Serving in the military means your financial life is never just about paychecks. It’s tied to timing, benefits, deployments, and constant moves.
With pensions, Thrift Savings Plans (TSPs), housing allowances, spousal income and relocations, military families face a financial mission that’s far more complex than most civilians ever experience.
One of the biggest differences? Retiring from the military can happen young, sometimes in your late 30s or early 40s. That’s a huge opportunity, but it also creates decades where you’ll need your money to work as hard as you did in uniform. Combine that with the fact that more than 60% of active-duty members carry consumer debt, and it’s clear why careful planning is critical.
To dig into what works, I spoke with three Wealthramp advisors who know the military life firsthand: Morgan Smith, a former Navy fighter pilot, and Army Rangers Joe Sroka and Jeff Wright.
Q: What’s the biggest financial mistake military families make early in their careers?
Don’t treat benefits in silos
Morgan Smith: “Underestimating how all your benefits work together. Your TSP, pension, BAH, and GI Bill are all tools to grow wealth, but if you treat them separately – or ignore some – you can leave money on the table.
Another big mistake is not creating a vision for your life beyond the military. It’s easy to get so absorbed in the mission that you don’t think about the future. The reality is that separation benefits may not cover the lifestyle you expect, so you’ll need supplemental income.
To boil it down: save and invest early, and think strategically about your transition even if it feels far away.”
Save early, even in small amounts
Joe Sroka: "Not budgeting to save for the future. Paying yourself first, even small amounts, lets compound returns work in your favor. That nest egg can grow surprisingly large before retirement.”
Q: What are some smart moves before retirement?
Max out the TSP – and diversify beyond it
Jeff Wright: “The TSP is like a 401(k) but often with lower fees. Always contribute at least 5% to get the government match – it’s free money! Max it out if you can, then diversify outside with IRAs, taxable accounts or real estate. Think of your TSP and pension as the base of your plan, not the whole plan.”
Decide where you’ll live first
Morgan Smith: “First, decide where you want to live. Costs of living and salaries can vary dramatically by region, and some families move overseas after service. Until you narrow down your location, you can’t build an accurate budget or retirement plan.”
Plan for three distinct stages of life
Joe Sroka:“Plan for three stages: life after military retirement, pre-civilian retirement and eventual retirement. Income and expenses will shift at each stage, and good planning helps you make the most of each opportunity.”
Q: What surprises most people after they retire young from the military?
Civilian earnings can accelerate quickly
Joe Sroka: “Your military experience can open doors in the civilian workforce that accelerate your earnings. That potential often surprises people.”
Taxes and healthcare costs add up
Jeff Wright: “The biggest surprise is taxes. Military pay is artificially low because of tax-free components like BAH and combat pay. In the civilian world, everything’s taxable. Add a pension on top of a new salary and you may jump into a higher tax bracket.
Healthcare surprises hit, too. TRICARE is excellent, but once you’re out, you need a plan if you’re not staying on Prime or Select.”
Too many options can feel overwhelming
Morgan Smith: “Most people who separate are still young with decades ahead, full of opportunities and expenses. The shock is suddenly having so many options after years of being told what to do. Networking with others who’ve recently separated can help you avoid poor decisions and find the right path forward.”
Q: How do you plan for flexibility in such a mobile lifestyle?
Liquidity is non-negotiable
Morgan Smith: “Liquidity is key. Keep an emergency fund, and make sure some investments can move with you. Don’t get tied down to the wrong place at the wrong time.”
Build a portfolio that moves with you
Jeff Wright: “Build a portfolio that follows your life, not one that anchors you. Choose investments that aren’t location-dependent.”
Beyond the basics: don’t overlook these factors
There are a few other areas I think are worth highlighting. Housing allowances, for example, are tax-free and can be a powerful tool, not just for covering rent but also for saving and investing more aggressively. Taxes can also trip people up. Some allowances are taxable, others aren’t, and knowing the difference can save thousands over the years.
Another piece people forget: your spouse’s career. Frequent moves and deployments often disrupt dual incomes, which can derail a household plan if you’re not accounting for it.
From service to financial security
With the right strategy, your military benefits can become the foundation of decades of financial security. The challenge – and the opportunity – is weaving them together into one coordinated plan that fits your life today and can adapt as it changes.
Your TSP, pension, housing allowance, healthcare and post-service income aren’t just separate pieces; they’re interconnected parts of a larger picture. And when they’re aligned with your goals, they can give you and your family a powerful financial edge. Or, as Smith put it: “It’s not about spending money on advice, it’s about making the money you have work smarter for you.”
