June 15, 2015
Be prepared. When most people hear these two words, they think of the Boy Scouts of America. I want to share with you why all military spouses need to be prepared as well.
I was a military spouse for three months shy of 20 years when my 1SG (First Sergeant) husband asked for a divorce. It was totally unexpected. I was devastated. Thankfully, I am an AFC® (Accredited Financial Counselor), have a Master’s degree, and had been employed by the federal government for about four years at that time. It took me a couple of months, but I was able to pick myself up by my bootstraps and soldier on. I whipped my resume into shape (we were overseas, and I was going to be forced to return to the United States) and began applying for jobs in the US.
During my marriage, we were responsible with our money. We diligently put money into savings and our TSP. We also put money into IRAs for each of us. I look back and am thankful for our conservative lifestyle and ability to save. I was prepared for my future but didn’t know what my future held.
Life throws us curve balls: Injuries and accidents, death, and even divorce. These life events take a toll on our emotions and our finances. We need to be prepared for anything that might come our way.
Do you have a life insurance policy on yourself? On your spouse? What if the military member dies? The money does not come rolling in immediately. Today’s SGLI (Servicemembers Group Life Insurance) of $400,000 may be enough to pay off the mortgage, but then what? How do you support yourself and your children?
What about disability insurance? The military will cover your active duty member if injured and on convalescent leave, but what if the spouse gets injured? How does a family account for the missing income and possible additional expenses? What if your military member has to go to a medical board and removed from the military due to an injury or disability?
Does the spouse have his or her own financial/bank accounts? We have all heard stories how one spouse blocked the other from accounts or spent what was in the accounts. Does the spouse have separate retirement accounts? Spousal IRAs for non-working spouses provide some long-term assurances for a non-working spouse who has given up a career for staying home with children.
What if your military member commits a crime and is imprisoned? You may be left without income, and without benefits.
During my years of financial counseling, I have encountered many spouses who have nothing in their name. When asked about putting money into a spousal IRA, I’ve been told it was not necessary; “We have his retirement.” I cannot count the number of military spouses who divorced after 20 years. Yes, a military spouse may be eligible to retain their military benefits after a 20 year marriage, provided the military member was in for at least 20 years, and the time overlapped for at least 20 years. There are few military spouses that fall into this category.
One of my clients was surprised with a divorce, where, unfortunately, he took control of the household money—because she did not “contribute.” Because of this move, she could not hire an attorney for her divorce. Her family did not have the money to lend her. She only had Legal Aid, while he could afford the retainer for the divorce attorney.
Every spouse needs to be prepared for whatever his or her future brings. We do not have a crystal ball to tell us what will happen in 5, 10, or 20 years.
By the time our divorce was final, we were married 20 years and 11 months. My story has a happy ending. I found a good job and have since been promoted to an even better position. I am debt free, able to contribute to my TSP again and am moving forward with planning for my own retirement. However, I wouldn’t be this far, this fast if I had not been prepared from the very beginning.
Guest Contributor: Kimberly Henne, MA, D-SAACP, AFC®