By Dr. Charles Patterson, WCI Columnist
Deployment is a fact of life for those serving in the armed forces. No matter the specialty—be it a physician, a pilot, or a munitions specialist—servicemembers are tasked with executing America’s wars. In fact, everything that we do (at least in the eyes of the Department of Defense) while in peacetime or stateside is mere practice for the next conflict. While there are a plethora of benefits (financial and otherwise) that accompany deployed status, it is imperative that military physicians have a well-crafted financial plan prior to shipping out.
The following paragraphs will highlight the most important considerations, and they should serve as a stepping stone for financial preparation.
Prepare a Will Before Deployment
This is a must for all military members. It is so important that the DoD all but issues you a will prior to deployment. These can be made at most base legal offices via appointment, and they are completely free. I found this service to be extraordinary (especially the price). It was thorough, professionally conducted, and absolutely appropriate for the scale of our family’s assets. Beyond the will, base legal can often help with estate planning and powers of attorney. While the scope of these services is dependent on location, think how much you save in attorney fees by having this done on base.
Of course, pre-deployment is not the only time to edit or revise a will. Doing so at every PCS (move), temporary duty or humanitarian mission, family change (children, marriage, etc.), promotion, and legal status change (residence) is also important. At a minimum, it is wise to give it a once-over every year. Prior to leaving for deployment, it may also be wise to touch base with the executor.
In that same vein, preparation for deployment should include a thorough review of insurance policies. Making sure that coverage includes wartime is important, but knowing what isn’t covered is equally as valuable. While many insurers won’t issue a new policy within 90 days of departure for deployment, it's imperative to know what will or will not be covered by a life or disability policy.
The harsh reality is that deployment is dangerous, even for physicians. The thought exercise of considering the worst-case scenario is a germane one, and cementing an Advanced Directive turned out to be one of the most reassuring financial moves that I have ever made.
A will is a document to be used one day, hopefully long into the future. It is important for everyone, but especially so for servicemembers.
More information here:
Budgeting and Household Planning
The typical deployment projects for 3-18 months. However, when you're told it will be six months, what the military really means is eight months. When it says it'll be a year, plan for 15 months. When planning for the care of your household, be sure to include a wide margin for possible delays.
Life back home goes on without you, and plans must be made to care for your responsibilities in your stead. The Servicemembers Civil Relief Act is an absolute must-read, as it details benefits that can significantly impact your mortgage, rent, credit cards, and student loans.
If you have a family and a household to run, drafting a comprehensive yet flexible plan for their care is invaluable. In my experience, many families return to their home of origin during a deployment to be near other family and friends. How will the travel costs be paid? Where will your family be staying? Who is going to be paying the bills and balancing the budget? What does that budget look like? If you’ve got a mortgage or a rental at your duty station, who will be looking over it? Again, as much as is feasible, work through the details of this period.
Furthermore, have a plan in place for your return. The transition back to “normal life” can be difficult for families (especially children). It's often a good and healthy thing to take several weeks of leave upon return to renew bonds. This helps everyone readjust and resets the tempo for the new dynamic. It also takes money—from where is that coming?
While it's not impossible to conduct many of the administrative functions of the household from a deployed location, connectivity and time are not guaranteed. As such, this becomes a great opportunity to sync with your spouse or to create a power of attorney to execute your affairs in absentia.
More information here:
Utilize the Military Savings Deposit Program
The Savings Deposit Program is a benefit unique to deployment. Service members may contribute up to $10,000, which will then grow at an annual interest rate of 10%. It's a relatively easy way of making $1,000. To qualify, the service member must be receiving Hostile Fire Pay/Imminent Danger Pay and must also be in a combat zone for at least 30 consecutive days (or one day each in three consecutive months). This is most typically fulfilled when deployed in support of OIF/OEF and/or on the Arabian Peninsula.
