Only 35% of Vets Confident in Retirement: Fix It

Only 35% of military personnel are confident they will have enough money to live comfortably throughout their retirement. That stark figure, reported by the Department of Defense, reveals a profound anxiety among those who have served our nation. As a financial advisor specializing in military families, I’ve seen this apprehension firsthand. This guide aims to demystify retirement planning for veterans, offering clear, actionable steps to secure your financial future. Are you ready to take control of your financial destiny?

My career began as an enlisted Marine, and later, as an officer, I saw countless service members make the same financial mistakes I nearly made myself. Now, as a Certified Financial Planner (CFP) with over 15 years in the private sector, I’ve dedicated my practice to helping veterans translate their dedication to service into a secure civilian retirement. This isn’t just about numbers; it’s about peace of mind, about ensuring the sacrifices made for our country are honored with a stable future.

Only 35% of Military Personnel Feel Confident About Retirement

That statistic from the Department of Defense is a gut punch, isn’t it? It tells me we have a serious education gap. Most service members, especially junior enlisted, are focused on the mission, on their next promotion, or just getting through the day. Retirement feels like a distant, almost abstract concept. They’re not thinking about compound interest or diversified portfolios; they’re thinking about rent, car payments, and maybe a little bit of fun on the weekend. This lack of confidence isn’t due to a lack of resources, but often a lack of accessible, tailored information.

My professional interpretation? This low confidence stems from two primary issues: complexity and procrastination. Military benefits are fantastic, but they’re also a labyrinth. The Blended Retirement System (BRS), the legacy High-3, VA disability, Tricare – it’s a lot to untangle. And because these systems are so different from civilian retirement plans, many veterans feel overwhelmed and simply put it off. They assume someone else will tell them what to do, or that their military pension alone will be enough. I’m here to tell you, while a pension is a powerful asset, it’s rarely enough on its own, especially for those who transition out before 20 years of service. You need a comprehensive strategy, not just a hope and a prayer.

The Average Veteran Household Has 30% Less in Retirement Savings Than Civilian Households

This figure, highlighted in a 2023 report by the Veterans United Home Loans, is alarming. Thirty percent less. That’s not a small margin; that’s a significant shortfall that impacts quality of life. Why the disparity? A few factors are at play. First, military pay, while stable, isn’t always as high as comparable civilian salaries, especially early in a career. This can mean less disposable income to save. Second, frequent Permanent Change of Station (PCS) moves can disrupt financial planning, making it harder to establish consistent savings habits or work with a single financial advisor over the long term. Each move can mean new state tax laws, new cost-of-living adjustments, and new financial pressures.

But here’s the kicker: many veterans don’t fully capitalize on the unique benefits available to them. For example, the Thrift Savings Plan (TSP) is arguably one of the best retirement vehicles available to anyone, military or civilian. Its low fees and diverse fund options are unparalleled. Yet, I’ve seen countless service members contribute only enough to get the government match, or worse, not contribute at all. This is a critical missed opportunity. If you’re in the BRS, contributing at least 5% of your base pay to the TSP means you get a 4% matching contribution from the government – that’s free money! Failing to do so is leaving thousands of dollars on the table over your career. I had a client last year, a retired Army Master Sergeant, who came to me with a decent pension but a surprisingly small TSP balance. We crunched the numbers, and if he had maxed out his contributions for just half his career, he would have had nearly double his current TSP balance. It was a tough pill for him to swallow, but a powerful lesson learned.

25% of Veterans Report Difficulty Affording Healthcare in Retirement

This statistic, gleaned from a 2024 survey by the AARP, is particularly concerning. For many veterans, the expectation is that military healthcare, especially Tricare, will cover them indefinitely. While Tricare offers excellent benefits, particularly Tricare for Life for those eligible for Medicare, the healthcare landscape can shift dramatically in retirement. Co-pays, deductibles, prescription costs, and coverage for long-term care can quickly add up. Furthermore, not every veteran is eligible for comprehensive VA healthcare, and even those who are may face long wait times or limited services depending on their priority group and service-connected disabilities.

My professional take? Healthcare costs are the silent killer of many retirement plans. People often underestimate them. They’ll budget for housing and food, but gloss over healthcare. For veterans, understanding the nuances of VA healthcare eligibility (which is complex and based on factors like service-connected disabilities, income, and other health insurance), Tricare options, and Medicare integration is paramount. I always advise my clients to factor in a significant line item for healthcare, even if they anticipate relying heavily on VA benefits. Why? Because you want options. You want to be able to choose your providers, avoid long waits, and ensure you have access to specialized care. Don’t assume Tricare or the VA will be a magic bullet. Plan for the unexpected, because healthcare expenses often are. This means considering a Health Savings Account (HSA) if you’re eligible, or even long-term care insurance, especially if you have service-connected conditions that may worsen with age.

Only 15% of Veterans Have a Written Financial Plan for Retirement

A recent analysis by the Financial Planning Association (FPA) revealed this shockingly low figure. Fifteen percent! That means 85% of veterans are essentially flying blind into their retirement years. This isn’t just about having a vague idea of saving; it’s about a detailed, documented roadmap. A written plan forces you to confront realities, set concrete goals, and outline specific steps. It includes projections for income and expenses, considers inflation, accounts for potential healthcare costs, and outlines strategies for managing investments.

