(This article by Kimberly Lankford originally appeared in the March 2026 issue of Military Officer, a magazine available to all MOAA Premium and Life members who can log in to access our digital version and archive. Basic members can save on a membership upgrade and access the magazine.)

 

Financial planning focuses on assessing a series of financial risks. As you set your goals and make decisions throughout your life, you need to determine which risks are worth taking and what you can do to prepare.

 

You might be thinking about buying your dream home, leaving the military for a higher-paying civilian job, figuring out whether you or your spouse can take time off from work to care for children or aging relatives, or even deciding when you can afford to fully retire. Each of those decisions entails financial risk. You don’t always have to make the safest choice, but you should understand the risks and how to mitigate them.

 

“Accepting a risk is completely fine,” said Lt. Col. Amy King, USA (Ret), a certified financial planner (CFP), the founder of Maryland-based Instar Financial Planning, and a Premium member of MOAA. “Making a decision that the numbers don’t support is OK as long as you understand what the trade-offs are and the magnitude of the trade-offs.”

 

As a member of the military and veteran community, some factors to consider in your financial decisions differ from those of civilians. For example, you might be unable to control where you live, and you might have a military pension or disability pay that changes the calculations. It’s important to put each decision in the context of your overall financial plans.

 

“Folks tend to focus on investment risk, but I also like to frame it as: What is the risk of not being able to live the life I want to?” said Col. Mike Hunsberger, USAF (Ret), a CFP, the founder of Missouri-based Next Mission Financial Planning, and a Life member of MOAA. “The big thing is knowing what you want your life to look like.”

 

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Here are some tips on how to assess several key financial risks throughout your life.

 

Reaching Your Goals

When people talk about financial risks, they tend to think of investments. Deciding how much risk you should take when choosing the investments for your Thrift Savings Plan (TSP) and other accounts depends on your goals and time frame.

 

If you have years before you plan to retire from working, you can usually aff ord to take more risk in your investments. You’ll have time to ride the market’s ups and downs in return for the possibility of higher returns over the long term.

 

“All investments carry risk, and each type comes with its own risk premium — the higher the risk, the greater the expected reward,” said Col. Pam Bergeson, USAF (Ret), a CFP and the founder of Florida-based Tailwind Financial Planning. “It’s essential to understand both the investment’s inherent risks and your personal risk tolerance, which is how comfortable you are with the market ups and downs, and your risk capacity, which is how much risk your timeline allows. If you need the funds soon, you have low risk capacity; if your goal is decades away, you can take on more risk.”

 

This is reflected in the TSP’s life cycle funds (otherwise known as L Funds), which begin invested primarily in stock funds when you have decades before retirement. They gradually become more conservative — shifting more money to the government securities G Fund and the fixed-income F Fund — as the date you plan to stop working gets closer.

 

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And you might be able to take more investment risk if you have the stability of military retirement pay and other guaranteed income streams.

 

“Many military retirees can afford to be more aggressive in their investments than the average investor because they have a pension and VA pay and Social Security, which are inflation-adjusted,” said Lila Quintiliani, a chartered financial consultant and accredited financial counselor who serves as MOAA’s program director for financial and benefits education/counseling. “So it’s going to come down to their risk tolerance and their goals.”

 

For his part, Chet Bennetts, the academics department chair and associate provost at the American College of Financial Services, calculates the equivalent bond rate to figure out how military retirement pay affects asset allocation.

 

For example, if you receive $30,000 per year in military retirement pay and the prevailing interest rate on bonds is 5%, that’s the equivalent of having a $600,000 bond allocation in your portfolio, said Bennetts, also a CFP and Marine Corps veteran. Having that guaranteed income means you can afford to invest more of your savings in stock funds without increasing your overall risk.

 

“With servicemembers and veterans who have multiple sources of income between retirement and the VA, when you treat them like the equivalent of what a bond would be giving you, it allows you to take more risks in your portfolio,” he explained.

