the final 10%. Again, we aren’t subtracting here, we’re doing VA math. At the bottom of this article is the VA Combined Ratings Table, which we will use to complete our calculations (you may find it easier to open this article in two browser tabs so you can follow along, or download and print the Combined Ratings Table, which we have a link to).

We start with the 30% disability. Look at the Combined Ratings Table and scroll down the left column until you find the number 30. Then go to the right column until you find the 20. The 30 and 20 combine for 44. If those are your only two ratings, you would have a 44% Va service-connected disability rating, which would round down to 40%. But we’re not done. We still have to add two 10% ratings.

Start on the left column again. This time, you will look for the 44 in the left column. Then find the intersection point with the 44 and 10. Your new rating is 50%. Repeat this one more time, starting with 50, and meeting up with 10. Your new combined rating is 55%, which rounds up to 60%.

How does this add up? Again, we aren’t doing normal subtraction here. We are doing VA math. You start with your efficiency rate of 100, multiple it by your disability rating, then subtract the result from your original rating. In this case, you would multiple 30% times 100, and get 30. You subtract that from 100 and come up with 70. Your new efficiency rating is 70 and your disability rating is 30. This is the starting point for the next calculation. You repeat the process for the next rating. You take 20%, multiply it by 70, and come up with 14. You subtract 14 from 70, and you get 56. Your new efficiency rating is 56, and your disability rating is 44. You repeat the process for each additional disability rating.

The math can be a bit confusing if you try to do it manually. The best thing to do is use the VA Combined Ratings Table, which does the math for you.

How Bilateral Disabilities Affect Your Rating

There is one more issue we need to consider – the bilateral factor. The bilateral factor can have a big impact on your rating, so don’t dismiss it.

What is the Bilateral Factor? The bilateral factor is considered when the veteran has disabilities on both limbs (for example, both arms, or both legs, or of paired skeletal muscles). The disabilities don’t have to mirror each other. For example, they don’t need to occur on both knees to be considered bilateral. A left foot disability and a right knee disability satisfies the requirement they injuries be on both legs.

With the bilateral factor, the VA combines two or or more ratings, adds a bilateral factor to the outcome, and considers them as one rating when using the Combined Ratings Table (found below). It’s best if I quote the regulations the VA uses, then we’ll use this in an example:

§4.26 Bilateral factor (Source).

When a partial disability results from disease or injury of both arms, or of both legs, or of paired skeletal muscles, the ratings for the disabilities of the right and left sides will be combined as usual, and 10 percent of this value will be added (i.e., not combined) before proceeding with further combinations, or converting to degree of disability. The bilateral factor will be applied to such bilateral disabilities before other combinations are carried out and the rating for such disabilities including the bilateral factor in this section will be treated as 1 disability for the purpose of arranging in order of severity and for all further combinations. For example, with disabilities evaluated at 60 percent, 20 percent, 10 percent and 10 percent (the two 10’s representing bilateral disabilities), the order of severity would be 60, 21 and 20. The 60 and 21 combine to 68 percent and the 68 and 20 to 74 percent, converted to 70 percent as the final degree of disability.

(a) The use of the terms “arms” and “legs” is not intended to distinguish between the arm, forearm and hand, or the thigh, leg, and foot, but relates to the upper extremities and lower extremities as a whole. Thus with a compensable disability of the right thigh, for example, amputation, and one of the left foot, for example, pes planus, the bilateral factor applies, and similarly whenever there are compensable disabilities affecting use of paired extremities regardless of location or specified type of impairment.

(b) The correct procedure when applying the bilateral factor to disabilities affecting both upper extremities and both lower extremities is to combine the ratings of the disabilities affecting the 4 extremities in the order of their individual severity and apply the bilateral factor by adding, not combining, 10 percent of the combined value thus attained.

(c) The bilateral factor is not applicable unless there is partial disability of compensable degree in each of 2 paired extremities, or paired skeletal muscles.

Example using the Bilateral Factor

Let’s stick with the example profile from above, but let’s add another knee disability, one on each leg. This would qualify for the bilateral factor. The disability rating for each knee was 10%, but when combined, they equal 21%, according to the VA’s Combined Rating Table. Here is how we apply the bilateral factor:

Bilateral Factor Applied:

A 10% disability combined with another 10% disability = 19%,

Then you add 10% of 19, or 1.9%.

19% + 1.9% = 20.9%, which rounds up to 21%.

