Financial Readiness Course
A guided classroom course for understanding benefits, retirement income, healthcare, and legacy decisions.
Start here, then move one module at a time
This page now separates assessments from lesson navigation so students do not have to decide between every course option at once.
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2
During class
Work through each module in order. The lesson remembers your last slide on this computer.
Begin Module 1 - 3
Course Modules
Know What You Have
Understand your military retirement pay, TSP options, and Social Security — and how they work together.
Maximizing Disability Benefits
Are you getting everything you've earned? Filing claims, understanding CRSC vs CRDP, and avoiding scams.
Healthcare & Long-Term Care
Managing VA healthcare, Medicare, TRICARE for Life, and planning for Aid & Attendance.
Managing Your Retirement Income
Income stacking, benefit system interactions, tax-efficient withdrawals, RMDs, state tax impact, and fixed-income debt decisions.
Legacy & Estate Planning
The Survivor Benefit Plan (SBP), estate documents, beneficiary designations, burial benefits, and protecting against exploitation.
Know What You Have
Understanding your pension, retirement savings, Social Security, and VA disability — and how they stack in retirement
Learning Objectives
- Understand your pension — military retired pay, civilian pension, or neither
- Know where your retirement savings live — TSP, 401(k), 403(b), or IRA — and your withdrawal options
- Learn when and how to optimize Social Security benefits
- Identify key resources for pay and benefits questions
How Your Pension Works
A pension is a monthly check for life, paid by a former employer. Some of you earned one from 20+ years of military service. Others earned one from a civilian career. A third group served under 20 years and has no pension — for you, Stream 2 (savings) and Stream 3 (Social Security) are the whole picture.
Military Retired Pay (High-3)
Average of highest 36 months of basic pay × 2.5% × years of service.
Example: 20 years at $7,000 High-3 = $3,500/month
Adjusted every January for inflation (COLA).
Civilian Pension (Defined Benefit)
Formula varies by employer — typically: final average salary × a multiplier (often 1.0–2.0%) × years of service.
Key differences from military: often no COLA (fixed amount for life), survivor election chosen once at retirement, eligibility age varies by plan.
Reading Your Pension Statement
Whether your pension comes from DFAS or a civilian plan administrator, every statement has a few lines worth knowing. Most veterans glance at the bottom line and file it away — here's what to actually look for:
Military Retirees — DFAS RAS
- Gross Pay — Base retired pay before deductions
- VA Waiver — Dollar-for-dollar reduction if you receive VA disability
- SBP Premium — Survivor Benefit Plan deduction
- CRDP/CRSC — Restored pay (Module 2)
- Federal Tax Withholding — Check W-4 elections
- Net Pay — What hits your bank account
Civilian Pensioners — Plan Statement
- Gross Benefit — Your elected monthly amount
- Survivor Election Reduction — Lower payment if you chose joint-and-survivor
- Federal & State Tax Withholding — Verify elections
- Medical Premium Deductions — If retiree healthcare is pulled from your check
- Net Deposit — What hits your bank account
VA Disability Compensation
VA disability compensation is a tax-free monthly payment based on your service-connected disability rating. It's available to every eligible veteran — military retirement is not required. If you served and have a service-connected condition, you may qualify.
How it interacts with your pension
Civilian pension or no pension: VA disability is fully additive — a separate tax-free stream on top of whatever else you have.
Military retired pay + VA disability: Your retired pay is reduced dollar-for-dollar by your VA amount (the "VA Waiver"). Programs like CRDP and CRSC can restore some or all of that reduction — covered in Module 2.
Your Retirement Savings Account
Whatever the label — TSP (federal / military), 401(k) (most private employers), 403(b) (schools, hospitals, non-profits), or IRA (individual) — these are all defined-contribution accounts. Same tax rules, same withdrawal rules, same RMDs. The differences are mostly about who administers them.
Traditional (pre-tax)
Contributions went in pre-tax, reducing your taxable income in your working years. Withdrawals in retirement are taxed as ordinary income.
Applies to: Traditional TSP, Traditional 401(k)/403(b), Traditional IRA.
Roth (after-tax)
Contributions went in after-tax. Qualified withdrawals — including all growth — come out tax-free in retirement.
Applies to: Roth TSP, Roth 401(k)/403(b), Roth IRA.
Knowing Your Plan
Every plan — TSP, 401(k), 403(b), IRA — works on the same three questions: what are you invested in, what does it cost, and does it still match your risk tolerance? Whether you're drawing down or still growing the balance, you should be able to answer all three.
If your account is TSP
Five core funds — plus L Funds (Lifecycle) that blend them by target date.
Lowest risk
Low-moderate
Moderate
Higher
Higher
If your account is 401(k) / 403(b) / IRA
Your plan has a menu of mutual funds or ETFs — often dozens of choices. Three things to know:
- Current allocation: what percent is in stocks vs. bonds vs. cash?
- Expense ratio: fees eat returns — below 0.50% is good, below 0.10% is great
- Target-date fund: most plans offer one (e.g., "Target Retirement 2025") that adjusts automatically — a simple default
Withdrawals & Required Minimum Distributions
Traditional balances in TSP, 401(k), 403(b), and IRA accounts trigger RMDs at age 73 (or 75 if born after 1959). The withdrawal options differ slightly by plan type:
TSP Options
- Monthly Payments: Fixed dollar amount or life-expectancy-based
- Single Withdrawal: One-time partial (min $1,000)
- Full Withdrawal: Lump sum, annuity, or roll to IRA
- Leave It: Continues growing tax-deferred until RMD age
401(k) / 403(b) / IRA Options
- Scheduled Distributions: Monthly or annual, set by you
- Ad-Hoc Withdrawals: Most plans allow any amount, any time
- Roll to IRA: Common move at retirement — more flexibility, broader investment menu
- Leave It: Usually fine, but check plan rules on forced-out small balances
Your Retirement Accounts
Take a minute and list every retirement account you have — TSP, 401(k)s from old employers, 403(b)s, IRAs. Are you drawing from any of them? Still letting them grow? Have you consolidated through rollovers?
