Financial Status and Well-being in Recently Separated Military Veterans (2024)

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Article history

ABSTRACT

INTRODUCTION

Military experience can affect financial well-being in several ways.¹ Service members’ basic needs are met by the military (e.g., meal plans, housing allowances, and health care). Therefore many new Veterans find themselves financially independent for the first time in their mid-to-late 20s or even 30s, a decade after most civilians do.^2,3 Furthermore, a number of military personnel require re-education⁴ and training to learn skills appropriate for civilian work.^5,6 Data indicate that predatory lenders target service members and Veterans. Higher concentrations of payday lending businesses—outfits that charge very high interest rates—are in zip codes near military bases.^1,7,8 Active duty service members are more likely than civilians to take out payday loans, though whether payday loan access has long-term adverse effects on military service members is not clear.⁹

Data from the National Financial Capability Study show that while military service members save money and open bank accounts at the same rate as civilians, they are more likely than civilians to have significant credit card debt. Data from the 2009 and 2012 National Financial Capability Studies revealed that military households have equivalent use of financial services but more problematic credit card behaviors than civilians.¹⁰ In a nationally representative survey of post-9/11 Veterans, one-third reported mismanaging money, such as being victim of a money scam, bouncing checks, going over one’s credit limit, and being turned over to a collection agency.² Recent data from the Consumer Financial Protection Bureau reveal that a substantial number of young Veterans in the first year after military separation become delinquent on debt payments, particularly auto loans, credit cards, and other installment loans.¹¹

Research confirms that financial strain is linked to poor clinical outcomes in Veterans. Veterans with PTSD, traumatic brain injury, or major depressive disorder were less likely to have money to cover basic needs and more likely to mismanage money.² Conversely, Veterans with better finances were less likely to abuse substances or report criminal justice involvement. Studies have confirmed a link between troubled financial status and poor physical and mental health in veterans; for example, lower income at age 38 was found to be associated with relatively worse health-related quality of life two decades later among Vietnam Era Veterans.¹² A longitudinal study demonstrated that post-9/11 Veterans who mismanaged their money had quadruple the rate of homelessness in the following year, controlling for mental health problems and annual income.¹³

Several studies have shown that suicide risk is associated with financial strain in Veterans. In a sample of active duty soldiers experiencing suicidal crises, 23% reported a financial stressor in the 24 hours before their crisis.¹⁴ In another study, Veterans lacking money to cover basic needs (e.g., food, clothes, shelter, transportation, and medical care) were three times more likely to endorse suicidal ideation 1 year later compared to Veterans with money to cover basic needs (22% vs 7%).¹⁵ A study of National Guard members found that many financial strain factors (including income decreases and difficulty making ends meet) were associated with suicidal thinking, but that having recent credit problems was the financial indicator most strongly associated with suicide attempts.¹⁶ An analysis of 2015-2016 electronic health records found that Veterans with financial problems were at greater risk for suicidality than those without financial problems, even after adjusting for mental health diagnoses.¹⁷

Veterans’ financial well-being is a nascent area of research. A few reports have described Veterans as better off compared to other Americans, when the population of Veterans is viewed as a whole.¹⁸ Veterans using the Veterans Health Administration (VA), however, tended to be less well-off and less healthy than their non-VA veteran counterparts, before the operations in Iraq and Afghanistan.¹⁹ Changes in how VA determined eligibility for care between the Gulf wars resulted in a large influx of younger Veterans as the post-9/11 operations continued for two decades, ultimately deploying 3 million Americans.²⁰ Many of these Veterans have separated from military service in recent years. As alluded to above, for many recently separated Veterans, managing household finances has been in the hands of the military since they left high school, while for others, psychological or physical injury has shortened their military career or handed them unexpected barriers to employment and household management. As a result, financial well-being and skills, especially among Veterans who have recently separated from the military, comprise a crucial transition skill.

To examine this, we used a conceptual framework of financial well-being that posits that both financial satisfaction and financial functioning interrelate, requiring examination in tandem.²¹ Put differently, aspects of financial well-being include satisfaction with one’s financial situation—an evaluation of one’s economic position—and ability to manage personal finances, or financial functioning. In turn, financial stressors and personal characteristics lead to variation in financial well-being, which has been examined in civilian samples.²² Similar work is needed that focuses on the population of Veterans, especially on those transitioning from military service to civilian life, to ensure smooth passage across this life juncture.

