In January, the US Department of Housing and Urban Development reported that 49,993 veterans were sleeping on the street on any given night. About 840,000 vets end up without shelter at some point during the year, according to the National Coalition for Homeless Veterans, and that’s a problem.
While those numbers are in decline, down a third since 2010, vets still make up a disproportionate number of America’s homeless: they constitute roughly one-tenth of the general population, one fifth of all suicides and one quarter of all homeless. Why?
While homelessness has a lot of causes — including mental illness and drug abuse — one of the top three is simply poverty: running out of money, usually after a traumatic event. Translation: most vets are up in the air without a safety net. A survey of veterans from the Iraq and Afghanistan wars showed that half of them were unsure how to network, negotiate salary or translate their skills to civilian life. That’s a good way to get poor fast.
It should be said that poverty among former service members goes beyond the most extreme case, homelessness. For every former soldier who hits the streets, there are nearly two hovering near the poverty line (1.5 million in total), just one trauma or misstep away from losing their shelter.
The situation is all the more absurd because members of the armed forces, after just 20 years service, are eligible for decent pensions, and they benefit from special investment accounts called Thrift Savings Plans, or TSPs. They have more legal advantages to protect themselves against the trials of age than almost any other profession.
The TSP has a 0.029% expense ratio, meaning that for every $1,000 you invest in the TSP while you’re in the service, it takes 29 cents for operating expenses. 29 cents. That’s even lower than Vanguard, the industry fee leader. A typical 401k fee of $13 is almost 45 times the amount you pay with the TSP.
For a variety of reasons, including leaving the military before their 20 years are up, only 17 percent of veterans draw a full pension. Like the majority of Americans, young enlisted members and officers fail to max out contributions to their TSP and IRAs while they’re in the service. That may not seem like a big deal to people in their 20s. But for a population prone to the worst risks later in life, they would do better to give themselves a financial cushion and shore up what they can.
Luckily, not having enough money is relatively fixable, compared to mental illness and addiction. We don’t have the solution for homelessness, but there are a few tricks that would keep some vets a lot farther from the poverty line. One of those is personal finance training that’s specific to their situation. We’re offering that, and a whole lot more, for free.
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