- Do you know what each account is invested in today?
- Have you thought about how withdrawal order affects your taxes?
- If you have accounts at multiple former employers, would consolidating into one IRA simplify your life?
Social Security for Veterans
Your military service counts toward Social Security. If you served after 1956, you paid into Social Security through payroll taxes — and you may have received special wage credits that boost your benefit.
When to Claim
- 62: Earliest age — permanently reduced benefit (~30% less)
- 67: Full retirement age (FRA) for those born 1960 or later. Born 1955–1959? Your FRA is between 66 yrs 2 mo and 66 yrs 10 mo — check ssa.gov for your exact date
- 70: Maximum benefit — 24% more than FRA amount
Key Facts for Veterans
- Military service counts toward your 35-year earnings record
- VA disability pay does NOT reduce your Social Security
- Military retirement pay and SS are both taxable (but at different rates)
Spousal & Survivor Benefits
Social Security isn't just about you — your claiming decision directly affects your spouse, both now and after you're gone.
- Spousal Benefit: Your spouse can receive up to 50% of your FRA benefit amount, even if they never worked
- Survivor Benefit: When you pass away, your surviving spouse can receive up to 100% of your benefit
- Timing Matters: If you claim early at 62, you permanently reduce both YOUR benefit and your spouse's future survivor benefit
- Divorced Spouse: An ex-spouse may qualify for benefits on your record if the marriage lasted 10+ years
Social Security: The Dollar Math
The decision of when to claim is worth $200,000–$500,000 over a couple's lifetime. Here's why delaying matters:
Permanently reduced ~30%
Full Retirement Age
Maximum — 24% above FRA
Why This Matters for Veterans
- If you have a pension: Military retired pay, civilian pension, or VA disability can cover your baseline — that means you don't NEED Social Security at 62, and letting it grow is essentially free money
- If you don't: Claiming timing matters even more — every year you delay past 62 is a permanent raise you can't get any other way
- Survivor protection: Your surviving spouse inherits your benefit amount. Claiming at 70 protects them for decades
- Break-even age ~82: If you live past 82, you come out ahead by waiting. Average 65-year-old male lives to 84
- VA disability doesn't count: Your VA pay is not counted as income for Social Security taxation thresholds
Your Social Security Plan
Have you already started receiving Social Security, or are you still deciding when to claim? What factors are influencing your decision?
- Have you created an account at ssa.gov to see your projected benefit?
- How does your spouse's work history and age factor into your timing?
- Did you know that delaying past your full retirement age increases your benefit by 8% per year?
Key Takeaways
- Pull your most recent pension statement — myPay (DFAS) for military retirees, plan administrator portal for civilian pensioners
- Review the allocation in every retirement account you have — TSP, 401(k), IRA — does it still match your risk tolerance?
- RMDs start at 73 (or 75) for traditional balances — missed amounts can trigger a 25% excise tax, or 10% if timely corrected
- Create an account at ssa.gov to see your projected Social Security benefit at 62, 67, and 70
- Delaying Social Security can significantly increase your spouse's survivor benefit
- VA disability pay is tax-free, available to every eligible veteran, and doesn't reduce Social Security
- Delaying Social Security from 62 to 70 can mean $200K-$500K more over a couple's lifetime
- If you have a pension (military or civilian), you may not need SS early — let it grow
Module 1 Complete!
You now have a clearer picture of your retirement income sources and how they work together.
Module Handouts
Maximizing Your Disability Benefits
Are you getting everything you've earned? Many veterans are underrated or missing benefits.
Learning Objectives
- Know how to file a new VA claim or request a rating increase
- Understand secondary service-connected conditions
- Compare CRDP and CRSC to maximize your compensation
- Recognize common scams that target veteran benefits
Filing New Claims & Rating Increases
It's never too late to file a VA disability claim. If you have a condition that started during service — or got worse because of service — you may be entitled to compensation. And if your existing conditions have worsened, you can request an increase.
New Claims
- File at va.gov or through your local VSO (free help)
- You need: medical evidence + a nexus to military service
- No time limit — you can file decades after separation
Rating Increases
- Conditions worsen with age — your rating should reflect that
- File a "Claim for Increase" with current medical evidence
- Common increases: hearing loss, joint conditions, PTSD
Secondary Service-Connected Conditions
A secondary condition is a new health problem caused or aggravated by a condition you're already service-connected for. These are commonly missed — and can significantly increase your overall rating.
Common Secondary Connections
- Back injury → knee or hip problems (compensating gait)
- PTSD → sleep apnea, hypertension, or depression
- Diabetes (Agent Orange) → peripheral neuropathy, kidney disease
- Tinnitus → migraines, anxiety, or sleep disturbance
Your VA Rating
Do you currently have a VA disability rating? Do you think it still accurately reflects your current health? Have any of your conditions gotten worse since your last evaluation?
- Have you ever considered filing for a rating increase?
- Are there health conditions you have now that might be connected to your service?
- Has anyone here worked with a VSO to file a claim?
The VA Waiver (Offset)
If you receive both military retired pay and VA disability compensation, your retired pay is reduced by your VA amount. This is the VA Waiver — and it affects most disabled military retirees.
Two federal programs exist to restore some or all of this waived pay:
- CRDP — Concurrent Retirement and Disability Pay
- CRSC — Combat-Related Special Compensation
You cannot receive both. You must elect one annually.