The purpose of this study was to describe the financial status of Veterans at separation from the military and to model their financial well-being and adjustment to civilian life 33 months later. This study investigated whether there are subcategories or profiles of Veterans’ financial status. It sought to understand how Veterans’ financial status and social status at separation were related to financial well-being nearly 3 years later adjusting for contemporaneous factors. Finally, it analyzed difficulty adjusting to civilian life as a function of demographic measures, psychosocial factors, and financial status.

MATERIALS AND METHODS

Sample and Data Collection

Veterans were identified through the VA/DoD Identity Repository if they were separating from active duty military service (including Reserve/National Guard activated 180+ days) in fall 2016. The Repository provided name, mailing address, gender, rank/paygrade, and branch of service. They were invited by letter with $5 cash enclosed to access a web-based survey managed by ICF International of Fairfax, VA.²³ This study was approved by the Institutional Review Boards at VA Boston Healthcare System for mailed outreach and at ICF for survey processes.

Of 48,965 Veterans invited, 9,566 self-enrolled, completed the survey, and received $20 gift cards; 4,682 had unusable addresses; 2 were deceased; and 581 submitted incomplete surveys for a 23% response rate, similar to other surveys of post-9/11 Veterans (20%-30% response rates).²⁴ This sample was generally representative of the fall 2016 cohort although women were slightly more likely to respond (18% sample vs 16% cohort) and Veterans in lower paygrades were less likely to participate (28% sample vs 41% cohort) consistent with civilian research.²⁵

In November 2017 and every 6 months through May 2019, all baseline respondents were invited to complete follow-up surveys for increasing incentives. Each survey closed when incentive funds were depleted. The study was designed and funded for 10% attrition per wave over six waves, meaning sample size decreased over time. Weights were created to adjust the sample to the sampling frame in terms of gender, rank, and branch. Weights at post-baseline waves incorporated loss to follow-up. The outcomes analyzed were taken from the final, sixth-wave surveys.

Measures

Veterans reported their demographic characteristics at baseline including age, gender, race, Hispanic ethnicity, and whether they were parents. Their psychological resilience to stressful events was assessed at baseline by the Brief Resilience Scale with six 5-point items. Brief Resilience Scale has good internal validity and moderately good test–retest reliability and compares favorably to other resilience measures.²⁶ Items were averaged; higher values indicated more resilience. In development, mean scores ranged from 3.5 to 4.0 (SD: 0.68-0.85).²⁷

They also responded to a series of six questions about their financial status at baseline, 3 months after exiting military service. Their responses regarding their present financial situation and future planning were subjected to a latent class analysis (LCA) to identify subcategories or profiles of financial status. The six yes/no questions queried whether they (1) had stable housing, (2) were able to pay their necessary expenses, (3) were keeping up with debt payments, (4) had adequate insurance for catastrophic events (disability; life; etc.), (5) were putting aside money toward their retirement, and (6) had 3 months of savings set aside for unexpected periods of reduced income.

The LCA suggested there were three classes consistent with “excellent,” “moderate,” and “troubled” financial status. The “excellent” class correlated highly with endorsing all six items or five items including both housing and savings, the “moderate” class correlated highly with having three to five items handled, and the last class correlated with mastering only one or two of the six financial tasks. Using this information and the sum of the six items, we generated a class variable, “financial status group.” Financial status group had the value “3” if all six items were covered or if five of the six were covered, housing was stable, and savings were in place (excellent financial status). Financial status group had the value “2” (moderate financial status) if three, four, or five items were covered, and the person did not meet the criteria for “excellent” status. Financial status group had the value “1” (troubled financial status) if only 0, 1, or 2 financial criteria were met.

Veterans’ vocational (employed; in school) and psychosocial status were assessed. Their wave 6 assessments were included in multivariable models to adjust for conditions concurrent with the outcomes. The 8-item Medical Outcomes Study (MOS) Social Support Survey was administered.²⁸ Veterans indicated how often someone was available to provide practical and emotional support. Responses on a 5-point scale (“none of the time” to “all of the time”) were summed and then transformed to a 0-to-100 scale as per MOS methods; higher values denoted greater social support.