The combined rating for both knees is now 21%, and the VA will use 21% as the rating for those disabilities. It is possible to have more than two disabilities combined in the bilateral factor.

New example with Bilateral Factor: We’ll stick with the previous example, but add the other knee injury and see how it affects the final outcome. Let’s say our retiree has the following service-connected disability ratings:

  • 30% rating for a back injury,
  • 21% (10% rating for his left knee, and 10% rating for his right knee, with bilateral factor applied),
  • 20% rating for right shoulder injury, and
  • 10% for hearing loss.

Using the Combined Rating Table, we start with the 21% and the 30%. This takes us to 45. Follow the left column down to 45 and find where it intersects with 20. You get 56. Repeat the process for 56 and 10, and you get 60. This overall service-connected disability rating for this veteran is exactly 60%.

The previous example was 55%, rounded up to 60%, and this example was exactly 60%. As your disability percentage increases, it takes more disabilities with higher ratings to move the needle. This is the impact of the math the VA uses to determine disability ratings. Here is another example using a bilateral factor.

VA Combined Ratings Table

The VA Combined Ratings Table is where all the math magic happens.

Instructions: List all disabilities in descending order. Start with the highest disability rating, find it in the left column, and find the intersecting point with the next highest disability rating. This is your combined rating for these two disabilities. If these are your only two disabilities, you can round to the nearest number divisible by 10 (anything 4.9 and lower are rounded down; 5 and higher are rounded up). Repeat this process until you have run the numbers for all disability ratings.

(Article continues below table):

102030405060708090
19273543516068768492
20283644526068768492
21293745536168768492
22303845536169778492
23313846546269778592
24323947546270778592
25334048556370788593
26334148566370788593
27344249566471788593
28354250576471788693
29364350576572798693
30374451586572798693
31384552596672798693
32394652596673808693
33404653606773808793
34414754606774808793
35424855616874818794
36424955626874818794
37435056626975818794
38445057636975818894
39455157637076828894
40465258647076828894
41475359657176828894
42485459657177838894
43495460667277838994
44505561667278838994
45515662677378848995
46515762687378848995
47525863687479848995
48535864697479849095
49545964697580859095
50556065707580859095
51566166717680859095
52576266717681869095
53586267727781869195
54596368727782869195
55606469737882879196
56606569747882879196
57616670747983879196
58626671757983879296
59636771758084889296
60646872768084889296
61656973778184889296
62667073778185899296
63677074788285899396
64687175788286899396
65697276798386909397
66697376808386909397
67707477808487909397
68717478818487909497
69727578818588919497
70737679828588919497
71747780838688919497
72757880838689929497
73767881848789929597
74777982848790929597
75788083858890939598
76788183868890939598
77798284868991939598
78808285878991939698
79818385879092949698
80828486889092949698
81838587899192949698
82848687899193959698
83858688909293959798
84868789909294959798
85878890919394969799
86878990929394969799
87889091929495969799
88899092939495969899
89909192939596979899
90919293949596979899
91929394959696979899
92939494959697989899
93949495969797989999
94959596969798989999

Source: 38 CFR 4.25 – Combined ratings table. Downloadable PDF: You can download this table here (pdf, courtesy of PurpleHeart.org).

Online VA Disability Ratings Calculator: It’s great to know how to use the Combined Ratings Table so you can verify your disability rating for yourself. But it’s also nice to be able to use a calculator that takes all of these factors into consideration. Here is a great online calculator that will help you determine your disability rating. This calculator seems accurate for the most part. However, it doesn’t seem to account for the bilateral factor. So you may wish to use the Combined Ratings Table to determine your overall rating if you have bilateral disabilities.

Summary: VA Math can seem confusing at first. But it makes sense when you take some time to run the numbers. When in doubt, use the Combined Ratings Table to do the math for you. If you have further questions about your specific case, then I recommend contacting the VA for clarification, or contacting a Veterans Service Officer at a Veterans Service Organization. VSO’s will help you with your claim free of charge.

Oh, and as for the examples with the 30 + 20: The combined ratings table shows us two disabilities rated at 30 and 20 equal 44%. This rounds down to 40% disability rating. If you apply the bilateral factor to disability ratings of 30 and 20, you would get 48.4% (44% + 4.4%). This rounds up to 50%.

