Investing VA Disability Payments

[rezarxt]

Hi everyone,

So I just found out I got a few ratings for service connected disability from when I was in the Army. One for my wrist and one for my neck. Its not much money per month, but I figure if I start investing it maybe in 25-30 years when I retire it could be a decent chunk of change.

My immediate thoughts are to open a Roth IRA with Vanguard. From what I read, you can't invest VA Disability payments directly in the a Roth IRA. But it is possible to invest income from your paycheck into the Roth. So my idea is to invest lets say $400 a month into a Roth IRA, then deposit the VA disability directly into my checking acct. I'm essentially using the VA payments to make up for the gap in my paycheck.

I'm curious on others thoughts about what to do with the money? I'm 28 years old and I have about $90,000 in my 401k so far when you combine TSP & private. I max out my contributions into my 401k each year.

Thanks for your input.

 

[Stanger00]

Hi everyone,

So I just found out I got a few ratings for service connected disability from when I was in the Army. One for my wrist and one for my neck. Its not much money per month, but I figure if I start investing it maybe in 25-30 years when I retire it could be a decent chunk of change.

My immediate thoughts are to open a Roth IRA with Vanguard. From what I read, you can't invest VA Disability payments directly in the a Roth IRA. But it is possible to invest income from your paycheck into the Roth. So my idea is to invest lets say $400 a month into a Roth IRA, then deposit the VA disability directly into my checking acct. I'm essentially using the VA payments to make up for the gap in my paycheck.

I'm curious on others thoughts about what to do with the money? I'm 28 years old and I have about $90,000 in my 401k so far when you combine TSP & private. I max out my contributions into my 401k each year.

Thanks for your input.

The max is $18,500 for 2018.

VA Disability is tax free and it makes sense to start an after tax piggybank!

Or you can use it to improve the quality of life today

Thanks for your service!


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[rezarxt]

When you say an after tax piggybank, you mean a Roth IRA? I'm already contributing 18,500 to my 401k so I can't put it there. Thanks for your help.

 

[CobraBob]

Smart to start that investing plan. I'm doing something similar with my disability payment. But my overall 403(b) investment each month is about 40% of my disability check. I'd like to do 100% but can't right now.

 

[Stanger00]

When you say an after tax piggybank, you mean a Roth IRA? I'm already contributing 18,500 to my 401k so I can't put it there. Thanks for your help.

Yes.

Since you can only contribute payroll money you will still be paying taxes on what you put into the Roth IRA but the money you get from VA is tax free. When you start to draw from the Roth IRA it will be tax free as well. Piggybank.

I wish I could use my disability to pay toward savings but for now it is helping with childcare. My son is 6 months old and full time daycare is almost $1400 a month. Nearly the max 401k contribution for my 26 paycheck cycle. I can only use $5k of that as pre-tax money from my flex-spending account. At least I get some sort of tax break for it.