Life stress was assessed by a 13-item questionnaire drawing content from four measures: The Life Experiences Survey,²⁹ the Chronic Stress Index,³⁰ the Chronic Strain Inventory,³¹ and the Social Readjustment Rating Scale.³² As described elsewhere, this approach created a comprehensive though brief measure of stressors.³³ Veterans rated how much stress they experienced, focusing on safety, discrimination, legal and health problems, finances, relationships, sexual harassment/assault, loss, and pressure at work/school. Items were summed to form the stress score. The finances item was, “Please indicate how much stress you have had as a result of the following experiences over the last 3 months…Financial problems (for example, not having money to pay bills or losing a job).” Response options were: “does not apply to me/hardly any/low stress/moderate stress/high stress.”

Dependent variables

The validated Well-Being Inventory was developed to assess Veterans’ functioning and satisfaction in several areas, including personal finances.³³ Both functioning and satisfaction items use a 5-point ordinal response set that ranges from 1 (“never”) to 5 (“most or all of the time”) for the functioning measure and from 1 (“very dissatisfied”) to 5 (“very satisfied”) for satisfaction. Items from the “functioning” stem, “Over the last 3 months, how often have you:” included “Followed a budget,” “Been late paying a bill.” Items from the “satisfaction” stem, “Over the last 3 months, how satisfied have you been with:” included “Your ability to pay for necessities,” “The amount of savings you have,” and “The amount of debt you have.” Items were averaged to create summary measures of financial functioning and financial satisfaction.

The surveys included a single item on adjustment. Respondents were asked, “How much do you agree or disagree with this statement: When I separated from the military, I had difficulty adjusting to civilian life?” on a scale of 1 (“strongly disagree”) to 5 (“strongly agree”). This report focuses on the Veterans’ last report of financial well-being and difficulty adjusting, collected at wave 6, about 33 months after separation from military service.

Analysis Plan

Descriptive analyses were conducted to characterize the sample, and Pearson correlations examined interrelationships among financial satisfaction, financial functioning, difficulty adjusting, social support, and resilience. Regressions modeled the wave 6 outcomes of financial satisfaction and financial functioning, and a final regression modeled difficulty adjusting to civilian life. Predictors were age, race (Black vs White and other race vs White), Hispanic ethnicity, female gender, enlisted, high school education or college degree(s) vs some college, parent of minor child(ren) at baseline, resilience score at baseline, and the two dummies of baseline financial status group: troubled financial status and moderate financial status (reference: excellent financial status), as well as working at wave 6, in school at wave 6, social support score at wave 6, and stressors’ score at wave 6. Linear regressions modeled the predictors of the two financial well-being subscales. An ordered logistic regression model assessed how much difficulty they were having adjusting to civilian life as reported at wave 6. In an ordered regression model, the cut-points or upper and lower boundaries of the latent variable underlying the ordered categorical value are estimated; the ordered values are the integers 1 (strongly disagree [with having] had difficulty) through 5 (strongly agree [with having] had difficulty). Therefore, the four cut-points distinguishing the response of 1 from 2, 2 from 3, 3 from 4, and 4 from 5, respectively, are presented with this model’s results.

Post hoc analyses were conducted on the three regression models adding income as a covariate. Analyses included weights to adjust for non-response relative to the sampling frame and attrition relative to baseline. Analyses were completed in StataMP 15 (StataCorp, College Station, TX).

RESULTS

The cohort of 48,965 Veterans separating from military service in fall 2016 had mean age 32.2 years (SE: 0.10, SD: 9.14; range 18-76), included 16% women, 14% Black Veterans, 15% Veterans of other non-White race, 15% of Hispanic/Latinx ethnicity, and 84% enlisted personnel (Table I; Supplemental Table I). Correlations show statistically significant interrelationships in the expected directions among between “difficulty adjusting” and “financial satisfaction” (r = −0.35), “financial functioning” (r = −0.33), “social support” (r = −0.39), and “resilience” (r = −0.35).

