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How veterans can offset the Covid financial hit that's threatening their retirement

Key Points
  • 15% of veterans work in industries hit hardest by the financial impact of the coronavirus.
  • The unemployment rate for veterans rose to 11.8% in April after previously reaching a 19-year low of 3.1% before the coronavirus hit. 
  • Veterans, who also rely on personal investments for their retirement, are wondering how to weather the recent market volatility.
  • PenFed Foundation, a nonprofit dedicated to the veteran community, began a Covid-19 emergency assistance program in mid-March and received over 6,000 applications in four days.  
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Veterans, hit hard by Covid-19 economic fallout, struggle over financial future

The coronavirus has thrown many Americans the equivalent of a stomach-churning financial curveball. In a matter of weeks, unemployment rose to historic highs and the stock market cratered, only to rise steadily again.

By some aspects the ride has been even harder for the nation's veterans, half of whom are over age 65 and are nearing retirement. Fifteen percent work in the industries hardest hit by the coronavirus, leaving them to worry about their jobs, their savings and their retirement investments. As a result, organizations that support veterans are reporting massive spikes for help.

"It's a real uncertain time for us right now," says U.S. Coast Guard veteran David Riley. While on active duty as a rescue swimmer 20 years ago, Riley contracted a near-fatal bacterial infection and doctors were forced to amputate his arms and legs. His wife, Yvonne, is his primary caregiver.

U.S. Coast Guard veteran David Riley and his wife, Yvonne, prepare for the day.
Source: David Riley

"I'm on disability, and we supplement the income with stocks through an IRA," said Riley. After watching their  account balance plunge, the Mobile, Alabama, couple began to wonder if it's time to move their money to the sidelines as they look to stay on track to retire in four years.

Veteran families often receive government health care and a pension that uses a formula based on their years of service and rank, but many also use their investments to fund their golden years.

More from Invest in You:
Military families face housing limbo during Covid-19 crisis
Here's what to do when you are close to retirement and a global pandemic hits
How veteran business owners are using their military crisis skills during the pandemic

Strategies to increase cash flow

Those approaching retirement should be proactive and take a detailed look at how their projected investment income will match up to their monthly cash needs, said Tara Falcone, a certified financial planner and founder of ReisUP, which provides financial literacy programs for colleges, companies and individuals.

Married to a navy husband, Falcone understands that veterans are often presented with unique financial challenges. She encourages her clients to stick to the plan and ride it out. But if retirement is less than 10 years away, she suggests organizing assets into buckets.

"Have a bucket of low-risk assets, like cash and short-term bonds, that you can earmark for the first few years in retirement, and then a medium-risk bucket of higher-quality equities and bonds for those next five to 10 years, and then a higher-risk bucket that you can really allow to compound for the later stages of retirement."

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How to protect your retirement amid coronavirus-driven market volatility

In addition to market turmoil, Covid-19 has caused millions of Americans to now be unemployed, and the nation's veterans are no exception. The Bureau of Labor Statistics includes Reservists and National Guardsman as veterans if they've previously been called to active duty. Before the virus hit, the unemployment rate for this group was at a 19-year low of 3.1%; in April it spiked to 11.8%.

PenFed Foundation, a nonprofit dedicated to the veteran community, began a Covid-19 emergency assistance program in mid-March and received more than 6,000 applications in just four days. In a typical year, the foundation receives 1,200 such requests.

Have a bucket of low-risk assets ... that you can earmark for the first few years in retirement, and then a medium-risk bucket of higher-quality equities and bonds for those next five to 10 years, and then a higher-risk bucket that you can really allow to compound for the later stages of retirement.
Tara Falcone
CFP and founder of ReisUP

Falcone says now is the time to focus on what can be controlled as opposed to the market or economy.

"Figure out how can you increase your cash flow by either decreasing your expenses or increasing your income if possible," she said."This will allow you to increase your cash reserves, which you can then dip into or possibly deploy strategically, should we see another downturn from here."

CNBC's Contessa Brewer contributed to this story.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

REGISTER NOW: Comcast NBCUniversal Military and Veteran Affairs, CNBC + Acorns Invest in You: Ready. Set. Grow. and DAV (Disabled American Veterans) are partnering to host "The Financial Path Forward: A Virtual Town Hall for America's Veterans" TODAY at 1pm ET.  Veterans across America will hear from a team of some of the country's most knowledgeable financial experts, thought leaders and small business advisors as they provide practical solutions and guidance to help veterans find their financial way forward during the coronavirus pandemic.  To register for this free event, go to veterans.cnbc.com. Please note that registration is limited.