UNDERSTANDING VETERANS’ BENEFITS

Most often when I write about benefits, they apply to the general public. Today I’m going to write about veterans’ benefits, which are often structured quite differently from other benefits such as Social Security.

Survivor benefits

To receive benefits as a surviving spouse, you must have been married to the veteran for at least one year and married at the time of death. If you are an ex-spouse at the time of the veteran’s death, you cannot claim survivor benefits; if you are a survivor and remarry later, you will lose survivor benefits. However, if you have remarried and that marriage has ended, you may be entitled to survivor benefits.

A benefit known as Dependency and Indemnity Compensation (DIC) is payable to the surviving spouse of an armed-services member who died in service or with a service-connected disability. These benefits are paid to a survivor only if the veteran was honorably discharged.

For the amount of these benefits you may be entitled to, see the Department of Affairs website at www.benefits.va.gov/ compensation.

The Department of Justice has determined that the right to spousal benefits for a same-sex spouse may be applicable to those who applied for benefits prior to the Supreme Court decision establishing the right to marriage for same-sex couples. So if you were denied benefits before that date because your state did not recognize your marriage, apply to the VA requesting retroactive benefits to your application.

Wartime service pension

If a veteran would have been eligible for a wartime service pension, the surviving spouse may claim a pension even if the death was not related to service. This requires that the survivor has a low income, taking into consideration other benefits the survivor receives.

Surviving children may also be eligible for a survivor’s wartime pension after the veteran’s death. The amount of a survivor pension depends on the survivor’s income and whether the survivor has dependent children, is housebound or requires Aid and Attendance (see below). Maximum wartime service pensions are between $700 and $1,300 per month, which can be

reduced based on the survivor’s income.

Aid and Attendance

Aid and Attendance (A&A) is a special program to assist veterans and survivors who are eligible for DIC benefits and are either living in a nursing facility or are housebound. If a survivor is in a nursing facility, an A&A benefit can add about $300 per month to whatever benefit the survivor is already receiving. For a housebound survivor, the benefit is usually somewhat less. The specific benefit depends on the survivor’s additional sources of income and medical expenses.

TRICARE

TRICARE is a generous system of medical coverage completely separate from other veteran benefits, and is available to retired military service members, their spouses and their children younger than 21. This system is administered by the Department of Defense. Individuals who have TRICARE coverage who become eligible for Medicare must be enrolled in both programs. Details regarding TRICARE eligibility, benefits and the coordination with Medicare are available at the TRICARE website, www.tricare. mil.

Medical treatment

One of the most important benefits available to veterans is free or low-cost medical treatment. The VA operates more than 150 hospitals throughout the country. In addition, a great number of outpatient clinics provide health care. Specialized care may be available to veterans free at a VA hospital that would be unavailable in private medicine.

Rules govern the interaction between VA and Medicare. Generally, for any specific medical treatment, you can choose either of the benefits but not both. There is a significant exception to the rule: If the VA authorizes you to receive treatment at a private facility, but does not cover all of the service you receive, Medicare may possibly pay for any of those services.

The VA’s website (www.va.gov) contains more information about these and other VA programs. The VA has large regional offices in major cities and many smaller offices known as vet centers. To find either the regional office or the vet center near you, look in the telephone directory under United State Government Veterans Affairs Department; or you can call the VA national benefits information line at 800-827-1000, or the health benefits line at 877-222-8387.

A good summary of veteran’s benefits, federal civil service benefits, Social Security benefits and Medicare is contained in “Social Security, Medicare and Government Pensions” by attorney Joseph Matthews (see at Nolo.com).

Elliot Raphaelson welcomes your questions and comments at raphelliot@gmail.com.

The volatility of the stock market based on fighting in Ukraine and soaring gas prices presents a significant challenge to your future if you’re nearing retirement or already in it.

Over the long run — 20 years — a diversified portfolio of large company stocks has always given a positive return, even adjusted for inflation. That’s why stocks belong in your portfolio. But your time horizon might be shorter than 20 years, especially if you are required to make annual withdrawals to fund your retirement.

Despite their track record of beating inflation in the long run, stocks often slide in reaction to inflation news — as rising costs of everything from energy to wages cut into profits and earnings.

The baby boomers are the first generation to be managing their own retirement portfolio, unlike their parents who typically received lifetime pensions (for their much shorter life expectancy). The recent outsize returns in the stock market have made 401(k) plan participants look like investment pros. But if your portfolio takes a bear market hit in the early years of your retirement, it could impact your future lifestyle in a major way.

The first step toward understanding potential risk lies in understanding what you own. Check your latest monthly statement. Let’s start with stocks.

I’ve always advised that retirees roll over their company 401(k) or 403(b) to an IRA when they stop working. That’s because most retirement plans have investment choices geared to younger investors trying to aggressively build retirement savings. Retirees, on the other hand, need more conservate stock funds, such as an equity-income fund. Few 401(k) plans offer money market funds, but if you’re still working you might be able to hide from volatility inside a stable value fund if one is offered.

Stocks aren’t the only risky part of your retirement portfolio. Bonds, as I’ve often written, can be even riskier than stocks.

When interest rates rise, bond prices fall. Currently, for every percentage-point increase in the level of interest rates, you can expect the price of a typical bond fund to fall by 6%.

You do the math. If interest rates rise from the current 2% on A-rated bonds to as high as 7% (matching current inflation), the price of this typical bond fund could drop by 30%.

The longer the maturity and the lower the quality of the bonds in your fund, the greater the potential price decline.

Whether you own stocks or bonds, you could be forced to take losses if you need to sell in order to take RMDs. So, it’s important to know what’s inside your mutual funds. Don’t count on the professionals who manage target-date retirement funds to protect you.

Ron Surz, author of “Baby Boomer Investing in the Perilous Decade of the 2020s,” says that these target-date funds are a “retirement disaster waiting to happen.” He explains that while many companies use these target-date funds as a default

“safe haven” for their employees, the average target-date fund for people near retirement has an 85% exposure to risky assets, both stocks and bonds.

That same mix lost more than 30% in the market decline of 2008. These days, Surz says, bonds are even riskier, since we are in a rising interest-rate environment with the potential for greater losses. Count those target-date funds among your riskier assets.

Where can you hide from risk? Surz says “It’s not so easy to find safety today. With short-term rates artificially low, even safe money is exposed to the risk of inflation eating away at your principal.” He recommends TIPS (Treasury inflation-protected securities) funds and gold, as well as commodity funds and ETFs, all designed to protect against inflation. Your best inflation bet, he says, may be the family home.

There’s an old saying in the stock market: “Sell down to the sleeping point.” You don’t have to sell everything — just enough to create liquidity for at least a few years of expenses. That should let you sleep. And that’s The Savage Truth.

Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.