 

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That’s the opposite way many servicemembers have invested their TSP money. Until 2018, the default investment for the TSP was the G Fund, which is a special non-marketable security that is guaranteed against loss. But having too much of your long-term investments in the G Fund exposes you to another risk: inflation.

 

Even though the investment won’t lose money, its purchasing power barely keeps up with inflation over the long term. “Because of that, there are so many servicemembers who have been way under risk for their investment allocation,” Bennetts said.

 

Hunsberger added that it can be painful to have a 20-year investment that only spent time in the G Fund.

 

“You basically kept pace with inflation or maybe a little better, but [you] squandered the opportunity” to potentially earn more over the long run, he said. “There’s taking too much risk and not taking enough risk to meet your goals, and how is that going to impact your lifestyle?”

 

But it’s not all math; there’s a psychological component. Even if you’re able to take on more risk, you should make sure you’re comfortable with the amount of risk you’re taking.

 

“The worst thing you want to do is think you can handle the risk, then something happens and you want to sell at the inopportune time when things are down. That can really hurt your long-term plans,” Hunsberger said.

 

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Buying a Home  

Even though the stability of a military retirement income stream can enable you to take more risks with your investments, being in the military can increase the financial risks you take when deciding whether to buy property. Because it’s not always clear how long you’re going to be stationed in an area, it’s important to do some extra math when deciding whether to buy a house and determining what you can afford.

 

“I think the conventional wisdom used to be that you had to stay three to five years somewhere to make buying a house in that location worth it,” said Quintiliani, noting that high housing costs have since extended that time frame.

 

Buying a home is “deeply personal” based on one’s preferences and risk tolerance, Bennetts said.

 

“I’ve worked with military folks who have done very well in moving to a new duty station, purchasing a home, and four years later made money. But there seem to be twice as many people who had the inverse situation.”

 

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Some key questions to ask yourself: Can you afford to continue to pay the mortgage after you move? What are the rental prospects in the area, and how do the going rates compare to your mortgage? Do you want to be a landlord, especially from a distance?

 

You can mitigate some of these risks by building up an emergency fund to help cover the carrying costs if you go for a few months without renters or if you need to make emergency repairs to the home. Don’t forget the cost of insurance and taxes, too.

 

“During your career, you don’t know how long you’re going to be in an area, but you might think about the calculus a little differently if it’s an area you know you’re going to go back to,” King said.

 

Keep in mind that the factors that are important earlier in your career — such as the school district and a neighborhood filled with young families — might be different after you become an empty nester. And as more time passes after retirement, accessibility becomes a bigger issue.

 

You’ll need to perform a different analysis when deciding whether to buy your retirement dream home or figuring out if you can afford to buy a second home. By that point, you can control where you live if you’ve separated from service. But you’ll no longer have a tax-free housing allowance, and you might not end up living there as long as expected.

 

“When it comes to buying a house after retirement, the idea of having a ‘forever home’ is very appealing to people who have moved all over for a while. But the truth of the matter is, that often doesn’t work out,” King said. “I see it play out quite a lot in friends and clients. They bought their ‘forever home,’ it was forever for five years, and now they’re moving.”

 

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Factors for choosing to leave that “forever home” can include too many stairs, distance from medical care, or proximity to children and grandchildren. King said she’ll often recommend clients rent for at least a year in an area they’re eyeing before buying a house after retirement. This helps them get a feel for the location before making a significant financial commitment.

 

“If you discover this isn’t the area, there’s no risk and you can leave whenever you want,” she said.

 

Taking the Time to Care for Others

Another significant financial risk families might face is whether one spouse can afford to stop working to care for young children or aging relatives.

 

“While child care can be expensive, one parent staying home isn’t automatically the cheaper option,” Bergeson said. “Beyond the cost of care, parents should also consider each parent’s earning potential, career growth, and retirement savings — factors that can have long-term financial impact on the family.”

 

King noted one common mistake is to solely look at the current cash flow when deciding whether it’s affordable to stop working to care for young children.

