Becoming Wealthy in the Military: Strategies and Realities

Many believe that the military lifestyle is one of constant financial strain, but it is possible to build substantial wealth while serving. This article explores the realities of amassing wealth in the military, including strategies for maximizing benefits, key financial decisions to consider, and the less positive aspects of military finance that new recruits should be aware of.

Understanding the Military Mentality

When you join the military, you face a unique financial challenge. Unlike many civilian jobs where saving a portion of your salary is encouraged, the military mentality is often use it or lose it. By the end of the month, many service members, including me, were running on fumes. In the late 1960s, I was spending every penny I received, unlike the more conscientious career men who saved parts of their earnings.

For example, returning home from Korea in February 1970, I had only a few dollars left in my pocket. I had to rely on public transportation to get home since I did not have enough for a cab.

Post-Military Wealth Accumulation: Strategies and Misconceptions

While it is true that high-ranking officers often find substantial wealth through lobbying and contracts with defense industries, this path is not open to most servicemen. However, there are still strategies that can be employed to build wealth during and after military service.

One of the most effective strategies is to reach a full military retirement after 20 years of service. Military investors estimate that a full retirement is easily worth over a million dollars, though what constitutes "rich" varies depending on individual circumstances. To fully leverage this benefit, service members should invest in the TSP Thrift Savings Plan or a 401K plan. Not only does this provide a substantial pension, but the military health benefits after retirement are also quite favorable, with monthly payments typically being minimal and covering a significant portion of health expenses.

Another crucial step is to obtain a disability rating from the Veteran Administration. A rating of 50% or higher can provide additional income, making your total retirement far more substantial. Before retirement, it is advisable to document any medical issues, as the VA will consider these when determining your disability rating.

Service members should also invest in temporary duty allowances or per diem payments, which can be substantial. These funds should be invested wisely, ideally into the TSP or a separate 401K plan, rather than squandered on frivolous expenses.

Financial Planning and Decision Making

One of the biggest challenges for service members is financial decision-making. Getting married early in your military career can lead to complications and potentially the loss of a portion of your retirement benefits. It is generally recommended to wait until you are 15 years into your service or to get married after you have had some time to establish a secure financial foundation.

Investing in a home just before retirement can also be a wise move, provided you are single. This ensures that the property remains a personal asset, preventing your spouse or former spouse from claiming a portion of it in a divorce. The military has a high divorce rate, and some spouses might use marriage as a means to gain access to the service member's retirement benefits and property. It is important to be aware of these dynamics and plan accordingly.

Overcoming Financial Challenges

The military lifestyle is fraught with financial challenges, and it is easy to fall into the trap of financial mismanagement. Some service members end up supporting spouses who are pursuing their education or careers, but it is essential to maintain your own financial health and independence.

It is a harsh reality that certain individuals will try to take advantage of the military's generous benefits. However, the onus is on each service member to manage their finances wisely and safeguard their future. My advice is clear: find a career that makes you happy, and be responsible for your own happiness.