Can You Live Off Military Retirement Savings in 2022?

Can You Live Off Military Retirement
by Scott R. Tucker // December 29 /

Imagine if, in just a few years, the military retirement you've worked so hard for during years of service to the military on active duty won't be enough to cover your retirement plan base pay. That's the reality military retirees may face in civilian life.

The military retirement pay career military members rarely will produce enough cash flow without other benefits like disability pay or investments like a traditional TSP. Learn more about the potential shortfall and what you can do to prepare.

Military Retirement for Veterans: A New Perspective

Veterans, don't lose your resources! Understand the value of what you have going for you. That means, how do you position your assets so that they benefit you? Maybe you have a military pension, maybe you have disability pay, maybe you have savings, maybe your greatest asset is your knowledge and skillset.

Is Your Retirement Pay a Priority?

What is your number one priority in life right now, today? Where does retirement sit on that list? If you’re younger like most military members on active duty who get excited about increases in base pay, it’s probably pretty low.

Your Financial Situation

If you're a little bit older, and you're nearing the time to begin military retirement planning, and you have built up your TSP account and other assets, and you're at a time where there's a lot of fluctuation or volatility. Your generation reached adulthood and established careers and families before the Internet age. For that generation, you didn't have the new blended retirement system, don't expect much from social security benefits, saving for future retirement income made sense, and so that's where their assets are now.

You still have a choice to protect what you have invested in the markets, and you should, specifically because you're going to need to rely on it more, and sooner, than the younger crowd. And maybe building new skill sets and building a business and all that kind of stuff isn't what you want to do.

Maybe you want to live off of your retirement accounts. And so now it becomes very, very important that your accounts not lose value. You don't have to gamble on the stock market and on the future. You can take advantage of tax mitigation and start to protect more of what you have so that you can give yourself a pay raise in retirement.

Variables that Impact Your Retirement Pay and TSP

We believe that today is the ideal time to regain control of your retirement savings, protect them from future market crashes, and position those accounts to avoid future taxes. 

Remember what it was like in 2008. Banks were failing, and in came the government with a big bailout, then very quickly the economy kind of jumpstarted, and people got back to work. They also continued to invest in their 401(k)s and save for retirement. The bailout kept things nice and happy for a while, but inevitably there is going to be a correction.

The bigger picture of what’s happening is that an unstable situation just keeps getting pushed down the road. Popular economic theory tells us that if you look back at all the crashes throughout history, there's always a rebound. But that rebound doesn’t mean everyone with money invested in the market recovers.

Retirees Already Taking Income

Millions of baby boomers are already in retirement and living off their savings, and this is where a lot of the wealth in our country has been concentrated.

The stock market is a long game; most of that population probably won’t live long enough to regain what they have lost or will lose during market corrections. They aren’t going to have a lot of confidence to reinvest what they do have back in the market.

For the economy to “recover,” prices need to come down to a point at which more people feel confident and begin investing again. Where's this transfer of wealth gonna come from?

The government is printing money out of thin air. And we pay for that with inflation and future taxes.

The Future Taxes Will Hurt Your Military Retirement Pay

Right now, taxes are at all-time lows. So they’re going to go up at some point, specifically in 2026 when the Trump tax cuts expire. So much of the money in this country is in tax-deferred retirement accounts like TSP or a 401K, which is a very dangerous bubble to be in. And yet, we are continually led to believe that effective financial planning means we should save for retirement in a retirement account, and that's kind of it.

If you have been saving for retirement, it's not that you've done anything wrong. What it’s really about is, have you asked yourself: what am I doing with this money?

Unlike on active duty when your tax benefits allowed you to spend a little above your means. Once you are taking military retirement pay and living from the income you may take from a tsp rollover, you will pay closer attention to what taxes take from your basic pay after you retire.

Military Retirement Risks

Retirement Income Insurance Protects Your Savings

Most standard financial planning experts would recommend that you spent years of service maximizing your thrift savings plan and other qualified retirement accounts like an IRA. This creates a situation where the majority of your own retirement savings are at risk of either income tax or stock market risks, or both.

Market Losses and Taxes are Costs

To combat these costs we offer new strategies that give you the option to invest in the market without actually putting your money at risk. With a certain kind of financial vehicle called a fixed index annuity, you are leveraging insurance on your stock market investment. 

This gets interesting. Think about insurance for a moment. Insurance costs money. But the purpose of insurance is to protect yourself from a devastating financial loss, right?

Insure Things With Value

If you total your car, without insurance, maybe you’re out $40,000. If your house burns to the ground, without insurance, you’re out hundreds of thousands of dollars. If you are unfortunate enough to end up with a really serious health condition, treatment can quickly run into hundreds of thousands of dollars.

