Today, we're going to observe Veterans Day (Nov. 11) a little early by taking some time to talk about a community that's critically under-served in the financial information space: American military servicemembers, veterans, and their families.

The Tea

Today, the U.S. is home to roughly 1.3 million active-duty troops, about 770,000 people in the National Guard/Reserves, and more than 18 million military veterans. That's nearly 6% of the country's population—and that doesn't include the husbands, wives, children, and other family members who fall under their financial umbrellas.

However, while veterans share many of the same financial challenges as ordinary citizens—finding a great bank, figuring out how to save for retirement—not only do those challenges often look a little different, but they also face other obstacles and difficulties that are unique to service and post-service life.

And like with many other smaller communities, these specific issues typically go under-reported and under-advised by the financial media, present company included.

Today, we'll try to start shining a light on these issues, beginning with a look at some of the financial realities of American servicemembers, veterans, and their families—as well as some of the resources they have at their disposal.

The Take

This week, I'd like to introduce you to Kaj Larsen, a U.S. Navy SEAL veteran, award-winning filmmaker, philanthropist, technology entrepreneur, and the Head of Military Investing and Communications at Siebert Financial.

He has no shortage of accomplishments and designations, and he had no shortage of things to say in our discussion about military finances.

Please read on as Larsen shares his thoughts on finances as it pertains to the active-duty and veteran community.

Military Pay

WealthUp: How does military pay work, and does that system present any unique challenges?

Larsen: Our pay is set by Congress. If you want to make more money, you don't have the option to march up to D.C. and negotiate a pay raise with your boss. You have stratified [tiered] pay. And as happened over the past few years with inflation, military pay has not been raised commensurate with inflation. The military has been more impacted by inflation over the past few years because of the stratified wage structure.

In 2025, the [cost of living adjustment] is 2.5% for the military. 

[Editor's Note: Military COLA is linked to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is the same index Social Security is linked to. Specifically, it looks at the percentage increase in CPI-W from the third quarter of the most recent year that a cost-of-living adjustment was made, to the CPI-W from the third quarter of the current year. That measurement won't always look like headline inflation from one year to the next, as we note in our Social Security COLA explainer.]

I think the thing people forget about inflation is … if you gain 20 pounds one year, and then 10 pounds the next year, then 5 pounds the next year after that, you're still 35 pounds overweight. So inflation is cooling, but prices are still relatively high.

In 2024, Congress passed an economic hardship act, and the monthly bonus amounts on average, per soldier, were $120 over six months. Yes—$120 divided by six months! It benefited around 266,000 people, the lowest-ranking people up to the grade of E3 [the third enlisted paygrade]. 

But all this is indicative of how inflation actually impacts the military more than the civilian population.

Another challenge is that you can't quit in the military. A pledge of military service is a blank check to the U.S. government, up to and including the price of your life. You do not really have the option of quitting and finding a new higher-paying job. In some ways, upward mobility within the military is highly rank-dependent in terms of compensation, and there are set promotion rates.

It's an "up-an-out" system. At some point, you have to be promoted, or you'll be pushed out if you don't achieve certain ranks.

Advantages That Servicemembers Enjoy

WealthUp: Conversely, are there any financial perks or assistance if you're in the military or a veteran?

Larsen: There are other economic incentives and perks that military folks can and should take advantage of to offset the cost of lower/static wages, such as:

• Maximizing the BAH. That's "basic allowance for housing."
• Maximizing the specialty pays. If you have a language skill, you can pass a test, an extra $75 a month depending on how you score, but you have to be proactive in searching out these special-duty pays. 
• Health care. Another thing to remember is that military health care is provided for, so this is an advantage over their socioeconomic peers.

Yes, you're in this trapped system. But within that system, there are certain advantages to exploit. 

Because of all of those other specialty pays and free health care, military members often have more disposable income than their socioeconomic peers. 