In the model of “financial functioning” measured at wave 6, lower scores were associated with being in the “moderate” (−0.3 point) or “troubled” (−0.5 point) financial status groups as well as with higher levels of current stressors (−.02 point per point increase in stress), enlisted status (−.13 point), and African American race (−.09 point; see Table II). Better financial functioning correlated with higher levels of concurrent “social support” (+.05 point per 10-point increase on social support) and baseline psychological “resilience” (+.04 point per point increase in resilience) as well as being currently employed (+.13 point) and having a college degree at baseline (+.12 point). Hispanic ethnicity, gender, age, being a parent of minor children, being in school now, and having only a high school education were not associated with financial functioning.

Table III shows that the model of “financial satisfaction” revealed similar risk effects for “troubled” (−0.82 point) or “moderate” (−0.37 point) financial status group, current stressors, and enlisted status as well as being a parent. At the same time, older age, college completion at baseline, working now, and more social support were associated with greater financial satisfaction. Psychological resilience was not significantly associated with financial satisfaction.

Table IV presents the ordered logistic regression on “difficulty adjusting” to civilian life, as reported approximately 33 months post-separation, showing that women had 15% decreased odds of strongly agreeing they had difficulty relative to any lower level of agreement, while “moderate” (1.19 times) and “troubled” (1.34 times) financial status and higher levels of current stressors were associated with this undesirable outcome. Veterans who had higher resilience, had already completed college at baseline, had more social support, or were employed at wave 6 were less likely to report they had difficulty adjusting.

Post hoc analyses conducted on the three regression models adding income as a covariate yielded similar models as above. Financial functioning and financial satisfaction retained the same significant predictors when analyses adjusted for income. For “difficulty adjusting,” however, adding income led to several variables no longer retaining associations at a level of statistical significance, including female sex, high school education, and financial status at separation. This suggests that income may mediate the relationship between these variables and difficulty adjusting.

DISCUSSION

Being able to manage one’s income—pay bills, manage debt, and save for the future—is critical to long-term financial well-being but remains understudied among Veterans. In the current study, we found that at separation from the military, a significant subgroup of Veterans—about 1 in 8—feels poorly equipped to manage their personal finances. Financial status and employment at the time of separation from the military predicted greater financial satisfaction, financial functioning, and difficulty adjusting 33 months after separation, adjusting for demographic covariates. Importantly, the aforementioned correlations demonstrate that financial well-being and financial status are linked to other aspects of psychosocial well-being, including social support and resilience. As such, this study offers preliminary evidence of the negative impact of inadequate financial status at separation from the military on adjustment to civilian life nearly 3 years later. Several main findings have implications for understanding the transition from military to civilian life for recently separated Veterans.

First, findings underscore the importance of ensuring that transitioning service members have adequate resources to find employment and have an adequate level of financial know-how when they leave the military. The multivariable analyses highlighted the role of employment at the time of military separation in achieving higher levels of financial satisfaction, financial functioning, and community reintegration as measured by difficulty adjusting. To our knowledge, the current study is the first to document that employment status at the time of military separation, along with financial status, prospectively predict difficulty with community adjustment in Veterans. In this regard, the current study provides empirical support for efforts of the DoD Transition Assistance Program³⁴ to provide opportunities, curriculum, and training for transitioning service members in their preparation to meet post-military goals including job preparation. The study also supports efforts of the Department of Veterans Affairs (VA) Military-to-Civilian Readiness Pathway (M2C Ready) to assist transitioning service members through their first 365 days post-separation by providing vocational resources. Nevertheless, there is room for improvement in these transition assistance programs, and a case can be made for longer-term support post-transition, based on data in the current study.