2014 Veterans Day Free Meals and Discounts


Updated: Nov. 11, 2014. Veterans Day is soon approaching and there are many restaurants and companies who want to thank our veterans by providing them with discounts or a free meal. To those companies offering veterans a free meal or discount, the military community gives a collective thanks!

Download a PDF List of Veterans Day Meals & Deals!

Two notes before jumping in:

  • Proof of Military Service. Most companies require some form of military ID. These include: a Military ID Card (active/reserve/retired), Current Leave and Earnings Statement (LES), Drivers License with Veterans Designation, Photograph in uniform, be wearing uniform (if your service permits), Veterans Organization Card (e.g., American Legion and VFW), DD214, discharge paperwork, or other form of identification. Other restaurants and companies may go by the honor system.
  • Participation. Second, always call ahead to verify locations, times, and participation. Many of the listed companies are franchises and may have different policies. We will do our best to keep this page updated as we find new info.

2014 Free Veterans Day Meals

Veterans Day free meals and discounts for military and veterans

Please credit this resource: We are frequently updating this list with new deals and offers for the military community. If you use items in this list, please direct your visitors to this page so they can find the most up to date information: http://themilitarywallet.com/veterans-day-free-meals-and-discounts/ Thanks!

Applebees Veterans Day AppreciationApplebee’s – free meal, Nov. 11, 2014: Last year, Applebee’s served over one million free meals to military veterans and active servicemembers. Applebee’s is again offering a free meal to military veterans and active-duty service members on Veterans Day, Tuesday, Nov. 11, 2014. There will be 7 entrées to choose from, beverage and gratuity not included. Military ID or proof of service required. More.

Bar Louie America - Veterans DayBar Louie, Free meal on Nov. 10th and 11th, 2014. From open to close November 10th and 11th every Bar Louie location across the country will offer veterans and military personnel a free meal up to a $12 value. Available at all locations, military ID or proof of service is required. Locations.

BJs Restaurant and Brewery Veterans DayBJs Restaurant and Brewhouse, Nov. 11, 2014. Complimentary lunch entree, up to $9.95 value. Offer valid to all active duty military and veterans, with proof of service. Locations.

Bob Evans, Nov. 11, 2014. Free All you can eat hotcakes. For active duty military and veterans with ID or proof of service. Locations.

Brann’s Steakhouse and Grille. Free 6 oz Sirloin and two sides. Locations.

California Pizza Kitchen, Nov. 11, 2014. Choose a pizza, full size salad, or pasta from the special Veterans Day Menu. Dine-in only. Please come in uniform or bring your military I.D. or other proof of service. Find a location near you.

Carraba’s, Nov. 11, 2014. Free appetizer of your choice for active duty servicemembers and veterans. Military ID or proof of service required. Locations.

Cattlemens Steakhouse, Nov. 11, 2014. Free 8 oz Sirloin Steak Dinner on Veterans Day. Proof of service required. Locations.

CentraArchy Restaurants, Nov. 11, 2014. Free meal for veterans and 25% off meals for accompanying guests at Fiesta del Burro Loco, all California Dreaming restaurants, Carolina Roadhouse, all Chophouse 47 restaurants, Gulfstream Cafe, Joey D’s Oakroom all New York Prime restaurants, and The Tavern at Phipps. Locations.

Champps Americana Veterans Day MealChampps Americana, Nov. 11, 2014. Participating Champps locations are offering veterans and active duty servicemembers a free cheeseburger. Dine in only, valid at participating locations (call ahead to verify local participation). Locations.

Charlie Brown’s Steakhouse, Nov. 11, 2014. Free meal for active and former military members with ID or other valid proof of service. Find a location near you.

Cheeseburger in Paradise, Nov. 11 2014. Free All-American Burger with fries with purchase of beverage and military ID or proof of service. Available to active military or veterans. Beverages and gratuity not included, dine-in only. Find a location near you.

Chick-fil-A, Nov. 11, 2014. Participating locations are offering a free meal to all veterans and those currently serving. ID required. Please call ahead to verify. Locations.

Chilis Restaurant Free Veterans Day DinnerChili’s – free meal, Tuesday, Nov. 11 2014. Chili’s is offering all military veterans past and present their choice of one of 7 meals during the dinner hour, or any lunch combo during lunch. Offer only available at participating Chili’s in the U.S. only. Dine-in from limited menu only; beverages and gratuity not included. Veterans and active duty military simply show proof of military service. Visit their website to find locations.

