Check Out MOAA’s New Blog

May 19 2016

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MOAA has a new blog!  You can access it here:

To find Financial Frontlines, visit the new blog and use the sortable categories to select “Military Benefits.”  You’ll be able to read all our new articles and comment there.


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Help MOAA Protect Veterans and Survivors

Apr 07 2016

MOAA will be Storming Capitol Hill April 13 to meet with legislators from every state to discuss two issues affecting your wallets that lawmakers can make an impact on this year.

  • The first issue deals with proposed TRICARE fee hikes and program changes in the FY 2017 defense budget that do little more than transfer costs onto beneficiaries without making plans to improve the military health care system. We need to make sure any reforms will improve the quality of care for military families.
  • The second issue addresses the $15,000 a year “widows tax” imposed on military survivors whose sponsor purchased coverage under the Survivor Benefit Plan and died from service-related causes. We think it’s wrong to place further burden on these survivors who already have paid the ultimate price. We need to repeal this unfair law or, at the very least, extend an offset due to expire next year that provides a partial remedy.

This year, we are asking our supporters to help us further multiply our message by doing two things:

Participation is easy. Just click on the “suggested message” link above to send a message to your legislators. And, if you have an account on Facebook or Twitter, visit MOAA’s Thunderclap page and click the “support with” buttons to share our message on your social media accounts.

By signing up, on April 13, the same day we meet with congressional leaders, Thunderclap automatically will post MOAA’s message on your and all of our supporters’ behalf at the same time, extending our reach virtually and amplifying our message to Congress.

We appreciate your support, and thank you for making a difference for military families!

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Reverse Mortgage Information

Apr 04 2016

As financial educators and counselors at MOAA, we are not specialists in every financial topic. Mortgages are not an area of expertise at MOAA. So today I will refer you to the Consumer Financial Protection Bureau (CFPB) for information on Reverse Mortgages. This topic comes up from time to time among our members.

As in any financial program, it has it’s good and bad points. As Warren Buffett is fond of saying about financial risk, risk is what happens when you don’t know what you are doing. I have always considered a Reverse Mortgage an option of last resort. I consider it a last resort because the program is a loan based on the equity of your home. It is complicated, can be costly, full of fine print, and in the worst case scenario, you could lose your home; not likely but possible.

If you are thinking about a Reverse Mortgage, minimize your risk by learning as much as you can about the product before you talk to a mortgage specialist. Go loaded for bear as a consumer.

CFPB Site for Reverse Mortgages

CFPB Reverse Mortgage Fact Sheet


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The New Service Retirement Program

Mar 30 2016

The new Service retirement program applies to everyone entering the Services in CY2018.

Those who entered the Service in CY2005 or earlier stay in the current retirement program—no options.

Members entering the Service between CY2006 through 2017 will be given the option to stay under the current system or opt-into the new program.

The current program.

You have the Thrift Saving Program (TSP) and you have the pension.

The TSP is like a 401k but without a “match.” A match is the employer’s contribution on top of your contribution.

The pension provides lifetime income with a cost of living adjustment (COLA). Eligibility for a pension starts after 20 years of active duty service or at age 60 with 20 creditable years of service for Reserve and Guard members.

The formula to determine the pension amount is:

  • (2.5% X years of service) X average high-three-years of base pay

The new retirement program.

Maintains a pension and the TSP adds a match. “Nice!” Hold on…

Everyone automatically gets the DOD TSP contribution of 1% of base pay starting upon entry to the Service (or when you opt-in) whether the member contributes or not.

After 2-years of service (or when you opt-in), members are eligible for a voluntary match up to 4% of base pay. The 1% automatic DOD contribution plus the 4% voluntary match totals 5%—you contribute 5%, DOD contributes 5%. The match stops at the 26th year of service.

After 2-years of service (or when you opt-in), the member owns the match money.

At 12 years of service, members will qualify for a retention bonus which requires a 4-year Service commitment. Amount will vary.

The pension amount is reduced 20%. Rather than 2.5% times years of service, now it will be 2% times years of service.

  • (2% X years of service) X average high-three-years of base pay

On the surface, this might not seem like a big deal. However when you consider starting out 20% less over a lifetime with COLA increases, the lifetime earnings under the new program will be significantly less than the current program.

There will be an option for a lump sum discounted pension payment upon retirement. Don’t take it. You’ll be trading dollars for pennies–lifelong financial stability and significant earnings for immediate gratification.

Those with the option should stick with the current program. Unless you are absolutely 100% certain you are getting out of the Service, you should assume you will serve until retirement.

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Changes to the Survivor Benefit Program (SBP)

Feb 18 2016

Couple of recent legislative changes were passed regarding SBP.

Beneficiary change from “Former Spouse” to current “Spouse”

If you were required to designate a former spouse as your SBP beneficiary due to a divorce court order, this may apply to you.

Previously, if a former spouse was designated as the beneficiary of the Service retiree’s SBP because of a divorce court order and the former spouse died, the SBP “died” with the former spouse. The SBP coverage was cancelled and the Service retiree permanently lost the SBP for future use.

Now if the former spouse dies as the beneficiary of the retiree’s SBP, the retiree can re-designate a current or future spouse as the SBP beneficiary.

Talk to your pay agency that administers SBP for details.

SBP can now pay a Special Needs Trust (SNT)

Previously, the SBP survivor annuity could only pay a person. This caused problems for retirees who had an incapacitated child as their SBP beneficiary.

You see, the SBP survivor income would count as income against financial need requirements that determine eligibility for state and federal assistance. SBP income would disqualify the beneficiary for critical state and federal assistance while at the same time the SBP income wouldn’t be enough to properly care for the child without the assistance.

Now, the SBP can pay a SNT established for an incapacitated child instead of a person. The new law only allows a SNT for an incapacitated child; no other beneficiaries like spouses.

The SNT negates SBP income from counting in the financial need requirements for state and federal assistance. The catch is that the SNT document must stipulate that residual assets in the SNT upon the beneficiary’s death are used to reimburse the governments involved for their extra costs incurred while the child was alive and receiving assistance.

Talk to your pay agency that administers SBP for details.

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