Let's say there's a plumber and they make $36,000, and you're a Marine Corps lance corporal making $36,000, they're not necessarily the same because of BAH, health care, etc. If you maximize those benefits, you can potentially have more discretionary income—and thus more opportunity to invest and build wealth for the future.

There are other advantages military personnel have, including the GI Bill (which helps cover costs for your education or job training), other educational benefits, and even retirement options. 

The Military and Retirement

WealthUp: Speaking of which, what does the military's retirement program look like?

Larsen: The military system used to have a fully defined-benefit system (do 20 years, you're eligible), but now it's the Blended Retirement System (BRS), which combines a traditional pension with a defined-contribution system. That's the Thrift Savings Plan (TSP).

The TSP is the largest retirement pension system in the country. It's the same one federal employees use. It's almost identical to a 401(k). It's a qualified retirement account with all the tax advantages and shields. 

The reason they did it was retention. A lot of guys were not necessarily going to stay the full 20 years. But they changed the retirement system to, instead of just doing your four-year contract and getting out, you do six years or eight years, and that TSP is completely portable. They can take that with them to their next job, so that's a big change.

Importantly, it's a qualified account, so you can merge it to a 401(k) in a civilian job without penalty. [You can also roll it over into an individual retirement account (IRA).]

The TSP has a few basic funds, but the most common one is the "G Fund" [Government Securities Investment Fund], which is a non-aggressive fund. All of the funds are very basic, cookie-cutter options. And this is where the private wealth community not playing with the military wealth community has been a disadvantage. Because [military savers] have only had these rudimentary boilerplate options, they haven't had access to the financial knowledge and opportunities other people might have.

Challenges Servicemembers Face

WealthUp: What would you consider some of the biggest financial-related challenges that servicemembers and veterans face?

1. 1. KNOWLEDGE/EDUCATION

Larsen: One of the biggest impediments to military savers is the knowledge gap. 

The population base [of the military] is from a lower socioeconomic class. For those people, the military is one of the best ways to change your economic trajectory because of both the educational and experiential benefits. But within that demographic, there's a low level of financial literacy.

I think financial literacy education, as it pertains to investing, needs to go like this:

1. Investing vs. saving. You can't invest until you save. We talk to people about develop a savings habit and having proper savings accounts.
2. Understanding compound interest, the "eighth wonder of the world."
3. Learning how to create a diversified portfolio.
4. Developing a growing understanding of how the market works

We also have an entire section devoted specifically to military financial knowledge ("military money," as I call it). How to vest in the TSP, how to decode your leave and earnings (LES) statement, arrival at your first duty station, permanent change of station (PCS) moves.

2. OPTEMPO

Larsen: Operational tempo [OpTempo] isn't just the fact that military members deploy for six to 12 months, depending on the geopolitical environment, but they also have to undergo a lot of training. Especially in special operations [SpecOps] communities, you could have days where you are theoretically at home doing a train-up cycle for deployment, but you're actually on the road for 270 days preparing for deployment. 

All of that equates to nonfamily time, and time away from your pillow, which puts increasing stress on military families. And military spouses often bear a preponderance of the economic responsibility in a military household.

3. PERMANENT CHANGE OF STATION (PCS)

Larsen: Quite often, soldiers do permanent change of station (PCS) every two to three years. So I might be stationed in San Diego at Seal Team 1, then I get assigned to Seal Team 8 in Little Creek, Virginia. Now I have to move my family across the country.

If you're leaving your job every two to three years, that's an additional challenge, hurts your income opportunities. Yes, the military will pay to move you across the country, but there are secondary costs:

• Loss of equity in your home. If you buy a home in San Diego, but the market fluctuates poorly and your home value actually goes lower over two to three years, but you still have to buy a house in Virginia, that's a challenge of constantly uprooting.
• Deposits for utilities.
• Transactional costs (a gym membership paid a year in advance being wasted, for instance).
• Large changes in insurance costs.
• Changes in state and local taxes.
• Changes in property taxes.
• Impact on any other family member's job and earnings power.