Claim Jumper, Monday Nov. 10, 2014. Free entrée from select menu, with official proof of service. Dine-in only. Locations.

Cotton Patch Café, Nov. 11, 2014. Free meal for current and former military members. Choices include full-size chicken fried steak, or chicken fried chicken. Proof of service required. Locations.

Country Cookin, Nov. 11, 2014. Free meal for current and former military. Proof of service required. Locations.

Denny's Veterans Day DinnerDenny’s, Nov. 11. Free Build Your Own Grand Slam® on Tuesday, Nov. 11, from 5 a.m. to noon for all active, inactive, and retired military personnel. Participating locations only. Please call ahead. Locations.

East Coast Wings, Nov. 11, 2014. Free Appetizer or Desert. Proof of service required. Locations.

Einstein Bros Bagels, Nov. 11, 2014. Free coffee at participating locations. Available to all active duty members and veterans with ID or proof of service. Locations.

Famous Daves Veterans Day CelebrationFamous Dave’s, Nov. 11, 2014. Free meal (one meat, a side and a corn muffin). Participating locations only more details.

Fatz Eatz & Drinkz, Nov. 11, 2014. Free meal for current and former military members, up to $13.00 value. Proof of service required. Locations.

Fire & Ice Grill & Bar, Nov. 11, 2014. Free meal for military and veterans. Proof of service required. Locations.

Friendly’s, Nov. 11, 2014. Free breakfast, lunch, or dinner. Breakfast offering is free a Big Two Do breakfast, which includes a coffee and the choice between French toast, buttermilk pancakes, or regular toast along with bacon or sausage links, and some eggs. Lunch or dinner includes an All-American Burger served with fries and a beverage. Offer available for active military and veterans with ID or discharge papers. Participating locations only. Locations.

golden corral free veterans day mealGolden Corral – Free meal, Monday Nov. 17, 2014 (5pm – 9pm): The 14th annual Golden Corral Military Appreciation Monday dinner will is available to any person who has ever served in the United States Military. If you are a veteran, retired, currently serving, in the National Guard or Reserves, you are invited to participate in Golden Corral’s Military Appreciation Monday dinner. For more information visit http://www.goldencorral.com/military/.

Special thanks to Golden Corral: To date, Golden Corral restaurants have provided over 4 million free meals and contributed over $8.7 million to the Disabled American Veterans organization. Amazing!

See more Military Discounts and Veterans Day Deals.

Hooters Veterans Day - Free MealHooters, Nov. 11, 2014. Tuesday, Nov. 11, Hooters invites all veterans and current servicemen and women to enjoy a free meal, up to $10.99 in value with any drink purchase, by presenting a military ID or proof of service at any Hooters location across the country. Locations.

Hoss’s Family Steak & Sea House, Nov. 11, 2014. Free meal form the American Values Menu, Nov. 11 from 11:00 a.m. to 9:00 p.m. Includes soup, salad, desert, and beverage. Dine-in only, valid ID or proof of service required. Locations.

IHOP, Nov. 11, 2014, from 7 a.m. to 7 p.m. Free Red, White and Blue pancakes, or Red, White and Blue pancakes combo plate including eggs, bacon and hashed browns. Participating locations only. Please call ahead to verify participation. More info. Locations.

Krispy Kreme free doughnut for Veterans DayKrispy Kreme – Free doughnut and small coffee, Nov. 11, 2014. Available only at participating Krispy Kreme stores. Offer available to all active-duty, retirees, & veterans. Be sure to call ahead to verify your local Krispy Kreme is participating. Locations.

Lone Star Steakhouse Veterans DayLone Star Steakhouse, Nov. 11, 2014. All veterans and active duty military will be eligible for a free Starter. ID or proof of service required. Please call ahead for verification. Locations.

Longhorn Steakhouse Veterans DayLongHorn Steakhouse, Nov. 11, 2014. Complimentary Texas Tonion and non-alcoholic beverage. Offer good for Veterans and active-duty military members. Proof of service required. Visit their site to find a location near you.

Max & Erma's free Veterans Day MealMax & Erma’s, November 11, 2014. Participating Max & Erma’s locations are offering military members and veterans a free Best Cheeseburger in America Combo, which includes tortilla soup or side Caesar salad, seasoned fries, and chocolate chip cookies. Dine-in only. Call ahead to verify participation. ID or proof of service required. More info. Locations.