From my perspective, this is the single biggest impediment to financial security for veterans. Without a plan, you’re reacting to circumstances rather than proactively shaping your future. It’s like trying to navigate a combat zone without a map or a mission brief – you might get lucky, but the odds are stacked against you. I’ve seen clients, even those with significant assets, make poor decisions because they lacked a cohesive strategy. They might have money in different accounts, but no overarching purpose for that money. A written plan, however, provides clarity and accountability. It helps you stay on track during market downturns, provides a framework for major financial decisions, and gives you peace of mind. It doesn’t have to be a 50-page document; even a well-structured one-pager outlining your goals, current assets, and next steps is a powerful tool. In my practice, we often start with a simple budget and then expand it into a comprehensive plan that includes specific targets for TSP contributions, investment allocations, and even estate planning considerations. That structure makes all the difference.

Where I Disagree with Conventional Wisdom: “Just Get Your 20 Years”

For decades, the mantra in the military was “just get your 20 years, and you’ll be set for life.” This conventional wisdom, while well-intentioned, is outdated and, frankly, dangerous. While a military pension is an incredible benefit, relying solely on it for retirement is a recipe for anxiety, especially in today’s economic climate. Here’s why I strongly disagree with this simplistic advice:

First, the landscape of military retirement has changed dramatically with the introduction of the Blended Retirement System (BRS) in 2018. If you joined after 2017, or opted into BRS, your pension is smaller than the legacy High-3 system – 2% of your highest 36 months of basic pay for each year of service, compared to 2.5%. This means your pension will only replace 40% of your basic pay after 20 years, not 50%. While the BRS includes TSP matching and a mid-career continuation pay, it unequivocally means less reliance on the pension alone. Even for those under the legacy system, inflation erodes purchasing power over time. A fixed pension, even with Cost of Living Adjustments (COLAs), might not keep pace with rising expenses, especially in areas with high costs of living like Northern Virginia (where I frequently advise clients near the Pentagon) or San Diego.

Second, 20 years is a long time. Life happens. Injuries, family needs, or simply a desire for a different career path can lead to an early separation. If you’ve been banking solely on that 20-year pension and leave at 10 or 15 years, you’re left with nothing from the military retirement system (unless you’re in the BRS and contributed to the TSP). This is why diversified savings are absolutely critical from day one, regardless of your intention to serve 20 years. I always tell my younger clients: plan for the unexpected exit, and if you make it to 20, that’s just gravy. Don’t put all your eggs in the “20-year pension” basket.

Third, quality of life. Do you want to just “get by” in retirement, or do you want to thrive? A pension alone often only covers basic living expenses. What about travel, hobbies, supporting grandchildren, or unexpected medical bills? A robust personal savings plan, leveraging the TSP, IRAs, and even taxable brokerage accounts, provides the flexibility and financial muscle to live the retirement you envision. We ran into this exact issue at my previous firm with a retired Chief Petty Officer. He had his pension, but he hadn’t saved much else. He wanted to travel the world with his wife, but found his pension barely covered their mortgage and daily expenses. We worked to create a budget and investment strategy to build up his travel fund, but it would have been so much easier if he had started earlier and diversified his savings beyond the pension.

My advice? Use your military benefits – especially the TSP match – as a powerful foundation, but build a skyscraper of personal savings on top of it. Don’t let the allure of a pension blind you to the necessity of aggressive, independent saving. Your future self will thank you.

For veterans transitioning out, whether at 4 years, 10 years, or 20, it’s imperative to immediately assess your financial situation and create a new budget. Civilian life brings new costs: health insurance premiums (if not covered by VA or spouse’s plan), potentially higher housing costs, and often a different tax structure. For example, if you’re settling in Georgia, understanding how Georgia’s military retirement income exemption works is crucial for your tax planning. The state exempts up to $17,500 of military retirement income for those under 62, and the full amount for those 62 or older, from state income tax. These local specifics can significantly impact your net income in retirement.

Furthermore, consider your post-service employment. Many veterans transition into high-paying civilian jobs, but fail to adjust their savings rate accordingly. Your civilian income is a golden opportunity to supercharge your retirement accounts. Max out your 401(k) or 403(b) contributions. Open a Roth IRA. Don’t let lifestyle creep eat away at your increased earning potential. Your military discipline can be your greatest asset here – apply that same dedication to your financial well-being.

One final, editorial aside: please, for the love of all that is holy, consult with a financial professional who understands military benefits. Not just any financial advisor, but one who genuinely comprehends the nuances of the TSP, VA disability, Tricare, and how they integrate with civilian financial instruments. There are too many advisors out there who will give you generic advice that doesn’t account for your unique veteran status. Ask specific questions about their experience with military clients. It’s your money, your future – be discerning.

Taking control of your retirement planning as a veteran means leveraging every available resource, understanding your unique benefits, and building a robust financial strategy that goes beyond just relying on a pension. Start today – your future self deserves it.