Millions of veterans gain access to tax-advantaged savings tool…but many don't know it yet

The financial and psychological wellbeing of the veterans and military families was brought into focus last month through the convergence of Mental Health Awareness Month, Armed Forces Day, and Memorial Day.

But many veterans may be unaware of a change that could benefit their finances, which came into effect on January 1, 20246.

Eligibility for ABLE accounts, the tax-advantaged savings vehicles designed for individuals with disabilities, has expanded to an estimated six million more Americans. The trigger was a change to the disability onset age threshold, raised from 26 to 46. For veterans who sustained injuries or developed conditions years into their service, that single adjustment has significant consequences.

Juliana Crist, SVP of ABLE Programs at Vestwell, has been tracking the expansion closely and told InvestmentNews that veterans are among the groups with the most to gain.

"The original ABLE Act limited eligibility to individuals whose disability began before age 26," she said. "That excluded a large cohort of veterans and others whose disabilities were not present until later in life. Many service members enlist in their late teens or early twenties, serve for a decade or more, and sustain injuries or develop conditions well into their thirties. Under the old rules, they were simply shut out."

The scale of the newly eligible population is substantial.

"There are 5.5 million veterans living with service-connected disabilities, and a significant portion of them now qualify for ABLE accounts for the first time," Crist said. "These are people who have already navigated enormous challenges and who deserve access to a financial tool that can genuinely help them build stability. For millions of veterans, it's the first time the door has been open at all."

There is also an awareness gap that advisors are well-placed to close.

"Many veterans may not realize they qualify for ABLE accounts because they don't think of themselves as having a 'disability' in the traditional sense," Crist said. "Conditions like PTSD, traumatic brain injury, chronic pain, hearing loss, and many other conditions — service-connected or not — can meet the eligibility requirements. Some of the veterans who stand to benefit most from this expansion may not know it yet."

Planning power for advisors

The expansion creates meaningful new options for veteran clients who were previously locked out of the tool. Crist is direct about the planning potential.

"ABLE accounts have real planning power: tax-free growth, tax-free withdrawals for qualified expenses, and crucially, friends and family members can contribute to the accounts, and assets don't count against means-tested benefit programs," she said. "That's a combination that's difficult to find elsewhere."

"If you are a financial advisor, and you could offer your client the ability to contribute up to $35,000-plus a year into a Roth IRA, with no income phase-out and no age limits on withdrawals — all with a potential state tax deduction to boot — would you do it? If so, you should be looking into ABLE accounts. That's the kind of power ABLE provides,” Crist said.

She describes the accounts as filling a structural gap in most clients' financial plans.

"Think of them as filling a gap between a retirement account, which you can't touch without penalty, and a checking account, which offers no tax advantage. For clients managing ongoing medical costs, housing needs, daily living expenses, or employment transitions, that middle ground is incredibly valuable."

The contribution limits in 2026 are generous. Individuals can contribute up to $20,000 annually, and working veterans not enrolled in an employer-sponsored retirement plan may be eligible to contribute an additional $15,650 on top of that.

"For veterans who have spent years keeping their savings low just to stay under program asset limits, that's a significant and liberating shift," Crist said.

Addressing the benefits cliff

One of the most persistent fears among veterans with disabilities is that saving money will trigger the loss of the federal benefits they depend on. ABLE accounts are specifically engineered to address that tension, and Crist says advisors should frame them accordingly.

"Veterans often feel like they're walking a tightrope when it comes to saving — and that's exactly the tension ABLE accounts are designed to resolve," she said. "They complement a veteran's existing benefits rather than compete with them. So many veterans know they need to save but worry that accumulating assets will disqualify them from Medicaid, their VA Pension, or other essential programs they've earned. ABLE accounts remove that fear and eliminate the need to choose one over the other."

She argues advisors should treat the accounts as a multi-purpose planning tool.

"Advisors should think of ABLE accounts as the Swiss-army knife of financial planning tools," Crist said. "They are built for the short-term and the long-term. ABLE accounts can provide a cushion for the everyday costs that disability often amplifies — like transportation to medical appointments, assistive technologies, or home modifications. Cash options and attached debit cards are widely available in ABLE plans for that purpose."

Looking further out, she notes that the investment options within ABLE plans are also evolving: "Beginning this year, ABLE plans are starting to offer target-date funds as investment options, to better serve those retirement-focused and long-term savers."

Misconceptions around eligibility

Advisors should not assume a veteran's eligibility based on how their VA benefits are structured or how the veteran describes their own condition. Crist identifies a common point of confusion.

"ABLE eligibility is tied to the Social Security Administration's definition of disability, not the VA's rating system," she said. "That said, you do not have to be receiving any SSA benefits in order to be ABLE-eligible. Many veterans do qualify, including an estimated one million more veterans as of January 1, 2026. The takeaway for advisors is: don't assume in either direction. Encourage clients to look into it carefully."

Identity is also a factor in who gets missed.

"Some veterans don't think of their service-connected condition as a 'disability' and therefore never consider themselves candidates for an ABLE account. Conditions like PTSD, TBI, and other mental health diagnoses can qualify — as can conditions that are unrelated to someone's service," Crist said. "Advisors can play a real role in gently broadening how clients think about eligibility, not to label anyone, but to make sure no one misses out on a significant tax-savings and wealth-building opportunity."

Financial security and mental health

The financial and psychological dimensions of disability are closely connected, and Crist said advisors who understand that link tend to serve their veteran clients better.

"Financial insecurity and mental health don't exist in separate silos. They're deeply interconnected and feed each other," she said. "For veterans managing disabilities, the stress of navigating benefits, medical costs, and uncertain income can be relentless. It affects everything."

The intangible benefits of having access to a dedicated savings tool go beyond the numbers.

"Beyond the tax advantages, ABLE accounts offer a sense of agency and stability," Crist said. "Having a savings tool that enables people with disabilities to build a cushion, plan ahead, and maintain financial self-sufficiency on their own terms is meaningful beyond the dollars and cents. I've heard from families who describe the relief of finally having a place to put money that's genuinely theirs, without the extra anxiety of a looming benefits cliff. That psychological dimension is real, and advisors who acknowledge it tend to build stronger relationships with their clients."

What advisors should do now

ABLE accounts have struggled with visibility since their introduction in 2016, and Crist says awareness remains the central challenge.

"They're administered at the state level, and there's no single national campaign driving awareness," she said. "There's also the identity piece. Veterans who don't see themselves as disabled — even if they're living with PTSD, chronic pain, or another qualifying condition — may never think to ask whether they're eligible. That's a real gap advisors can help close."

Her recommendation is to build ABLE account eligibility into standard discovery conversations.

 "I'd encourage advisors to make ABLE accounts part of their standard discovery process when working with any client, treating it as a genuine first-line question rather than an afterthought," Crist said. "You don't have to become an ABLE expert overnight, but every advisor should know enough to recognize when to explore a client's potential eligibility."

For advisors working directly with transitioning service members or veterans managing long-term disabilities, she outlines a practical sequence.

"First, understand the client's full benefits picture before recommending anything. Knowing whether they receive VA Pension or Medicaid shapes how an ABLE account fits into their overall plan. Second, help them compare state ABLE programs, since most are open to residents nationwide and fees and investment options vary significantly. Third, develop a contribution strategy."

The broader goal, she said, is straightforward: "The goal is to help veterans build genuine financial independence. ABLE accounts, used well, are a meaningful step toward that."