McCormick and Schmicks Veterans Appreciation DayMcCormick & Schmick’s Seafood Restaurants – free lunch or dinner, Sunday Nov 9, 2014: McCormick & Schmick’s is celebrating their 16th annual Veteran’s Appreciation Event on Sunday, November 9th. Veterans will be able to choose a complimentary lunch or dinner entrée from a special menu. Veterans must provide proof of military service. Be sure to contact your local McCormick & Schmick’s as this is valid at participating restaurants only. Also, space is limited and reservations are highly recommended. For more information visit: M&S Veterans Appreciation Event.

Menchie’s, Nov. 11, 2014. All veterans and current servicemembers will receive a free 6 oz. frozen yogurt on Veterans Day. Locations.

Noah’s Bagels, Nov. 11, 2014. Free coffee for active duty and veterans. Proof of service required. Locations.

O’Charley’s, Nov. 11, 2014. Free entree from the $9.99’er menu for all active military and veterans with proof of service. Find a location near you.

On the Border Veterans Day SpecialOn The Border, Mon. Nov. 11, 2014. Veterans and current servicemembers will receive a free choose 2 or choose 3 “Create Your Own Combo”. Dine-in only, proof of service required. Find a location near you.

Orange Leaf, Nov. 11, 2014. Free frozen yogurt (up to 11 0z.). Proof of service required. Locations.

Outback Steakhouse Veterans DayOutback Steakhouse – Nov. 11, 2014. Outback Steakhouse is honoring America’s military veterans by offering active duty military and veterans a free Bloomin’ Onion and a non-alcoholic beverage. This offer is available to Military Personnel and veterans with ID. Also receive 15% off your purchase from Nov. 12-Dec 31, 2014. Locations.

Perkins Veterans DayPerkin’s Restaurant & Bakery, Nov. 11, 2014. Participating restaurants are offering current servicemembers and veterans a free Magnificent Seven meal which includes two eggs, three buttermilk pancakes, and a choice of two bacon strips or two sausage links. Beverage not included. Call ahead to verify participation. ID or proof of service required. Locations.

Pinnacle Entertainment (Casino Chain), Nov. 11, 2014. Select locations are offering a free buffet meal for current military members and veterans. ID or proof of service required. More info and locations.

Red Hot & Blue, Nov. 10-12, 2014. Free Entrée with purchase of another entrée of equal or greater value. Coupon. Proof of Service required. Website.

Red Lobster Veterans DayRed Lobster – Monday, Nov. 10 – Thursday Nov. 13, 2014. Free Appetizer on Veterans Day with military ID or proof of service. Vets may choose from a select list of appetizers. Find a location near you.

Red Robin Veterans DayRed Robin, Nov. 11, 2014. Free Red’s Tavern Double and Bottomless Steak Fries for all Red Robin guests with a military ID or proof of service. (offer) Locations.

Rib City (St. Louis, Missouri), Nov. 11, 2014.  50% Military Appreciation Meal Discount everyday to all Veterans and Active Duty Military. Eat in or carry out. (Des Peres and Cottleville, MO) More info.

Ruby Tuesday’s, Nov. 11, 2014. Free appetizer at participating locations, proof of service required. More info. Locations.

Shoney’s, Nov. 11, 2014. Free All-American Burger to veterans and active duty servicemembers. Dine-in only, Proof of Service required. More info. Locations.

Sizzler Restaurant logoSizzler Restaurants, Nov. 11, 2014. Free lunch served until 4pm. Choice of 3 entrees, and a free coffee, tea, or fountain drink. Valid with proof of military service. Dine-in only, not valid for salad bar or gratuity. Locations.

StarBucks, Nov. 11, 2014. Free tall brewed coffee for active duty, veterans, and their spouses. Participating stores only. Please call ahead.

Tap House Grill, Nov. 11, 2014. Free meal for servicemembers and veterans with proof of service. Dine-in only. Locations.

Texas Corral Veterans DayTexas Corral – Monday, Nov. 11, 2013. Free entrée (dine-in only). Offer available to all active duty members and veterans with ID. Locations.

Texas De Brazil Churrascaria, Nov. 11, 2014. 50% off for all current and former servicemembers at participating locations (please call ahead). Locations.

Texas Land and Cattle Steak House, Nov. 11, 2014. Free appetizer or shared plate for current servicemembers and veterans. ID or proof of service is required. Locations.