CRDP vs. CRSC: Side by Side
CRDP
- 50% minimum VA rating
- Automatic enrollment (no form required)
- Taxable as retired pay
- Any service-connected disability
CRSC
- 10% minimum VA rating
- Requires DD Form 2860 application to your branch of service
- Non-taxable — can mean thousands more per year
- Combat-related only (armed conflict, hazardous duty, instrumentalities of war)
Annual Election & DFAS Lags
Annual Election
Retirees who qualify for both can switch once per year. Run the numbers both ways since rating changes may shift which program pays more.
DFAS Reporting Lags
When the VA changes your disability rating retroactively, there is often a significant time lag before DFAS adjusts your retired pay. This can trigger unexpected debts or back payments.
Which Path Applies to You?
Based on what we've covered, do you think you're currently receiving the right compensation — CRDP or CRSC? Has anyone here had to deal with the annual DFAS election process?
- Do you know your current VA disability rating percentage?
- Have you checked whether your conditions qualify as combat-related for CRSC?
- Has anyone experienced the DFAS processing delays we discussed?
VA Pension & the 36-Month Lookback
The VA pension is a needs-based benefit for wartime veterans with limited income and assets. It's separate from disability compensation — and one of the most underutilized benefits in the VA system.
- Wartime service required: 90+ days active duty, at least 1 day during a wartime period
- Age 65+ or permanently disabled
- 2026 net worth limit: $163,699 (includes most assets except home and vehicle)
- Enhanced by Aid & Attendance (covered in Module 3)
Veteran Benefit Scams: A $584 Million Crisis
Military-connected consumers lost $584 million to fraud in 2024 — veterans and retirees accounted for $419 million of that. Twenty-seven percent of veterans have lost money to a scam at some point. You are specifically targeted because of your guaranteed income.
Top Threats for This Room
- Claim Sharks: Charge $3,000-$10,000+ to file VA claims. This is illegal — VSOs do it free
- Pension Poaching: "Advisors" restructure your assets into annuities to qualify you for VA pension, then pocket fees while you risk repayment
- VA Impersonation: Phone/email scams claiming you owe money or must "verify" your account. The VA will never call demanding payment
- Predatory Financial Products: High-fee annuities, whole life insurance, and crypto sold to veterans receiving lump-sum back-pay
Protect Yourself
- Never pay for VA claims assistance — use accredited VSOs (DAV, VFW, American Legion)
- Verify anyone offering benefit help at va.gov/vso
- Report scams to the VA OIG: 1-800-488-8244 or FTC: reportfraud.ftc.gov
Key Takeaways
- It's never too late to file a VA disability claim or request an increase
- Secondary conditions are commonly missed — they could raise your rating
- Check if CRDP or CRSC applies to restore your waived retired pay
- VA pension is needs-based with a 3-year asset look-back — don't fall for restructuring scams
- Military-connected consumers lost $584M to fraud in 2024 ($419M from veterans/retirees) — never pay for claims assistance
Module 2 Complete!
You now know how to check if you're maximizing your disability benefits and how to protect yourself from scams.
Module Handout
Healthcare & Long-Term Care
Managing VA healthcare, Medicare, TRICARE, CHAMPVA, and long-term care planning
Learning Objectives
- Use VA priority groups to explain costs, access, and why enrollment still matters
- Build a Medicare-at-65 checklist for veterans, military retirees, and CHAMPVA families
- Compare prescription strategies across VA, TRICARE, CHAMPVA, and Part D
- Recognize long-term care levels, Aid & Attendance eligibility, and Medicaid planning traps
VA Healthcare Priority Groups
VA healthcare is not one single benefit level. After enrollment, VA assigns veterans to priority groups 1 through 8 based on disability rating, income, pension status, Medicaid eligibility, combat or toxic exposure history, and special eligibility factors.
Highest Priority Examples
- Group 1: 50% or higher service-connected rating, individual unemployability, or Medal of Honor
- Group 2: 30% or 40% service-connected rating
- Group 3: former POW, Purple Heart, 10% or 20% service-connected rating, or related special status
Planning Point
- Priority group can affect copays and access to added services
- VA can assign a higher group if the veteran qualifies under more than one rule
- Ratings, income changes, Medicaid eligibility, or pension status can change the group
Access Outside the VA System
VA healthcare is strongest inside VA, but some outside care may be covered when VA authorizes it or when urgent and emergency care rules are met.
Common Outside-VA Pathways
- VA-approved community care referrals
- Urgent care through VA's contracted network if eligibility rules are met
- Emergency care under specific VA notification and eligibility rules
Veteran Mistake to Avoid
Assuming every civilian bill will be paid because "I have VA." For non-VA care, veterans should check authorization, network status, and reporting requirements before the bill arrives.
CHAMPVA: Coverage for Dependents
The Civilian Health and Medical Program of the Department of Veterans Affairs covers dependents of veterans who are:
Who Qualifies
- Spouse or child of a permanently and totally disabled veteran
- Surviving spouse/child of a veteran who died from service-connected disability
- Surviving spouse/child of a veteran who was permanently disabled at death
Key Details
- CHAMPVA covers 75% of allowable charges
- Annual deductible: $50/person, $100/family
- Annual cap: $3,000 out-of-pocket
- If eligible for Medicare, the dependent must generally have Parts A and B to keep CHAMPVA
VA Long-Term Supports Before Nursing Home Care
Long-term care is not just a nursing home decision. VA offers services that may help veterans stay at home or support family caregivers when clinical need and local availability line up.
