Understanding the State of Veteran Financial Well-Being
Though it’s historically been an under-leveraged segment of the workforce , savvy business leaders are increasingly recognizing the critical role that veteran talent can play in executing their talent and business strategies. However, as many organizations have yet to understand the full potential of employing this segment, their employee experiences, work environments, and benefits packages have yet to meet the unique needs of veteran talent.
Compared to their civilian peers, many service members experienced a unique set of challenges and opportunities in reaching their financial goals during and after their service. On one side, the consistency of military pay, subsidies, education benefits, and other programs allows for a more solid footing for financial well-being. On the other hand, however, there is also the impact of relocations, deployments, a lack of employment opportunities for their spouses, and, of course, war-related trauma on whether a service member is set-up to meet their current and future financial goals.
Transitioning from military to civilian life isn’t easy. The rigid structure of the military may not prepare veteran staffers for a more independent lifestyle.
Using data from a 2017 Consumer Financial Protection Bureau (CFPB) survey on financial well-being, the Office of Servicemember Affairs produced a detailed brief , released in April 2019, on financial well-being among veterans. The Office found that “veterans, as a group, experienced somewhat higher levels of financial well-being than the average American.
But, as the brief points out, military life presents plenty of financial wellness challenges, too, the consequences of which may be most manifest when veterans enter into private employment. The analysis also showed that, as for all Americans, debt is frequently a problem for veterans. Financial well-being can be diminished when veterans use short-term credit products, have been contacted by debt collectors, or possess student loan debt.
The consequences of these realities are something that Chief HR Officers and their teams may need to understand and address within their veteran workforce. Here are five of the important areas to keep in mind as you design your support of the financial well-being of your veteran talent.
1. Communication Challenges
With all of these unique concerns in mind, it’s understandable that reaching out to veterans can be in itself a special challenge.
The CFPB has found that service members and their families have often been reluctant to use the financial education resources provided by the military. No one knows exactly why – perhaps veterans find them difficult to access or service members may not want to look vulnerable. In any case, you may want to consider carefully the best ways to target communications directly to your veteran staffers to overcome any hesitancy on their part to take advantage of the program benefits.
2. Generational Differences
The feeling of financial wellness can differ significantly among different generations of veterans. According to Prudential’s 2018 Financial Wellness Census of more than 3,000 adults aged 25 to 70, including military veterans, older veterans are struggling less than their younger counterparts. That makes sense, considering that they’ve had more time to acclimate to civilian life and, importantly, pay down debt.
That said, you’re likely dealing with a workforce that includes a good number of vets who are millennials (or younger). Unfortunately, this group is facing more financial stress than older veterans and their civilian counterparts.
More than 40% of millennial veterans report they’re struggling financially as opposed to 32% of non-veteran millennials. New financial responsibilities and the higher cost of living outside the military are often overwhelming. According to the Prudential survey results, only 15% of millennial veterans reported feeling financially secure, and 35% felt pessimistic about their financial future compared to 20% of non-veteran millennials.
Not unlike their civilian counterparts, millennial vets may find paying off debt a main area of financial stress. Nearly 70% of Prudential Census veteran respondents ranked paying off debt third among their financial goals, after building an emergency fund and keeping up with expenses. Veterans in general report high levels of credit card, personal loan, and medical debt.
The CFPB study found that veterans’ perception of their financial well-being drops off significantly more for those with less liquid savings. In addition, perception drops off even more for those who have experienced a poor credit event, such as being contacted by a debt collector or rejected for a new line of credit.
A separate study by the CFPB found that service members are more likely to have taken out an auto loan or credit card, compared to their civilian peers. Additionally, they found a significant number of the younger enlisted service members go into delinquency on these debt repayments or have severe derogatory remarks on their credit record. In fact, they are between two and ten times more likely to have delinquency/default on their credit record after serving than before.
4. Special Student Loan Repayment Concerns
Veterans may benefit greatly from any employer-sponsored student debt repayment programs. This can come as a surprise to many civilians, who may assume that military programs help veterans with student debt repayment more than employer-sponsored programs would.
While it is true that there are a number of education benefits available to current and former service members, the full benefits may be limited to those that have met specific criteria like time served in a hostile active-combat area or a disability. Like many Americans, wading through the different government-sponsored student debt programs and certifying your eligibility can be burdensome.
There is some good news on this front: In early October, the Department of Education announced some major changes to make it easier to qualify for the Public Service Loan Forgiveness Program (PSLF), including removing several barriers that had prevented military service members from taking advantage.
5. Navigating Veteran Benefits
Student loan repayment is a good example of how challenging it can be to navigate government-sponsored veteran benefits. As a result, many vets may be missing out on important financial supports. Employers may be able to help through their financial wellness counseling and advisor services.
Employers can do a lot to help with these transitions and challenges. As you would with all of your employees, you want to make sure you’re helping your veteran workers balance short-term budget considerations with long-term financial goals. A veteran-ready financial well-being program can go a long way to help your veteran employees on their path to financial independence and realize their ambitions.
Photo credit: iStock/Boris Jovanovic
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