When you get a VA pension, it can help you save for retirement, but you also need to figure out what you want to do with the money, experts say.
Here’s what you need to know about retirement savings and what you can expect in the future.
Read MoreVietnam Veterans Are Losing Their Pension The country’s largest veterans pension fund has been struggling since its founding in 1974, and the number of active duty military retirees in the U.S. has fallen to 1.1 million from 1.2 million in 2006, according to a report by the National Committee for a Better VA, a nonprofit group.
The fund, the VA Pension Benefit Guaranty Corporation, is a joint venture between the VA and a private company called Vanguard, and has a $3.4 trillion market cap.
The VA says its plan is to invest the proceeds from its pension assets to cover benefits and costs that will be covered by the government through 2019, but many veteran advocates worry that the fund is being squeezed by low interest rates and other factors.
Veterans can expect to see the retirement fund’s investments decrease by nearly $1 billion in 2019, according a VA spokesperson, and retirements will not be funded until 2023, which means that even with the government’s help, retirees may not have a chance to get their money back.
Veteran advocates are calling on Congress to pass a new law that would guarantee the fund’s long-term investment success, and that could help the fund grow, but it won’t be easy to get passed in a lame duck Congress.
The new law would require the VA to set aside at least $2 billion in the fund each year to cover retirement costs and would provide an emergency cushion in the event of catastrophic cuts to the fund, said Natalie Johnson, senior policy analyst for the Veterans Economic and Social Rights Project at the Center for American Progress, a progressive think tank.VA leaders are currently working to get a bill passed before the end of the year.
A bill introduced by Sen. John McCain, R-Ariz., that would protect VA retirees from future cuts has received bipartisan support.
But with the 2018 midterm elections looming, it’s unclear whether McCain’s bill will gain enough support to become law.
In a statement, the National Veterans Coalition, a group that represents veterans and their families, said it supports a bill that provides VA retirees with greater access to retirement savings.
“It’s not just the VA that needs to make the investments, it is the entire American economy,” the group said.
“VA retirees should not have to go broke in order to have their money secure.”
A federal law passed in 2013 gives veterans who are currently serving in the military a $4,000 tax credit for every $100 of their pension assets.
That’s meant to help pay for pension benefits for veterans who aren’t eligible for the same benefits because they were deployed overseas or in combat.
But the VA’s plan is for the funds to grow by about $1.5 billion annually over the next 10 years, according the VA.
So if Congress doesn’t act, retirees will have to rely on their own savings to pay for benefits in the meantime.
A spokesperson for the VA, which oversees the pension fund, did not respond to requests for comment.