Home & Community Services
- Homemaker and home health aide services
- Adult day health care
- Respite care for family caregivers
- Skilled home health, palliative care, hospice, and home telehealth
Residential & Nursing Options
- VA Community Living Centers
- Community nursing homes under VA contract
- State Veterans Homes
- Assisted living room and board is often not paid by VA
Medicare at Age 65
Veterans are strongly encouraged to review Medicare Parts A and B before age 65 because Medicare opens civilian provider access nationwide. VA care, Medicare, and TRICARE do different jobs.
For military retirees, enrolling in Medicare Parts A and B is mandatory to keep TRICARE for Life.
Medicare Enrollment Windows
The Initial Enrollment Period is a 7-month window: 3 months before the 65th birthday month, the birthday month, and 3 months after.
- Sign up before the birthday month when possible so coverage starts on time
- If you miss the first window, the General Enrollment Period runs January 1 through March 31
- Current Medicare rules generally start GEP coverage the month after sign-up
- Employer group coverage can create a Special Enrollment Period, but VA healthcare by itself is not employer coverage
Medicare Part B & Part D: Costly Pitfalls
Medicare enrollment has strict deadlines. Missing them can cost you permanently — and the penalties never go away.
Late Enrollment Penalties
- Part B: 10% surcharge for every 12 months you delay past your initial enrollment window — for life
- Part D: 1% of the national base premium per month of delay — for life
- These penalties compound — someone 3 years late on Part B pays 30% more forever
Part D Drug Coverage
- Part D penalty starts after 63+ days without Medicare drug coverage or other creditable drug coverage
- TRICARE, VA drug coverage, and CHAMPVA can be creditable prescription coverage
- Keep proof of creditable coverage in case a Medicare drug plan asks later
Missed the Window?
- General Enrollment Period (GEP): January 1 – March 31 each year for those who missed their initial window
- Coverage doesn't start until July 1 of that year — and late penalties still apply
2026 Medicare Costs & IRMAA
The standard Medicare Part B premium is $202.90 per month in 2026, before any income-related surcharge.
Base Costs to Remember
- Part A is $0 for most people with enough Medicare-taxed work history
- Part B premium: $202.90/month in 2026
- Part B deductible: $283 in 2026
IRMAA Surcharges
- Higher-income retirees pay more for Parts B and D
- Based on modified adjusted gross income from 2 years prior
- TSP withdrawals, Roth conversions, pensions, and Social Security can push income up
TRICARE for Life
TRICARE for Life is Medicare-wraparound coverage for eligible military retirees and family members who have Medicare Parts A and B.
- Medicare pays first as the primary insurer
- TRICARE pays second for covered services
- No separate TFL enrollment form or enrollment fee once Medicare A and B and DEERS are current
- Dropping or failing to pay Part B can break TRICARE coverage
Prescription Strategy
Drug coverage decisions are where veterans get confused because VA, TRICARE, CHAMPVA, and Part D all use different rules.
Usually Enough
- TRICARE pharmacy benefit is creditable coverage for TFL retirees
- VA prescription coverage may be creditable for Part D penalty purposes
- CHAMPVA beneficiaries can use Meds by Mail when eligible
Reasons to Consider Part D
- You need non-VA local pharmacy flexibility
- You qualify for Extra Help with drug costs
- Your medication is not convenient through VA, TRICARE, or CHAMPVA channels
Medicare Advantage: Slow Down Before Switching
Medicare Advantage plans can be useful for some retirees, but veterans should compare networks, referrals, drug rules, and how the plan coordinates with TRICARE, CHAMPVA, and VA care.
- Medicare Advantage still requires keeping Part B
- Network restrictions may matter more when traveling or living rurally
- TFL users should understand whether a plan changes provider choice or billing workflow
- CHAMPVA beneficiaries eligible for Medicare must generally keep Parts A and B; Medicare Advantage can meet that requirement
Coverage Comparison: VA vs. Medicare vs. TRICARE
- VA Healthcare: Best inside VA, with some authorized community, urgent, and emergency care. Copays vary by priority group.
- Medicare: Covers any Medicare-accepting provider nationwide. Part B premium $202.90/month (2026). No VA facility requirement.
- TRICARE for Life: Wraps around Medicare after age 65. Medicare pays first, TRICARE pays second. Requires Medicare Parts A and B.
- CHAMPVA: Dependent and survivor coverage for eligible families; secondary to Medicare and most other insurance.
Prescription Drug Coverage Note
VA drug coverage requires VA authorization and is usually filled through VA channels. Medicare Part D may add pharmacy flexibility, but veterans with TRICARE, VA drug coverage, or CHAMPVA should confirm whether they already have creditable drug coverage before buying a plan.
Healthcare Scenario: Three Veterans Turn 65
Break into pairs. Decide what each person should do before age 65: a 30% disabled veteran using VA only, a military retiree with TRICARE, and a spouse using CHAMPVA.
- Who must have Medicare Part B to keep another benefit?
- Who may already have creditable drug coverage?
- Who should call VA, TRICARE, CHAMPVA, Medicare, or SHIP before changing plans?
The Long-Term Care Ladder
Teach long-term care as a ladder. The earlier rungs are usually cheaper, more flexible, and less disruptive than jumping straight to a nursing home.
- Home help: family care, homemaker/home health aide, respite, adult day health
- Assisted living or residential care: help with daily activities, usually paid privately unless other benefits apply
- Skilled nursing: 24/7 medical care, higher cost, more rules, Medicaid often becomes part of the conversation
- End-of-life support: palliative care and hospice for comfort and symptom control
Who Pays for Long-Term Care?
The hard truth: Medicare is not a long-term custodial care plan. It is mainly medical insurance, not a funding source for years of help with bathing, dressing, meals, or supervision.
