Retirement planning is an essential yet often overlooked aspect of personal finance. Many individuals only realize its significance when they are nearing retirement age. However, studies show that veterans tend to retire with more assets, fewer debts, and greater confidence about their financial futures. This is not a coincidence; it reflects the military's long-standing emphasis on financial preparedness, starting from a young age.
The habits and practices that veterans adopt to secure their retirement can offer valuable insights for civilians. By understanding how the military instills disciplined financial planning from day one, we can all apply these lessons to our own retirement strategies—regardless of our occupation.
In the United States, most service members begin their military careers in their late teens. Data reveals that over 80% of military recruits are between the ages of 17 and 21, a demographic in which most civilians have yet to think seriously about retirement savings.
Unlike their civilian peers, however, all military enlistees are required to participate in a retirement savings plan. For example, service members automatically join the Thrift Savings Plan (TSP), a 401(k)-style retirement account for federal employees and military personnel.
Additionally, they are provided with life insurance policies managed by the Department of Veterans Affairs (VA) to ensure financial security throughout their careers and beyond. These early retirement initiatives reflect the military's commitment to preparing soldiers for their financial futures—a practice that is uncommon among civilians.
Civilians, on the other hand, typically begin thinking about retirement savings later in life. Only around 8% of Americans aged 15 to 23 have a retirement account, whereas veterans tend to start saving much earlier. This early financial preparation puts military personnel in a better position for retirement and highlights the importance of starting to plan for the future as early as possible.
Apart from early savings, veterans also prioritize family financial planning. Many service members marry young due to the unique nature of military life, which leads them to take their financial responsibilities more seriously. Marriage, especially for those in their early twenties, forces individuals to consider the future, including budgeting, saving, and acquiring insurance.
Military culture emphasizes these considerations because of the inherent uncertainties in military life, such as deployments or long periods away from home. As a result, military families often have open, transparent discussions about money, which is something that civilians could benefit from more.
For example, John Osarczuk, a former Air Force pilot, remembers how the military’s culture of openness about finances shaped his approach to money. In the military, it was common for more experienced service members to offer financial guidance, such as advising younger soldiers on the dangers of taking on high-interest loans.
In the civilian world, however, money is still often seen as a private matter, which can hinder financial learning and growth. The key takeaway here is that discussing finances with trusted individuals—whether that’s family, friends, or financial advisors—can help prevent poor financial decisions and promote healthier financial habits.
Another important aspect of military financial preparation is living within one’s means. While basic pay in the military may not be very high, especially at the beginning of a career, the discipline of living on a modest income helps service members cultivate essential budgeting skills.
Veterans are often accustomed to budgeting out of necessity, as their salaries early on do not leave much room for frivolous spending. This sense of frugality becomes second nature, and many veterans apply it throughout their civilian lives, even after they transition out of the military.
In contrast, civilians, especially in more consumer-driven cultures, are often tempted to spend beyond their means, leading to debt and a lack of savings. The military’s emphasis on saving and frugality offers a critical lesson in the importance of living within one’s means and adhering to a budget.
The military’s focus on retirement preparedness also extends to the benefits offered to service members. Although fewer than 30% of military personnel stay in the service long enough to retire, they are generally well-versed in the benefits available to them.
Veterans often transition into civilian careers with a deeper understanding of benefits packages and retirement options compared to their civilian counterparts, who may overlook or fail to take full advantage of their employer-sponsored retirement plans.
Craig Copeland, Director of Wealth Benefits Research at the Employee Benefit Research Institute, notes that civilians frequently treat job transitions as just “more paperwork” and do not always take the time to thoroughly understand the benefits available to them.
On the other hand, veterans, who have dealt with various benefits systems during their time in the military, are more likely to ask questions and ensure they are utilizing every available benefit when they transition to civilian life.
This focus on benefits extends to the military’s approach to financial planning. Veterans regularly reassess their retirement plans to accommodate changes in their lives, just as they would adapt their military strategy to changing circumstances on the battlefield.
This adaptability is a key element of military readiness and operational success. Financially, this means that veterans are accustomed to periodically revisiting and adjusting their retirement goals, making sure they are on track and aligned with their current life situation.
For civilians, this practice of continuous financial reassessment is equally important. It is easy to set a retirement plan and forget about it, but as life circumstances change—whether due to career shifts, family changes, or economic factors—it is crucial to regularly revisit and revise one’s financial plans. This not only helps ensure that retirement goals remain realistic and achievable, but also provides peace of mind knowing that financial strategies are aligned with current realities.
In conclusion, the military’s approach to financial planning offers a wealth of valuable lessons for civilians looking to secure their financial future. From starting early with savings to regularly reassessing retirement goals, veterans exemplify the importance of discipline, transparency, and adaptability in managing finances.
By adopting similar practices, civilians can improve their financial readiness for retirement and avoid the common pitfalls of delayed savings and financial uncertainty.
Whether through open communication about finances, adhering to a budget, or taking full advantage of available benefits, we can all learn from the military’s systematic approach to financial security and apply these strategies to our own lives to ensure a comfortable and stress-free retirement.