As May draws to a close, financial advisors are intensifying efforts to assist military clients grappling with inflation and market turbulence. The annual adjustment of military pay and benefits in January often fails to keep pace with rising costs throughout the year, creating budgeting challenges for service members.
Mike Hunsberger, owner of Next Mission Financial Planning and a member of XYPN, notes that military pay increases—such as annual raises, longevity bumps, and promotion increments—are typically received in January. However, the cost of goods and services rises steadily, leaving many families struggling later in the year. To address this, Hunsberger advises clients to save or invest a portion of each pay increase immediately, building a buffer over time that can be tapped for specific goals or emergencies.
One significant shift Hunsberger has implemented is recommending military families increase their liquid emergency savings from three months to six months of expenses. This change is driven by recent Congressional budget impasses that have threatened paycheck stability—a hallmark of military life. “With short-term rates on high-yield savings accounts, clients can still earn a reasonable return while maintaining liquidity,” Hunsberger said.
Amy King, founder of Instar Financial Planning, emphasizes that uncertainty is inherent in military life. Her retirement planning approach accounts for the likelihood that plans will change due to geopolitical events or service-related injuries. “We always know these things are a possibility and we plan for it,” King said. She recommends using benefits like the healthcare flexible spending account (FSA), dependent care FSA, VA education benefits, and transition assistance programs to reduce out-of-pocket costs.
King stresses the importance of advisors staying current on federal and state military benefits, as well as nonprofit programs. “It’s a lot of work, but it’s one of the most valuable ways a financial advisor can serve military clients,” she added.
Derek Merkler, a financial planner at Trophy Point Financial Planning and XYPN member, treats service-related health risks and geopolitical volatility as separate planning issues. While military service carries higher risks of injury or disability, he notes that these outcomes are not predictable enough to base every plan on a medical retirement. However, the bureaucratic process for medical discharge provides time to adapt the core plan.
Geopolitical volatility, Merkler says, raises the importance of contingency planning for families. “In the worst-case scenario, the focus shifts from the service member’s own retirement to preserving the surviving family’s lifestyle by coordinating military survivor benefits, life insurance, savings, and the estate plan,” he explained.
Merkler also highlights a specific benefit gap: Servicemembers’ Group Life Insurance (SGLI). Although the maximum coverage increased to $500,000 in 2023—the first increase since 2005—many service members with spouses or children remain underinsured. He advises clients to consider supplemental coverage to close the gap.
For junior service members, especially those with families, cost-of-living gaps are most acute because a larger share of income goes to necessities. Merkler helps these clients track spending to make intentional, values-based decisions, separating essential expenses from habitual or stress-driven spending.
Advisors recommend leveraging military benefits that adjust with inflation, such as the Basic Allowance for Housing and retirement pay, to mitigate the impact of rising prices. By combining these strategies with disciplined savings and contingency planning, financial planners aim to help military families navigate both current inflation and long-term financial goals.