Possible Funding Sources
- Personal income and savings
- VA home and community services when eligible and available
- VA Pension with Aid & Attendance
- Long-term care insurance, if already owned
- Medicaid after financial and medical eligibility rules are met
Planning Trap
Families often wait until a fall, stroke, dementia diagnosis, or hospital discharge. At that point, choices narrow and costs rise.
VA Aid & Attendance Overview
Aid & Attendance is an increased monthly amount added to VA Pension or Survivors Pension for qualified veterans and survivors who need regular help or are housebound.
- This is not VA disability compensation
- It is tied to pension eligibility, countable income, net worth, and medical need
- It may help pay for in-home help, assisted living, or other care needs
- It can also matter for surviving spouses
2026 Aid & Attendance Rates
(both qualify for A&A)
These are rounded monthly maximums based on 2026 MAPR tables. The actual payment is reduced by countable income after allowable deductions.
Net worth limit: $163,699 from December 1, 2025, through November 30, 2026, with a 3-year look-back period on certain asset transfers.
Eligibility & Daily Help
Baseline Pension Rules
- 90 days active duty, 1+ day wartime
- Non-dishonorable discharge
- Age 65+ or permanently disabled
- Meets income and net worth limits
A&A Medical Need
- Needs another person for daily activities like bathing, feeding, or dressing
- Bedridden due to illness
- Nursing home patient due to mental or physical disability
- Severe visual limitation under VA rules
Application Evidence
Students do not need to memorize every form, but they should know what evidence starts the conversation.
- VA Form 21-2680: Examination for Housebound Status or Permanent Need for Regular Aid and Attendance
- VA Form 21-0779: nursing home information when the claimant is in a qualifying facility
- Medical evidence from a doctor or care provider
- Proof of service, marital status, dependent status, income, assets, and unreimbursed medical expenses
Medicaid Interaction
Aid & Attendance can help with home care or assisted living, but Medicaid-funded nursing home care changes the math.
- If Medicaid pays for nursing home care, VA pension can be reduced to about $90/month
- Medicaid has its own financial eligibility rules and look-back period
- Giving assets away without advice can trigger VA or Medicaid penalties
Care Plan Activity
Scenario: A 72-year-old wartime veteran has a spouse, $90,000 in savings, Social Security, a small pension, and increasing dementia symptoms. The family wants him home as long as possible. What questions should they ask first?
- What VA home and community services might help before assisted living?
- Could Aid & Attendance apply, and what evidence would be needed?
- When should the family talk to an elder law attorney?
- What should the spouse know if the veteran dies first?
Key Takeaways
- Enroll in Medicare A & B at 65 to keep TRICARE for Life
- VA healthcare, Medicare, TRICARE, and CHAMPVA each solve different access problems
- TRICARE, VA drug coverage, and CHAMPVA can affect whether Part D is necessary
- Long-term care planning starts with home supports, not just nursing homes
- Aid & Attendance is pension-based, income-tested, asset-tested, and evidence-driven
- Medicaid-funded nursing home care can reduce VA pension to about $90/month
Module 3 Complete!
You now have a practical healthcare checklist for age 65 and a long-term care planning framework for veterans and surviving spouses.
Module Handout
The April Surprise
One veteran. One $40,000 withdrawal. Three things he didn’t see coming.
Meet Master Sergeant Davis
Retired Army E-8. Age 67. Lives on a military pension, VA disability at 70%, and Social Security. His monthly income covers his bills with a little left over.
Last December, his roof failed. He pulled $40,000 from his traditional TSP to pay for the repair. In April, he opened his tax return and found three surprises — none of them good.
By the end of this module, you’ll know exactly what hit him — and how to keep it from hitting you.
Your retirement paycheck isn’t one check — it’s a stack.
Davis doesn’t have an income. He has three, and each one follows different rules. Here’s his monthly stack:
Try the Retirement Income Stack
Move the sliders to see how monthly cash flow can be split between tax-free and taxable portions. The goal is not a perfect tax estimate — it is to see which layers create tax pressure.
Build Your Own Stack
On a piece of paper, sketch your stack the way Davis’s is drawn on the previous slide. List every monthly income source you’ll have in retirement — pension, VA, Social Security, TSP draws, part-time work — and color it red, gold, or green based on how it’s taxed.
- What’s your monthly total? Does it cover your fixed expenses?
- How much of your stack is COLA-protected vs. flat-dollar (private pension, annuity, savings)?
- If you had to pull a one-time $40,000 like Davis did, where would it come from?
Money flows in from four sources. Six different agencies are watching.
Here’s the part most veterans miss: the people who send you money are not the same people who measure what you’ve been sent. Davis’s December TSP withdrawal sent zero new dollars from DFAS — but four different agencies still cared.
Who pays you
- DFASMilitary retired pay, CRDP, CRSC
- VADisability compensation, pension, A&A
- SSASocial Security retirement & survivor benefits
- TSP / IRA custodianWithdrawals you choose to take
Who measures you
- IRSAGI, taxable share of Social Security, RMD penalties
- Medicare / SSAIRMAA premiums — based on tax returns from two years ago
- Your state tax boardState-by-state rules on pensions and SS
- LendersDebt-to-income on loan applications
One withdrawal. Four tax events.
This is what hit Davis in April. Each card is one consequence of the same $40,000 TSP withdrawal — falling like dominoes from his December decision.
-
The Withdrawal
Davis pulls $40,000 from traditional TSP for a roof repair.
$40,000 -
AGI Jumps
His AGI rockets from about $55k to about $101k in one year.
+$46k AGI -
Social Security Hit
Taxable share of his SS jumps from 50% to 85%, adding more taxable income on top.
50% → 85% -
Federal Tax Bill
Davis owes about $9,000 more in federal tax than the year before. He came within $5k of triggering an IRMAA Medicare premium hike in 2028.
