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Options for Investing While in the Military


Military life presents some unique opportunities that other citizens do not have, such as tax-free combat zone pay, $0 down payment mortgage loans, and the potential for retirement at an early age. Servicemembers also have the ability to invest financially in their futures through a variety of benefit options. 

The earlier you start investing while you’re in the military, the better off you’ll be. Early investing creates disciplined financial habits and enables the magic of compounding to work longer. Investment returns compound when you earn returns not only on your initial investment, but also on your previous returns from that investment, which helps you harness market growth and build wealth.

In addition to the standard investment opportunities available to most people, there are some unique investment opportunities available to military servicemembers. The following list includes both general and military investment options.

Military Pension

Your military pension is the most important financial benefit offered to servicemembers. The choices you make throughout your military career will impact your final payout. For active duty servicemembers, all of the military retirement systems include an annuity component if you serve 20 years, which is guaranteed by the government and increases for each additional year of service and with the cost of living. The higher your rank and the longer you serve, the greater your pension. For National Guard members and Reservists, your pension is based on a point system, which is determined by a number of factors, some of which your choices will dictate.

Thrift Savings Plan (TSP)

The government-backed Thrift Savings Plan (TSP) is one of the best retirement programs available. Similar to a 401(k), the TSP is an easy way to invest pre- or post-tax income for retirement. With the pre-tax option, you don’t pay tax on the income you contribute now, and your investments grow tax-free, but you do pay tax when you take distributions from the account in retirement. With the post-tax (Roth) option, your contribution is made after income taxes are paid, but the earnings grow tax free and withdrawals in retirement are not taxed. Best of all, the military will match up to 5% of your base pay. While the default investment (i.e., the G fund) is composed of low-risk government securities that provide conservative returns over time, there are also higher-risk options available for potentially greater gains. 

Savings Deposit Program (SDP)

For servicemembers serving in a designated combat zone and receiving Hostile Fire Pay, the Savings Deposit Program can be used to save that money and earn 10% annual interest.

Real Estate

Investing in real estate offers a number of tax benefits, provides regular passive income, and can help protect against inflation. VA mortgage loans are a popular military benefit because you can qualify for a  $0 down payment on most homes and they offer competitive interest rates. While VA Loans are not designed to be used for investment properties, there are still ways to use them that allow you to make money off rentals. For example, it is possible to purchase up to a quadplex (i.e., 4 units), as long as you are living in one of the units; you can rent out the other three.

GI Bill

While this is not a financial investment, it is an investment in your future — or in your children's or spouse’s futures — and it can save you a lot of money. In 2009, the military began allowing members to transfer their Post-9/11 GI Bill benefits to their spouse or children in exchange for extending their service. The transfer covers in-state tuition, housing, books, and supplies. Only servicemembers who have served at least six years are able to transfer their benefits.

Get Investment Management Support from AAFMAA Wealth Management & Trust

Whatever your goals, risk tolerance, or time horizon, your personal team at AAFMAA Wealth Management & Trust LLC (AWM&T) can work with you to develop an investment strategy and define the right portfolio for you. Call 1-888-961-5427 or contact an AWM&T Relationship Manager online today to discuss your military investment options.

Common Questions

Yes, your AAFMAA policy will cover a death related to COVID-19 if you are an existing AAFMAA Member with a policy issued more than two years ago or prior to a COVID-19 diagnosis, even within the first two years the policy is owned. The only exclusion on AAFMAA policies is death by suicide within the first two years.

However it is important to note that death claims made against an underwritten policy issued within the last two years are contestable, regardless of the cause of death. Contestable death claims are reviewed and subject to denial if we find undisclosed material information that would have changed the outcome of the policy issuance decision.

Yes, if you are applying for a policy that requires medical underwriting, you must disclose a positive COVID-19 diagnosis. Not doing so would be considered material misrepresentation and could result in your policy being voided.

As mentioned above, death claims made against an underwritten policy issued within the last two years are contestable, regardless of the cause of death. Additionally, you don’t have to die for a material misrepresentation to void your contract. The policy can be voided at any point within the first two years if AAFMAA finds that you provided incorrect information about your health history and that the correct information would have prevented us from issuing the policy.

If you were diagnosed with having contracted COVID-19 prior to applying for life insurance and you failed to disclose that diagnosis on your application, your death claim could be denied. This is because, if you had disclosed your COVID-19 diagnosis, we would have followed current industry guidelines and possibly postponed acceptance of your application. In this case, your policy would be voided and your survivors would only receive a refund of the premiums you had paid.

No, the COVID-19 vaccine is classified as a typical wellness check, for which we do not require disclosures and do not deny death claims. We strongly suggest that our Members follow CDC recommendations and receive the COVID-19 vaccination as soon as they are eligible.

Industry guidelines indicate that a COVID-19 diagnosis may postpone acceptance of your application for a period of three weeks to 1 year following recovery, depending on the severity of symptoms and treatment. This timeline is subject to change as new information becomes available and industry guidelines are adjusted accordingly. Those who experience a full recovery may be considered for issue before 12 months, while serious cases (such as those which required a ventilator) may be postponed for longer.

No. Receiving a COVID-19 vaccination will not affect the acceptance of your application.

No, AAFMAA cannot change your premiums or your health classification on a policy you currently hold. Your premiums and health classification will remain the same, even if you have been diagnosed with COVID-19 or you are at a higher risk of exposure due to your job, living situation, or recent travel, or if you get one of the COVID-19 vaccinations approved for emergency use by the USFDA.