You carry insurance against all of these things. And yet – how much money did you lose in the most recent stock market crash? Tens of thousands? Hundreds of thousands? How much did retired baby boomers just lose?

Why wouldn’t you insure yourself against that kind of devastating financial loss, too, if you know that it’s an option?

Because it is.

Not only that, but the car crash, the house fire, and the devastating illness may never happen; in fact, the odds are that they won’t. But another stock market crash will absolutely happen. The question is, will you be ready when it does? 

From Retirement Uncertainty to Private Pension Plans

With our new Veteran Retirement Rescue strategy, you can take your thrift savings plan and individual retirement accounts and lock in your profits with a guarantee that you're not going to lose any more money.

Stock Market Insurance

Using a fixed index annuity or FIA is an insurance contract on an investment in a stock market index. It works because you make a deal with the insurance company that goes like this: if the market loses money, you've got insurance on it, so you don't lose anything. But when the market is up, you get 80% of the upside of the market.

That’s the price of the insurance, and it’s a pretty good trade-off: 80% of the upside for zero percent on the downside. The insurance companies are simply putting insurances on your investment. And while anybody can do this using options or futures contracts, the best people who are doing it are insurance companies with a very, very long-term, low risk, and low-cost plan. They make money, and so do you.

How Does Life Insurance Factor In?

Veterans Group Life Insurance and the survivor benefit plan will not provide enough death benefit or annuity replacement to fully cover retired pay. This is why it is important to ensure savings must play an important role when you officially retire. We write more in other articles about how life insurance can better protect your retired pay and TSP once your benefits start.

Full Retirement Age for Military Retirees

Ultimately, saving, growing, and protecting your money isn’t only about putting all your money in a Roth TSP or individual retirement account. Regardless of how you see your life unfolding and what you want for your future, the question is, how do you actually fund yourself and your lifestyle without taking major or unnecessary risks, especially given the uncertainties that lie ahead?

People are living longer. Baby boomers are living longer. They're going to need to guarantee that they can live on their assets. The strategies that they've been taught were all about accumulating wealth. This makes sense, especially taking into account that the financial advisors teach accumulation of wealth because they get paid a percentage of the wealth their clients accumulate. They don't get paid when you're taking your money out of your accounts.

history of benefits

A New Way to Guarantee Your Military Pension, Base Pay, and TSP

At US VetWealth, we recognize that if you're focused on the end goal, which is to maximize the return on your investment, then the smartest thing to do is to not accumulate and protect that asset just so you can pass it on when you die; the smartest thing to do is to use it while you are still living in some way that is meaningful to you, and then enslave that wealth so that it creates more wealth, and we have strategies that can do both. 

The typical military financial planning approach only did one thing. It was only about growing wealth and passing it on to your heirs and may be living off of a little stipend of it. With the modern strategies, you get a lot more flexibility in how you access that wealth, which means that you also have the option to leverage it for more abundance than was previously possible, or that was previously only available when an estate passed.

Redefine Retirement

This paradigm shift allows for a redefinition of retirement, even for people who are a little further along in life or nearing what would be considered the traditional retirement age. We want to empower military service members to start making some real choices about their military benefits and leverage what military retirement benefits exist. If you know there are certain resources that you need and you don’t have them, we want to help you get them.

Traditionally, options for what to do with money or taxable income that is tied up in a retirement plan like traditional TSP were limited. You could keep your money there, or you could take it out, and lose possibly up to 40% of it to federal and state taxes and penalties.

Today, you have the option to take full control over your resources, both now and later. You can rollover thrift savings plan from one account to another, and once we develop a strategy for what you're trying to do and how you want to repurpose your accounts, your retirement-focused dollars, or other savings and investment accounts, we can design a financial strategy specifically for YOUR needs.

VETERAN RETIREMENT RESCUE Book Cover

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Learn About the Veteran Retirement Rescue Strategy

You've worked hard to save for retirement, but you're worried about the current economy and stock market. You don't want to risk losing what you've saved, but you also want to participate in stock market growth. 

Veteran Retirement Rescue is a retirement solution that guarantees the principle of your retirement savings while allowing you to participate in stock market growth without risking your assets to the next market correction.

Military retirement is something you've worked hard for, and it's important to make sure that it will be enough to cover your costs in civilian life. That's why we're urging all military retirees to schedule a free life retirement income consultation as soon as possible. During this consultation, one of our experts will help you create a plan that ensures you have the money you need to enjoy your golden years. Don't wait - schedule your consultation today!


Scott R. Tucker is an author, speaker and the founder of US VetWealth, a lifestyle and financial consulting brand that helps US Military Retirees achieve more autonomy and work/life balance. He likes to say, "I help the 1% who serve our country become the 1% who influence It." A West Point graduate, serial world traveler, military financial expert, and entrepreneur, Scott brings valuable experience and insight to those who have sacrificed so much in service to our country.

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