4. WEALTH SERVICING

Larsen: A large part of the military community that has been left behind by the private wealth community. They have few resources, low financial literacy, and there are a host of predatory industries out there designed to take military people's money. 

When I first started Guild Financial, which is now Siebert.Valor, I mapped the distance from Benning, Georgia, to the first used car dealership that offered young servicemembers a 21% service loan based solely on their paycheck. You have E3s making $36,000 a year but buying a $50,000 Mustang. The distance was 0.3 miles. You could walk right off base. And right next to the used car dealership was a payday lender, and next to that was a tattoo parlor, and then a strip club. 

So there's a whole industry designed to take their money, but not a giant industry designed to take on their financial needs.

My founder and I started to build products specifically for the community we know. Unlike their civilian counterparts, a lot of people exit the military and retire after 20 years. They're 42. Some are 38. They often go on to have second careers based on military experience. So retirement possibilities appropriate for a 65-year-old are not the best for someone who is 38 and often going to have a second career and a second pension. So we wanted to tailor portfolios and products for a community that we understood.

In addition to self-directed investing, we have more sophisticated products for managed money. I just built a whole portfolio called the Valor Portfolio, geared toward companies that hire veterans or support America, whether that's servicing the military, federal government, etc. A company like Palantir (PLTR) is a good example of this kind of company; we all use Palantir in the military, so we're all familiar with it. (Palantir's price is high, though, so it's not currently in the portfolio because of its value proposition.) But we have a whole host of companies and exchange-traded funds (ETFs)—like iShares U.S. Aerospace & Defense (ITA) and iShares Cybersecurity and Tech (IHAK)—oriented with this filter. It's under the Warren Buffett principle of never betting against America. Yes, the Valor portfolio is geared toward defense, hiring, etc., but it's an example of the ways we're making investing more palatable, understandable, and value-aligned.

5. DEATH

Larsen: The financial challenge that's most extreme is … we wear the cloth of a country, and we've been at war for the past 20 years, so especially in my community, there's a chance that a military member will be killed. Suddenly, their families lose that earnings power.

There are compensatory systems, sure, but there are also psychological problems. Fortunately, there are resources for both.

Gold Star families are sacrosanct in our community; we do everything to support and protect them. There are also other government resources available, such as death benefits, Servicemembers' Group Life Insurance (SGLI), death benefits for widows, health benefits like [what's offered by] Veterans Affairs. And there are a host of philanthropic organizations that take care of families, too.

The challenge is to both take full advantage of government resources but also learn and understand the ecosystem of nonprofit services designed to help. 

Two great examples of the latter are the SEAL Foundation and SEAL Future Foundation. They do things like pay for full tuition (whether that's elementary school, high school, or college) for Gold Star children. Full stop. They'll just write the check. They also offer counseling services, and even things like family trips to Disney World.

The military is pretty good from a command perspective—they provide a pre-deployment checklist, including updating your will and all of those things in the event a worst-case scenario happens. It's pretty automatic.

Still, because of the higher probability of risk, military families have to be more conscious of their planning and emergency funds.

Financial Resources for Military Families

WealthUp: What are some of the most important resources that servicemembers and veterans can tap for knowledge or financial help?

Larsen: One of the most important things for military folks to think about is that we don't go into combat without a battle plan. And we shouldn't go into the financial landscape without a financial battle plan. You have to have a plan that you discuss with your family. And you have to have someone who can execute that plan—sometimes in your absence. 

For that, there are several good resources for military folks, including:

• Department of Defense Office of Financial Readiness
• Command-level programs
• Financial advisor at every command
• Private-side philanthropic organizations
• Nonprofits and foundations that help raise the knowledge base when it comes to financial services

Military OneSource is another good resource if you're a veteran needing financial counseling. It acts like the "Google" of the military community—not necessarily giving you direct answers, but effectively directing you to the right place.

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Thank you for your time this weekend, and thank you, servicemembers and veterans, for your service.

Riley & Kyle

WealthUp

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