Texas Roadhouse Veterans Day MealTexas Roadhouse, Nov. 11, 2014. Free lunch event to honor the men and women of our armed forces. Choose from one of 10 free meals, plus sides and a drink. Offer good for All veterans – including all active, retired or former U.S. military. ID Required. Dine-in only. Call ahead to verify times and locations. Find locations.

T.G.I.-Fridays Veterans Day Free MealT.G.I. Friday’s, Nov. 11, 2014. Free lunch for all current military members and veterans from 11:00 a.m. to 2:00 p.m. Valid ID or proof of service required. Dine-on only at participating locations. Be sure to contact your local T.G.I Friday’s for details. Locations.

The Olive Garden Veterans Day entreeThe Olive Garden, Free entrée, Nov. 11, 2014. Offer good for veterans and active duty military; proof of service required. (details) Locations.

Tim Hortons, Nov. 11, 2014 – all US locations are offering a free donut to all active duty servicemembers and veterans. No purchase necessary. Proof of service required. Locations.

Travel Centers of America, Nov. 11, 2014. Free meal for CDL holders who are also veterans. Participating locations only; proof of service required. More info.

Twin Peaks Restaurants Veterans DayTwin Peaks, Nov. 11, 2014. Free 2015 calendar with $160 in coupons to first 100 servicemembers and veterans at each location. Free mealat following locations: Greenville, Jacksonville, Knoxville, Pensacola, Orlando, Concord. Please call ahead to verify participation. Locations.

UNO's pizza Veterans DayUno Chicago Grill, Nov. 11, 2014. Free individual pizza or entrée with the purchase of a pizza or entrée of equal or greater value. Available for all active duty and veterans. No coupon necessary; proof of service required. Don’t forget to tell the staff you are there that day to support Fisher House, and a portion of your party’s check will go to benefit the Fisher House Foundation, an awesome military charity. Find a location near you.

Village Inn Veterans DayVillage Inn, Nov. 11, 2014. Free breakfast any time of day (choice of three menu items). Veterans will also receive a “Thank You for Your Service Card” valid for 20% off their total bill on their next visit when they dine at Village Inn on Veterans Day. Participating locations only. Please call ahead. Locations.

54th Street Grill, Nov. 11, 2014. Free meal, up to $12 value, valid for current and former service members (more info). Proof of service required. Locations.

Awaiting updates for 2014:

Many restaurants and companies offer an annual Veterans Day promotion. The following deals were active last year, but have not yet been confirmed for 2014. Please feel free to contact me if you have information about 2014. Please do not assume these deals are in place for 2014 – call ahead to verify! (We will continue to update this list until Veterans Day 2014, so check back!).

Fox and Hound Bar and Grill Veterans Day OfferFox & Hound and Bailey’s Sports Grille, Nov. 11, 2013. Free Sandwich or Entree (up to $13) for active duty military and veterans with ID or proof of service. Dine-in only and at only at participating locations. Locations.

HoneyBaked Stores, Nov. 11 – Nov. 17, 2013. Free lunch to current servicemembers and veterans with valid ID. Lunch includes sandwich, chips, cookie, and a drink. Valid only at the St. Louis, Knoxville, Las Vegas, Salt Lake City and Albuquerque locations, Please call ahead to verify participation. Locations.

Hy-Vee Celebrates Veterans Day with Free BreakfastHy-Vee, Free Breakfast, Monday, Nov. 11, 2013. Free Veterans Day breakfast from 7am – 11am at all participating Hy-Vee supermarkets with in-store dining. Please call ahead to verify participation, and bring proof of military service.

Little Caesars Pizza Crazy BreadLittle Caesars® Pizza, Nov. 11, 2013. Little Caesars is honoring the men and women of the United States armed forces this Veterans Day by providing veterans and active military members with a free Crazy Bread® with proof of military status or proof of service at participating stores nationwide. Call ahead to verify participation.

Ruby’s Diner, (Awaiting update – this is last year’s offer). Free Cinnamon Roll French Toast until 11:30am. Valid for all military service members past and present. Coupon required.

Souplantation & Sweet Tomatoes, (Awaiting update – this is last year’s offer). Free meal with purchase of another regular priced meal. Available to current and former military members with valid ID. Available at all Souplantation and Sweet Tomatoes locations. More info.