Second, and related, we found that Veterans with college degrees at separation had significantly higher scores on both domains of financial well-being, as did officers in comparison to enlisted Veterans. Job retraining through college opportunities is frequently the focus of programs for new Veterans.³⁵ In connection with the current study findings, student veteran associations on college campuses, for example, would do well to offer short courses on financial education, tailored to Veterans, or host discussions of post-military financial issues. The cohort in our study is now mostly in their 30s and going through a major life transition from the military to community living. They may be at the nadir of their financial satisfaction, especially the younger and less economically skilled Veterans. Providing education to offset deficits in their skillset could improve their trajectories of financial satisfaction at this critical juncture in their lives. Previous research has found benefits of financial assistance or education to Veterans,^36–38 and offerings could also help Veterans in college develop their social support networks with other Veterans on campus or could be adapted to other settings such as the workplace. The DoD Office of Financial Readiness provides financial education, tools, and calculators for service members as they transition to civilian life. Financial education could help Veterans identify their own needs, such as how to address poor debt management and how to plan for future financial exigencies.^2,39 The current findings suggest that basic instruction in household financial management should be offered to all separating Veterans, to ensure those at risk of a difficult transition have the tools to manage their finances.

Third, that resilience and social support were positively associated with financial functioning/satisfaction shows that financial well-being occurs not in a vacuum but within the context of Veterans’ coping abilities and social environment. Thus, assessment of a Veterans’ social support network is an important consideration for transition programs to make when assisting recently discharged service members with their financial well-being specifically and with community adjustment generally. That resilience was positively associated with financial functioning/satisfaction is a new finding and demonstrates that psychosocial well-being and financial well-being are inextricably linked, consistent with other research in Veterans.^2,17 Put differently, this shows that Veterans’ finances are issues reaching into the psychological and social realms, beyond the scope of managing the household budget. This finding suggests the potential value of the VA Solid Start Program in which every newly separated service member is called three times during their first year of separation to aid in connecting with resources for home loans, returning to work, and accessing health care.

Finally, our initial model of difficult transitioning showed that women perceived slightly less difficulty. This was surprising given other findings that recently separated women Veterans are more likely to report poor mental health.⁴⁰ Interestingly, when income was added to the model, the gender effect became nonsignificant.

There are several limitations to consider. First, as in all survey research, data in this study were self-reported and therefore perceptual and subject to recall and social desirability bias. Second, the response rate was 23%; this drawback was mitigated by the use of weights to adjust for differences between the cohort targeted and the sample obtained. Weights also adjusted for attrition in the wave 6 respondents relative to the baseline sample. Third, the dependent variable, “difficulty adjusting to civilian life,” was a single-item measure not used in previous research; however, it correlated as expected with other included measures. Validating a scale to measure this construct would be a useful avenue of future research. Fourth, there are a number of aspects of financial well-being not measured in this study (e.g., financial knowledge and financial behaviors); future research should investigate in greater detail additional components of financial well-being in military Veterans, consistent with overarching frameworks of financial well-being.²²

These findings provide preliminary evidence that financial status at the time of military separation predicts future financial functioning, financial satisfaction, and difficulty with community adjustment in Veterans. As such, the study underscores the urgent need to focus on financial education and job retraining both before and after the time of separation. A number of DoD and VA programs aim to achieve this goal, and the current data provide empirical support to continue these efforts. At the same time, the study elucidates that understanding the psychosocial well-being of recently separated Veterans requires considering Veterans’ employment, education, social support, and resilience with respect to financial functioning and financial satisfaction. Upstream efforts to enhance financial literacy and employability of Veterans when they leave the military may increase the odds that our military service members will make a successful transition to civilian life.

SUPPLEMENTARY MATERIAL

SUPPLEMENTARY MATERIAL is available at Military Medicine online.

FUNDING

This research was managed by the Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc. (HJF) and collaboratively sponsored by the Bob Woodruff Foundation, Health Net Federal Services, The Heinz Endowments, HJF, Lockheed Martin Corporation, May and Stanley Smith Charitable Trust, National Endowment for the Humanities, Northrop Grumman, Philip and Marge Odeen, Prudential, Robert R. McCormick Foundation, Rumsfeld Foundation, Schultz Family Foundation, Walmart Foundation, Wounded Warrior Project, Inc., and the Veterans Health Administration Health Services Research and Development Service (award #FOP-15-464). Grant monies were paid to the authors’ institutions to partially support their salary.

REFERENCES

Author notes

The opinions and assertions contained herein are the private views of the authors and are not to be construed as official or as reflecting the views of any of the sponsor organizations listed.

Published by Oxford University Press on behalf of the Association of Military Surgeons of the United States 2022. This work is written by (a) US Government employee(s) and is in the public domain in the US.

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