Career · Military

Financial planning for
military service members.

READ3 min · UPDATED2026-04-22

Reviewed against primary sources cited at the bottom of this page.

The Thrift Savings Plan, the Blended Retirement System, tax-free BAH, the VA home loan, and the unique financial advantages and challenges of military service. Specific and practical.

This page covers US-specific accounts and tax law. Outside the US? The priority order is the same, the account names differ (ISA in the UK, TFSA/RRSP in Canada, Super in Australia, etc.).

THE SHORT VERSION

Max the TSP Roth up to the match, then up to the annual limit if you can. Use the VA home loan. Understand BAH as tax-free income when you compare offers. If you are in the Blended Retirement System, capture the government match on TSP contributions. Plan the transition before it happens.

The Thrift Savings Plan (TSP)

The government's version of a 401(k). Same contribution limits as a 401(k): $24,500 for 2026 verify×DON'T TRUST, VERIFYClaim: TSP elective deferral limit matches 401(k); 2026 projected $24,500.Verify at: tsp.gov ↗Indexed annually; TSP publishes limits each year..

Investment options

G Fund: government securities, ultra-safe, low return
F Fund: bond index fund
C Fund: S&P 500 equivalent
S Fund: small-cap index
I Fund: international index
L Funds: lifecycle/target date funds

For most: a C Fund + S Fund combination weighted toward C mirrors a total US market allocation. Or an L Fund for simplicity.

Traditional vs Roth TSP: same decision logic as Traditional vs Roth 401(k). See Roth vs Traditional. Deployed in a combat zone tax-exclusion month? Roth TSP contributions from that income come out completely tax-free later.

Blended Retirement System vs Legacy

If you joined after January 1, 2018, you are automatically in BRS. If you joined before and had a choice, you know which side you picked.

BRS

Lower pension at 20 years (~40% of base at 20) verify×DON'T TRUST, VERIFYClaim: BRS pension multiplier is 2.0% per year (40% at 20 years), vs 2.5% (50% at 20 years) under legacy High-3.Verify at: militarypay.defense.gov BRS ↗DoD-authoritative source for retirement system rules.
Automatic 1% TSP contribution from government
Government matches up to 4% more (5% total match)
Continuation pay option at ~12 years

LEGACY (HIGH-3)

50% of base salary at 20 years
No TSP match
All-or-nothing: full pension at 20 or nothing earlier

Key military benefits

BAH

Basic Allowance for Housing. Not taxable income verify×DON'T TRUST, VERIFYClaim: BAH and BAS are tax-free allowances under IRC Section 134.Verify at: DFAS BAH tables ↗IRC 134 exempts military allowances from federal tax.. When comparing a civilian offer to an active-duty package, gross-up BAH and BAS by your effective tax rate to compare apples to apples.

VA HOME LOAN

No down payment, no PMI, competitive rates. One of the most valuable benefits available. Available after qualifying service. va.gov ↗

SDP

Savings Deposit Program. During deployment in designated combat zones, up to $10,000 earns guaranteed 10% annually verify×DON'T TRUST, VERIFYClaim: SDP offers 10% guaranteed annual interest on up to $10,000 during qualifying combat zone deployment.Verify at: DFAS SDP ↗Enrollment required during deployment.. Take advantage of this.

GI BILL

Education benefit. Transferable to spouse or children after qualifying service. va.gov/education ↗

Transition planning

Military service provides significant structure and benefits. Leaving can be financially disorienting. Plan the transition 12 to 24 months before it happens, not after.

Healthcare: TRICARE ends. Plan for civilian healthcare costs.
Pension: understand your exact monthly payment if retired.
TSP: roll over or leave. Leaving is fine. Plan for future RMDs.
GI Bill: understand transfer options if not using personally.
VA disability: file the claim process before separation.