The Spaghetti Warehouse Veterans DaySpaghetti Warehouse, Sunday Nov. 10 – Monday, Nov. 12, 2013. Buy one entrée, get one free, coupon required. Choose any of 11 Original Recipe Spaghetti entrées and receive a second entrée free. Friends and relatives are encouraged to treat a veteran to a meal.

Tony Roma's Veterans Day Free MealTony Roma’s, Nov. 11, 2013. Free Entree, up to $15 for current and former military members with valid proof of service. Valid at select locations only. Please call ahead to verify participation. Details.

Download a PDF List of Veterans Day Meals & Deals!

More Veterans Day Discounts! Please click through to Page 2 – Parks and Entertainment and Page 3 – Retail and Regional Discounts to see more Veterans Day deals, including free National Park Admission, Amusement parks, and retail and regional discounts.

Veterans Day Meals and Deals image and all written content copyright this site. All other images copyright their respective restaurant or brand.


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Golden Corral Military Appreciation Monday – Free Dinner for Veterans

It has become popular over the last few years for restaurants to offer free meals on Veterans Day. But Golden Corral has one of the longest running military appreciation events among national restaurants. This is the 14th consecutive year that Golden Corral has provided a free buffet meal and drink to current military members and veterans. This year, the 14th annual Golden Corral Military Appreciation Monday event is scheduled for November 17, 2014, from 4pm to 9pm.

Golden Corral Military Appreciation Monday

Veterans and active duty servicemembers can receive a free meal at Golden Corral!

Military Appreciation Monday is offered to anyone who has ever served in the US armed forces. In the past the only requirement to receive the free meal was to inform the restaurant you are a veteran. They usually go on the honor system, and no proof required. That being said – please don’t abuse the system. Claiming you are a veteran just for a free meal is an insult to those who have served our country.

Here is more information about proving your military service:

These forms of ID are usually acceptable for most restaurants or Veterans Day offers. Many other places will accept a membership card from the VFW, American Legion, Vietnam Veterans of American, Iraq and Afghanistan Veterans of America, or another service organization. A photo of your time in the service may also be sufficient proof of service, depending on the location.

Golden Corral Military Appreciation Monday Facts

Golden Corral has been a wonderful supporter of the military community – providing millions of free meals to veterans and servicemembers, and contributing millions of dollars to support veteran organizations. Here are a few amazing facts about Golden Corrals’ support:

  • Last year, Golden Coral provided over 433,500 free meals for veterans and active duty service members. Guests and restaurants combined to contribute over $1,409,000 for the Disabled American Veterans organization. These funds are used to assist disabled veterans.
  • In the 13 years this event has been running, Golden Corral has given veterans and active duty servicemembers over 4.0 million free dinners, and contributed over $8.7 million to the the Disabled American Veterans organization.

I would like to extend my thanks to the folks at Golden Corral for making this possible, and to all Americans who have served – thank you for your service!

For more details, visit Golden Corral’s website.

Visit our Mega-list of Restaurants offering free meals on Veterans Day. for other free meals and deals this Veterans Day!

2015 Military Retirement Pay COLA – 1.7% Increase

Military retirement pay is based on a percentage of your the base pay you received prior to retiring from active duty, or from the Guard or Reserves. One of the benefits that makes military retirement pay so valuable is the built-in annual Cost of Living Adjustment (COLA).

Military Retirement Pay COLA Increase

COLA is pegged to the Consumer Price Index (CPI), which is a formula calculated by the Bureau of Labor Statistics. In layman’s terms, it tracks inflation for the cost of certain consumer goods. The final measurement is used for many government calculations, such as the Cost of Living Adjustment for federal pension plans (including FERS, CSRS, and military pensions), as well as COLA increases for Social Security Benefits, VA Disability Compensation, and other government benefits programs. In short, COLA is there to help your military retirement pay maintain its purchasing power over time.

Related: Did you know that your military service may increase your Social Security Benefits?

2015 Annual Military Retirement Pay Increase

The Cost of Living Allowance for 2015 will be 1.7%. This is the same increase that will be applied to Social Security recipients, VA disability compensation rates, and many other recipients of government pensions and other benefits programs (verify the final numbers with the parent agency if you receive a different form of compensation).

This military retirement pay COLA increase will take effect in your January 2015 payment.

Note about the term COLA: The term “COLA” has different meanings, depending on the situation. In this example, we are using it as a Cost of Living Adjustment. The military also uses this term to refer to a COLA for “Cost of Living Allowance” which is an additional form of payment given to some servicemembers living in areas with a high cost of living, including overseas locations. These are different uses of the same term.