+$9,000
Control the Calendar Before December 31
Imagine Davis came to you in October — before the withdrawal — instead of April. With two months left in the tax year, what choices could have softened the dominoes? Work this out at your table.
- Could he split the $40k across two tax years instead of one?
- Did he have a Roth IRA he could pull from tax-free instead?
- Could he have used a 0% promotional credit card or a HELOC for short-term financing?
- Which decisions have to happen before December 31, and which can wait until January?
Where you live changes the math.
Davis’s federal tax hit was the same in every state. But his state tax bill on the same $40,000 withdrawal looks completely different depending on where he wakes up. Here’s the comparison:
| State | Military Pension | Social Security | $40k TSP withdrawal |
|---|---|---|---|
| Florida | No state tax | No state tax | No state tax |
| West Virginia | Fully exempt | Fully exempt (2026) | Taxable at state rate |
| D.C. | Fully taxable | Exempt | Fully taxable |
The federal rule never changes. The state rule changes everything. A withdrawal that costs Davis nothing extra in Florida could cost him $2,000+ across the border in D.C.
MSG Rivera Wants to Move for the Tax Savings
Different veteran, same problem. MSG Rivera has a $3,200/month military pension and is comparing North Carolina, Texas, Florida, and West Virginia. He’s ready to move tomorrow for “the tax savings.” What’s he forgetting?
- Is his pension already exempt where he lives now?
- What about property taxes, homeowner’s insurance, sales tax, and cost of living?
- What does he lose — family proximity, VA facility access, his current doctors?
Two forces drain your stack — both quietly.
Tax surprises are loud. The two biggest threats to Davis’s retirement income are silent. They show up only when you compare year to year.
Debt
97% of adults age 66–71 carry non-mortgage debt (2024)On a fixed income, every credit card interest payment is dollars that won’t buy groceries. And there’s no second career to dig out.
Pay off high-interest debt before retirement — not after.
Inflation
$554 what $1,000 today buys in 20 years (at 3% inflation)Every income source either keeps up with inflation or it doesn’t. Davis’s pension, VA, and SS all have COLA. A private pension or fixed annuity does not.
COLA-protected income is worth more than it looks.
At 73, the IRS makes you withdraw — whether you need the money or not.
Required Minimum Distributions are the government’s way of saying, “You deferred taxes for decades. Time to pay.” They apply to traditional TSP, traditional IRAs, and 401(k)s — but not to Roth accounts.
Davis turns 73 in 2032. His first RMD will be roughly his TSP balance divided by an IRS life-expectancy factor — about $11,000–$13,000 per year on his current balance, taxable as ordinary income, with all the same domino effects you just saw.
Module 4 Complete
You walked Davis’s story from the December withdrawal to the April surprise — and you have the system to keep it from happening to you.
The System in Three Moves
- Stack your income. Know which layers are taxable, which are tax-free, and which are COLA-protected.
- Watch the dominoes. Every traditional withdrawal moves AGI, Social Security taxation, IRMAA, and state taxes — in that order.
- Time the calendar. Decisions made before December 31 are planning. Decisions made in April are damage control.
Legacy & Estate Planning
Make sure your family is taken care of and your wishes are clear
Learning Objectives
- Understand your Survivor Benefit Plan (SBP) coverage — or your options if you declined it
- Know how Dependency and Indemnity Compensation (DIC) interacts with the Survivor Benefit Plan after the 2023 offset elimination
- Ensure your estate documents and beneficiary designations are current
- Prepare end-of-life care, legal authority, family instructions, and first-week survivor steps
- Protect your estate from fraud and exploitation
Understanding Your Survivor Benefit Plan
If you elected the Survivor Benefit Plan (SBP) at retirement, your surviving spouse receives 55% of your selected base amount as a guaranteed, inflation-indexed monthly payment for life. If you declined, there may still be options.
SBP Pros
- Lifetime guarantee — beneficiary cannot outlive the benefit
- Inflation-indexed via annual COLA
- DoD-subsidized — often cheaper than equivalent commercial annuities
- No medical exam required
- Premiums deducted pre-tax, lowering current income tax
SBP Cons
- Very limited change windows — retirement election is difficult to change later
- No access to principal — it's insurance, not an investment
- If beneficiary dies first, no refund of premiums paid
- Benefits are taxable to the surviving spouse
- Coverage is suspended if beneficiary remarries before age 55 (reinstated if that marriage ends)
Premiums & Paid-Up Status
- Premium: 6.5% of selected base amount, deducted from pre-tax retired pay
- Paid-Up: Premiums stop after 360 months (30 years) of payments and reaching age 70 — both conditions required
- COLA: Payout increases annually with Cost of Living Adjustment
- No medical exam required for enrollment
What If You Declined the Survivor Benefit Plan?
If you didn't elect the Survivor Benefit Plan at retirement, you're not automatically out of luck. Congress has periodically opened enrollment windows, and there are alternative strategies to consider.
Options to Explore
- Congressional Open Seasons: Congress has authorized Survivor Benefit Plan enrollment windows (most recently 2023-2024 via the National Defense Authorization Act). Watch for future opportunities.
- Term Life Insurance: May be more affordable than SBP if you're healthy. But it expires or gets very expensive with age.
- Permanent Life Insurance: Provides a death benefit regardless of age, but premiums are significantly higher.
- Investment Strategy: Some veterans self-insure by building a dedicated investment portfolio for their spouse. This carries market risk.
Your Survivor Benefit Plan
Do you currently have the Survivor Benefit Plan (SBP)? If so, do you understand what your spouse would receive? If you declined, what's your plan to ensure your spouse is financially secure?
- If you have SBP, do you know when your premiums will stop (paid-up status)?
- For those without SBP — do you have alternative coverage in place?