 

“That’s where most people stop with that analysis, but it’s so important — especially when it’s caregiving for young kids when the parent is young, too — to think about what are you giving up in terms of career opportunities and retirement savings. Those are big numbers on the young end,” King said. “That might be a perfectly acceptable trade-off for families who believe one parent should be home, but you can’t overlook it as a trade-off.”

 

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As a military spouse who frequently moves, it might prove especially difficult to find a job when you’re ready to return to work. The calculation is different if an older spouse is thinking of leaving work to care for aging relatives, King explained.

 

“The issue can be that if you leave the workforce in your 50s or 60s, you may not have an opportunity to go back because you’re older,” she said. “I believe it’s totally OK to make that decision, but you have to take into account the big math and not just the day-to-day math.”

 

Some ways to mitigate the risk include continuing to work part time or performing consulting work; these steps both provide an income and keep your job skills up to date.

 

Bergeson also encourages clients to investigate their ability to take family and medical leave, commonly referred to as FMLA, from their job.

 

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“That could allow them to step away from work temporarily to cover a family member’s medical needs while preserving their ability to return to work with minimal impact on their employment and earnings potential,” she said.

 

Another option, she added, is sharing the burden with siblings, where each alternates care responsibilities by months or even annually.

 

Transitions and Retirements

Deciding when to leave the military involves a major financial risk assessment. You might receive higher income in a civilian job, but what military benefits will you be giving up?

 

You can’t just compare salaries because you’ll no longer have a tax-free housing allowance, and you might have new state income taxes after you leave active duty, likely requiring you to pay taxes in the state in which you live.

 

Furthermore, ask yourself: If I don’t stay in the service for 20 years, what is the value of the military retirement pay I’m giving up? How much will I have to pay for health insurance if I’m ineligible for TRICARE or VA benefits? Would I lose other potentially valuable benefits if I leave before a certain time, such as the ability to transfer Post-9/11 GI Bill benefits to my children?

 

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You also might be more susceptible to layoffs after leaving the military. Consider whether you can continue to earn some benefits by going into the Reserves.

 

“There’s plenty of reasons beyond the money piece: It’s not an easy lifestyle, maybe you don’t like the moves, or the kids want to stay in one place,” but you must consider the financial trade-offs, noted Hunsberger.

 

The calculations become even more important when deciding when to completely retire from work. “Before deciding to fully retire, I always recommend a full financial model of all the possible risks and outcomes of your financial plans,” Bergeson said.

 

For a basic estimate, she recommends calculating your average monthly spend rate. “It’s important to look back on at least 12 months of spending, to factor in one-off expenses like home and auto repairs, and to include future Medicare premiums for age 65 and beyond,” she said. “Then add up your anticipated income including your military pension, any VA benefits, and your estimated Social Security income. Next, estimate what a safe withdrawal from your savings might be; 4% is a widely accepted factor to use as an estimate,” she added. “Finally, do the math. Is there enough income to support your lifestyle?”

 

If you receive military retirement pay, you’ll need to withdraw much less from your savings each month. But Bergeson has seen people underestimate their spending.

 

“In the first few years of retirement, they spend substantially more because they have trips they’ve wanted to take, home repairs that have stacked up while they’ve been busy, and hobbies that now take center stage in their lives,” she said. “I recommend increasing your estimated spend rate by 10% for the first five to 10 years to account for pent-up demand.”

 

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It’s also important to consider more than finances, King noted.

 

“The full retirement decision for a lot of people is going to be largely driven by money. Can they afford to retire? But I think that one of the key considerations is: What are you retiring to?” King said. “Most military servicemembers are very driven, and we worked very hard, and that didn’t change when we retired and we did that in our encore careers.”

 

So, what do you plan to do in retirement? Would a phased retirement help you financially and keep you more engaged?

 

“Visualize the type of retirement you want and where you want to live because that’s going to determine whether you can afford to retire,” Quintiliani said. “It’s not a simple mathematical calculation, either — some people like to work to feel like they are continuing to contribute.”

 

Kimberly Lankford is a financial expert based in Virginia and the spouse of a retired Army colonel.