All my life, I’ve been working to provide for myself and my loved ones. A keystone to ‘providing’ is being Financially Secure. The US military has resources available to us to teach us about financial planning, but how often do we actually take steps to build a plan and work towards our financial goals? And, what topics does the military skimp out on when trying to teach us?

1. Retirement Planning in the Military – why does it matter?
…Planning for retirement is crucial for military personnel, as it ensures financial security in their post-service life. No matter how long you serve, be it 4 years or 30, we all have to separate eventually. The key to that separation and the life that follows, is how much planning we’ve done in the meantime. Planning now allows veterans to maintain a certain lifestyle and achieve long-term goals, so that we don’t have to work following separation (or military retirement). And if we do choose to work, we can make the best choices for our families.

2. Retirement Plans for Military Members

Military members have access to retirement plans like the Thrift Savings Plan (TSP), which offers tax-advantaged savings options. They can allocate funds to the G, F, C, S, and I Funds, each with its own risk and return characteristics. Additionally, you can opt to choose a ‘Lifecycle’ Fund, where you select the projected year you want to retire (say year 2050) and it automatically adjusts where your money is invested, starting in ‘risky’ funds up front (say the C or I fund) and moving money into safer funds (like the G fund, government securities and bonds) once youre ready to retire and start making withdrawals. All in all, the important part is that we start as early as is reasonable based on your lifestyle.

3. Starting Early

Service members should begin retirement planning as soon as possible. By reading this and learning about retirement options, you’re already ahead of your peer group. Most people in America and abroad never invest. But by starting as early as you can, you will take advantage of compound interest and accumulate substantial savings over time. It’s never too early to set aside a portion of your income for retirement.

Options for Retirement
1. High-3 Retirement System

The High-3 retirement system was the traditional pension plan for military members. It calculates retirement pay based on the average of the highest three years of a service member’s basic pay. This system provides a predictable source of income in retirement, and for those (like myself) that joined prior to 2021, we’ll be rewarded with around ~$2,000 per month for the remaining of our lives! (It’s also inflation adjusted, subject to INCREASE as the years go by. One of the few remaining great pension plans offered to American Military Members).

2. Blended Retirement System (BRS)

BRS was introduced in 2018, offering a choice between a traditional pension and a defined contribution plan with a TSP match. It’s more flexible and encourages service members to save for retirement actively. As of 2021, this is the only retirement plan available to service members. The best part of this retirement plan is that it’s automatic (members start with a 1% base pay contribution) and that you get employer matching up to 5%! A phenomenal option for those that take full advantage of the 5% matching.

3. Disability Retirement

In cases of service-related disabilities, military personnel will be eligible for disability retirement, which provides financial support and medical benefits. And as my fellow service members know, most of us will end up with at least some life limiting factors (be it back pain, arthritis from typing or repetitive stress injuries, or more serious conditions like PSTD or asthma, etc). Understanding the criteria and application process for disability retirement is vital. The key here: Go see your Primary Care Provider! Get every injury in your record. No issue is too small considering the Veterans Affairs office will help you receive compensation in the long run. This can pay out even more than your HIGH-3 or BRS retirement income.

Lastly, The Stability of Military Income
1. Predictable Paychecks: A significant advantage of military service is the steady and predictable paychecks. Military members receive their pay on specific dates (usually the 1st BAE 15th of the month), making it easier to budget and plan for expenses. Even during government shutdowns… we tend to get paid (case in point, I’ve never missed a paycheck in the past 11 years of service).

2. Housing and Healthcare Benefits

Again, the military often provides so much financial stability. Housing and healthcare benefits are practically guaranteed, reducing two major expenses for service members and their families. The inexpensive healthcare and dental may not be the most premium services in the world, but any catastrophic healthcare needs will be covered at a minimum (especially important considering the cost of child birth being ~$15,000 in the US). And with the US not providing universal healthcare to it’s citizens, military members have a huge advantage in this area. This stability contributes to overall financial security that is hard to beat.

Continue to educate yourself about personal finance. Attend financial workshops, read books, or follow reputable financial blogs (*wink wink*) to stay informed about the latest strategies and opportunities for building wealth. I’ll be here for you, every step of the way!

-Michael, with military.cash

P.s. Personal Finance is my passion. If you want to follow along on my journey, follow me on Instagram @military.cash