- Has anyone calculated what their spouse's income would look like without their military pension?
Dependency & Indemnity Compensation (DIC)
DIC is a separate, tax-free VA benefit paid to surviving spouses of veterans whose death was service-connected. The base 2026 DIC rate is $1,699.36/month (effective December 1, 2025), with additional amounts for dependent children.
Estate Essentials & VA Burial
Four Documents Every Veteran Needs
- Will — directs asset distribution
- Durable Power of Attorney — financial decisions if incapacitated
- Healthcare Power of Attorney — medical decisions
- Advance Directive — end-of-life care wishes
Help: Military legal assistance, legal aid, elder-law attorneys, and Veterans Service Organizations (VSOs) can help with the right parts of the plan.
VA Burial Benefits (Free)
- National cemetery gravesite at no cost
- Government headstone/marker
- Burial flag & Presidential Memorial Certificate
- Possible burial allowance if eligibility requirements are met
Pre-plan: File VA Form 40-10007 now.
Beneficiary Designation Checklist
Beneficiary designations override your will. Review these annually and after any major life event:
- Survivor Benefit Plan (DD Form 2656): Spouse, former spouse, or child
- Military life insurance — SGLI / VGLI: Servicemembers' or Veterans' Group Life Insurance beneficiary (can be anyone)
- Thrift Savings Plan (Form TSP-3): Your retirement-plan beneficiary
- VA Life Insurance: Beneficiary for any VA-sponsored policy
- Bank / Investment Accounts: Transfer-on-death or payable-on-death designations
- Retirement Accounts (IRAs): Primary and contingent beneficiaries
When Did You Last Check?
Here's a tough but important question: when was the last time you reviewed who's listed as your beneficiary on your military life insurance (SGLI/VGLI), Thrift Savings Plan, and bank accounts? Has anything changed — divorce, remarriage, new children — since you last updated them?
- Do you have a current will, or are you relying on state law?
- Have you set up a power of attorney and advance medical directive?
- Who in your family knows where your important documents are stored?
- Has the person named as executor, agent, or trustee agreed to serve?
Protecting Your Estate
Elder financial exploitation is one of the fastest-growing crimes in America. Veterans are especially targeted because of their guaranteed income streams.
Warning Signs
- Pressure to change your power of attorney or will
- Someone controls access to your finances
- Unexpected account or beneficiary changes
- Being asked to sign documents you don't understand
Protective Steps
- Add a trusted contact at banks and brokerages
- Use a durable power of attorney with clear limits
- Review statements and set alerts
- Consider whether a revocable trust fits
Planning for Cognitive Decline
Nobody wants to think about this, but it's one of the most important financial decisions you can make while you're still sharp enough to make it.
Act Now, While You Can
- Durable Power of Attorney: "Durable" means it stays in effect if you become incapacitated. A regular power of attorney does not. Make sure yours says "durable"
- Trusted Contact Person: Authorize your bank and brokerage to contact someone if they notice unusual activity. This is free and takes 5 minutes
- Successor Trustee: If you have a trust, name a backup trustee who can step in
- VA Representative Payee: If you can no longer manage VA benefits, the VA can appoint a fiduciary. Nominate someone you trust before it's needed
Key Takeaways
- Know your Survivor Benefit Plan (SBP) status — and explore options if you declined
- The Survivor Benefit Plan–DIC offset was eliminated in 2023 — survivors receive both in full
- Every veteran needs a will, durable power of attorney, healthcare agent, and advance directive
- Money is only one part of readiness; family needs legal authority, care wishes, and first-week instructions
- Review beneficiary designations annually — they override your will
- Set up trusted contacts at financial institutions to help prevent exploitation
- Eligible veterans can receive no-cost VA national cemetery burial benefits
- Tell your family where your documents are and what accounts you have
Course Complete!
Congratulations! You've completed all five modules of the VUB Financial Readiness Course.
Module Handouts
Review & Post-Test
Five modules behind you. One short test ahead. Let's lock in what you've learned and measure how far you've come.
What We'll Do Today
- Recap the key takeaway from each of the five modules
- Identify one or two action items to start this week
- Complete the post-test — the same 20 questions you saw on Day 1
- Compare your score to your pre-test to see how much you've grown
Module 1 — Know What You Have
Your retirement income is a stack, not a single check. Most veterans have three or four streams that interact in ways your monthly statement doesn't show.
Key Takeaways
- High-3 retirement: average of highest 36 months × 2.5% × years of service
- VA disability is tax-free and doesn't reduce Social Security
- TSP: Traditional is taxed on withdrawal; Roth is tax-free if 5-year rule + 59½ met
- Social Security: claiming at 62 = ~70% of PIA; at 70 = ~124%; FRA is 67 if born 1960+
- RMDs kick in at 73 or 75 (depending on birth year); penalty for missing is 25%
Module 2 — Disability Benefits
Two big ideas: (1) it's never too late to file or increase a VA claim, and (2) free, accredited help exists — nobody should pay to file a claim.
Key Takeaways
- File or increase a VA claim through a free, accredited VSO (DAV, VFW, American Legion)
- Secondary conditions (PTSD → sleep apnea, back → knees) are commonly missed
- CRDP (50%+ rating, automatic, taxable) vs. CRSC (combat-related, DD 2860, tax-free)
- VA Pension 36-month lookback on asset transfers — never trust an "asset restructuring" pitch
- Veterans lost $419M to scams in 2024 — if someone charges to file a claim, they're operating illegally
Module 3 — Healthcare
The most expensive mistake in this course: skipping Medicare Part B at 65 because "I have the VA." Don't be that veteran.