While there are no strings attached to the earnings, establishing the account takes planning and foresight. The program is run by the Defense Finance and Accounting Service, and knowing the regulations for qualification, execution, and withdrawal is important. Here are just a few highlights:
- Any Active Duty or Guard member filling the above stipulations qualifies
- Deposits can only be made when deployed
- Interest will accrue up to 90 days after the completion of the deployment
- Withdrawals are done through DFAS
The Savings Deposit Program is a great way of making a guaranteed 10% on up to $10,000. You can deposit this sum from tax-free earnings, further minimizing any tax burden. Keep in mind, however, that this comes from unallocated pay, meaning that the money deposited into it comes after TSP contributions. This fact will become salient next.
Thrift Savings Plan Contributions During Deployment
The Thrift Savings Plan (TSP), the military’s 401(k) system, has a yearly annual contribution limit of $22,500 [for 2023] when stateside or otherwise not deployed. This does not include the 5% match if in the Blended Retirement System (BRS). However, when receiving tax-exempt pay while deployed, military members can contribute up to $66,000. Admittedly, it would be difficult to get to this amount unless the deployment was long and/or your expenses back home were minimal.
It's important to note that the first $22,500 of contributions would [should] go into Roth TSP space, plus contributions from the DoD if in the BRS. The remainder (approximately $43,000 depending on rank) has to go into traditional space. While suboptimal, this is still very likely the best play if you can swing it.
More information here:
All of these best-laid plans for savings are made in the context of a sobering reality: practicing medicine in a warzone is dangerous. While, generally speaking, doctors are not on “the front lines,” the wars in Iraq, Afghanistan, and Syria have taught us that the front line can be anywhere. Military physicians can and do die in war.
Contingency planning for deployment isn’t much different than planning for catastrophe in the civilian world. One has to make sure that insurance is up to date and sufficient and that it will cover your family’s needs. Also, there need to be very clear instructions in place should the worst happen.
In addition to the will, having a readily-available reference sheet that identifies resources is a prudent addition to your contingency plan. This worksheet would contain vital planning and contact information that you really don’t want your loved ones to have to go digging for. This is not a will nor is it a legal document. It can include but is not limited to things like:
- Insurance policy numbers
- Instructions on account access
- Service and utility provider accounts
- Points of contact within your unit, such as the First Sergeant
- Helpful resources within the military, such as Military OneSource
- Access to your written financial plan
- Funeral and burial wishes (if not already covered in the will)
- Financial advisor contact information
- CPA contact information, if applicable
- GI Bill administrator information
- Debt-holder (such as mortgage) contacts
Again, this worksheet is simply an adjunct to centralize critical information so that your family does not have to [quickly] unravel the complexities of your financial home. Some of us opt to share this information with trusted relatives or friends so that the initial burden of finances doesn’t fall on your family. You could just as easily give it to an attorney (for a fee, I am sure). Contingency planning is not just advisable; it's an act of caring.
Why Make a Pre-Deployment Financial Checklist?
Some in the military would argue that making such plans violates the unwritten superstitions that ward off evil spirits in the deployed environment. I am not one of those people. Financial planning keeps your mind where it should be—on the mission. In this modern age of military medicine, combat care can be done very well. But it requires attention. If I am preoccupied thinking about whether a water bill is getting paid, then I am taking bandwidth away from where it should be.
In the personal finance world, we tend to look at insurance, a will, and survivor benefits as somewhat ethereal ventures—means of building more turrets in our towers. Thinking through the hazards of deployment shifts your mindset. It shakes you out of the comfort of your routine and thrusts you into the reality that deployment (read: life) can be dangerous. It shows you how complete your castle is and what needs to be done if you’re not there to continue building it.
I don’t want my wife to bear any extra burden for my lack of planning, but I do want the plans and resources to be clear, concise, and effective. Deployment can be tough on you, your family, and your support network. But it can also be a very good thing for your finances. With the appropriate foresight and diligence, one can avoid onerous decision-making while maximizing the real benefits of this sacrifice.
Before you were deployed, what was on your financial checklist? Did it give you and your family peace of mind? Why or why not? Comment below!
The views expressed in this article are those of the author and do not reflect any official position of the Department of Defense or the US government. These writings are not authorized, approved, or endorsed by any of the above entities.