Who Receives This COLA Increase?

If you retired under the Final Pay or High-3 retirement plans, and you have been retired for longer than one year, you should receive the full COLA increase. If you retired in 2014 (or plan to retire in 2014), your COLA may be affected. COLA is applied on a sliding scale if you retired during the calendar year.

DFAS hasn’t updated the final numbers for the 2014 retirees, so what follows are the numbers that affected military members who retired in 2013 (2014 had a 1.5% COLA increase). The numbers should be fairly similar for 2014 retirees, with the highest increase being the full 1.7% and the other COLA adjustments slightly higher.

Recent military retirees receive COLA based on the quarter in which they retired. For example, those who retired between January 1, 2013 and September 30, 2013 received a full or partial COLA, as follows:

  • January through March retirees received the full 1.5% COLA for 2014.
  • April through June retirees received 0.9%.
  • July through September retirees received 0.4%.
  • October through December retirees received no COLA in 2014.

Again, the 2015 numbers should be slightly higher, based on the 1.7% COLA increase. I would expect them to be around 1.7%, 1.0%, 0.5%, and 0%, or somewhere in that range. We will update this article when DFAS makes the official announcement. (DFAS page).

The reduced payment is a one-time deal, and only affects retirees following the year in which they retired. Retirees will receive the full COLA increase in subsequent years of retirement.

REDUX COLA Adjustments Will Be Smaller

If you signed up for the $30,000 Career Status Bonus at your 15-year mark and agreed to retire under the REDUX retirement plan, you will receive a smaller Cost of Living Adjustment each year. This is the agreement you made in exchange for receiving the $30,000 cash bonus. REDUX retirement recipients receive a COLA that is pegged at CPI – 1%. So for the 2015 increase, they would only see a 0.7% increase for the year.

One-time catch-up adjustment for REDUX retirees. There is a one-time adjustment at age 62 that brings REDUX retirees’ pay up to the level it would have been without the decreased COLA. However, this is a one-time adjustment. After this increase, the annual COLA of CPI – 1% resumes.

REDUX retirees in 2014. There is also a partial COLA given to military members who retired under the REDUX plan in 2014. Again, the COLA is based on the quarter in which you retired. Here are the 2013 numbers from DFAS (like the above example, we should see something very similar, if not slightly higher, for 2015).

CSB recipients who retired between January 1, 2013 and June 30, 2013 received a partial COLA based on the quarter they retired.

  • January through March retirees received 0.5% (the full 1.5% – the 1% REDUX adjustment).
  • April through June retirees received 0.4%
  • June – December retirees received no COLA adjustment for 2014.

Like the above example, the reduced payment is a one-time deal, and only affects retirees following the year in which they retired. Retirees will receive the full COLA increase in subsequent years of retirement.

More Info on CPI and Threats to CPI-Based COLA

How is CPI Determined: The measurement the government uses is called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), but you will often hear it simply referred to as CPI. The CPI is determined by measuring the price increases for consumer goods, such as food and beverages, housing, clothing, transportation, medical care, recreation, education, communication, and more.

Threats to CPI and Military Retirement COLA. The government has recently examined several methods of decreasing the annual COLA pay increases for military retirees and other government benefits recipients. Two of the more stringent methods are explained below:

  • Chained CPI. Chained CPI is a measurement that reduces the overall CPI used today. The theory is that as the cost of some goods increase, people replace them with lower-cost goods. An example would be, as the price of steak increases, people eat less steak, and more chicken. And as the cost of gasoline increases, people will carpool, drive less frequently, or take public transportation. There are flaws in these assumptions, but that is the gist of it. Here is a full-length article on how Chained CPI can erode your purchasing power.
  • Congress decreased Military Retirement Pay – then restored it. In early 2014, Congress agreed to cut military retirement pay, or should I say, they agreed to decrease the annual Cost of Living Adjustment similar to the REDUX option. Retirees would receive an annual COLA of (CPI – 1%), up to the age of 62, at which point they would receive a one-time adjustment to bring their pay back to the level it would have been under the full COLA method we have now. Then full COLA increases at the CPI rate would resume. This was later voted back to the current method.

While these last two examples didn’t end of happening, it’s important to keep in mind that there are threats to your military retirement pay.