Key Takeaways
- Enroll in Medicare A & B at 65 — required to keep TRICARE for Life
- Part B late-enrollment penalty: +10% for life per year delayed
- TRICARE for Life wraps Medicare; most covered services = $0 out-of-pocket
- CHAMPVA covers spouses/dependents of permanently disabled or deceased veterans
- Aid & Attendance: up to $3,845/month tax-free for veterans needing help with daily activities
Module 4 — Managing Income
Your COLA-protected income (military + VA + Social Security) is one of the strongest inflation-protected income stacks in America. Most retirees don't have it.
Key Takeaways
- Stack your income: know which streams are taxable vs. tax-free
- Income systems: traditional withdrawals can raise AGI, taxable Social Security, Medicare IRMAA exposure, and state tax impact
- Up to 85% of Social Security can be taxable based on provisional income
- State tax matters: 9 states have no income tax; many fully exempt military pensions
- Never ignore an RMD — missed amounts can trigger a 25% excise tax, or 10% if timely corrected
- Pay off high-interest debt before retirement — fixed income leaves no room to dig out
Module 5 — Legacy
Beneficiary forms override your will. Outdated SBP, TSP, and SGLI designations are the single biggest money leak after divorce or remarriage. Check them annually.
Key Takeaways
- SBP = 55% of base amount, lifetime, COLA-adjusted, government-subsidized
- SBP-DIC offset eliminated in 2023 — survivors now receive both in full
- Every veteran needs: will, durable POA, healthcare POA, advance directive
- VA burial benefits are free for honorably discharged veterans — pre-file Form 40-10007
- Set up a trusted contact at every financial institution — takes 5 minutes, free, prevents exploitation
Action Items — Start This Week
Knowledge that doesn't move into action gets forgotten. Pick one or two of these and do them in the next seven days.
Quick Wins (15-30 minutes)
- Set up a trusted contact at your bank
- Update your TSP-3 beneficiary form online
- Verify your most recent RAS on myPay
- Pre-file VA Form 40-10007 (burial pre-need)
- Bookmark va.gov/ogc/accreditation.asp to find a VSO
Bigger Steps (this month)
- Schedule a VSO appointment to review your rating
- Verify your Medicare enrollment status (or plan for it)
- Tell your spouse where your documents are stored
- Review and update your will and durable POA
- Find a fee-only financial planner at napfa.org
What Will You Do First?
Go around the room. Each person picks one action item from the list and commits to doing it before the next class meeting. Saying it out loud makes it more likely to actually happen.
- What's the smallest step that would still feel meaningful?
- Is there someone in your family you'll need to talk to about it?
- What's the one number, form, or website you'll need to do it?
Take the Post-Test
The same 20 questions from Day 1. No judgment — this is how we measure how much the course actually helped. Take your time and answer with what you know now.
What to Expect
- 20 multiple-choice questions, same format as the pre-test
- ~15 minutes to complete
- Submit at the end — results go straight to your instructor
- Compare your score against your pre-test to see your growth
Course Complete!
Congratulations — you've finished the VUB Financial Readiness Course. The work doesn't stop here, but you now have the vocabulary, the resources, and the framework to navigate the next chapter.
Review & Practice
Knowledge Quiz
10 multiple-choice questions covering all five modules. Test your understanding of retirement benefits, disability compensation, healthcare, investments, and legacy planning.
Flashcards
60 interactive flashcards for self-study. Covers key terms, eligibility rules, benefit amounts, forms, and financial strategies from the course material.
Additional Materials
- Study Guide — Comprehensive written review with practice questions and glossary
- Infographic — Visual summary of the full retirement benefits landscape
- Slide Deck — Presentation slides for reference
- Module 4 Instructor Deep-Dive — Step-by-step explainer for teaching the retirement income systems flow
- Module 4 Practical Scenarios — Instructor-ready cases for withdrawals, taxes, Medicare premiums, RMDs, relocation, debt, and inflation
- Module 4 My Income Stack Worksheet — Student worksheet for mapping income sources, tax status, COLA protection, and withdrawal readiness
- Module 4 Before December 31 Checklist — Year-end checklist for withdrawals, RMDs, Medicare IRMAA, state tax, and debt decisions
- Module 5 Practical Scenarios — Instructor-ready cases for the Survivor Benefit Plan, Dependency & Indemnity Compensation, beneficiary forms, end-of-life care, and first steps after death
- Module 5 Tough Questions & Confident Answers — Instructor quick-reference with model answers to the hardest questions veterans ask about the Survivor Benefit Plan, Dependency & Indemnity Compensation, beneficiaries, and end-of-life planning
Printable Handouts
- Retirement Transition Checklist — Timeline and action items for separation planning
- My Income Stack Worksheet — Printable Module 4 worksheet for listing retirement income layers
- Before December 31 Checklist — Printable Module 4 year-end planning checklist
- Retirement Income Systems Map — How income sources affect tax, Medicare, state rules, and cash flow
- TSP Retirement Income Guide — Withdrawal options, RMD rules, and fund comparison
- CRDP vs. CRSC Comparison — Side-by-side eligibility, taxation, and application details
- Healthcare Benefits Reference — VA, Medicare, TRICARE, and CHAMPVA quick reference
- Survivor Benefit Plan (SBP) Decision Worksheet — Pros/cons analysis and financial modeling guide
- Survivor Income Map — Checklist for what income stops, continues, or requires action after death
- End-of-Life Readiness Checklist — Care wishes, legal authority, family communication, and first-week survivor steps
- Beneficiary & Document Locator — Account, form, and document inventory for family readiness
- Legacy Planning Action Checklist — Master take-home checklist of every Module 5 form and decision: the Survivor Benefit Plan, Dependency & Indemnity Compensation, estate documents, beneficiaries, VA burial, and the family conversation