3 Steps to Retire Early on a Military Salary

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BLUF: In college I paid off $32k in student loans in a year. On a military salary I paid off a $280k mortgage in seven years. I’ve bought several rental properties with cash. I did this through paying off debt, having a high savings rate, and investing well.

My name is Rich. I’m an Air Force Lt Col of 16 years. I’m married with 2 young kids.


Here is my message:

Don’t work until you’re 65. Not even 55. You can save enough money to retire in 20 years or less. I mean after 20 years of work, NEVER WORK AGAIN (unless you want to). This method doesn’t depend on a military retirement, that’s just a bonus!

I currently make enough money from my investments to live on. I could quit working today, but I’m less than four years from a generous military retirement.

I worked for Fidelity Investments as a stock broker during college. I’ve read almost every finance and real estate book out there.

Most of what I’ve read is useless. Money is strikingly simple.

Image of piggy bank with hundred-dollar bills falling into it | The-Military-Guide.com

Less than 20 years!

  1. Get out of debt
  2. Have a high savings rate
  3. Invest


1. Get out and stay out of debt

If you are in debt, get out. Debt keeps us poor forever.

This has to be done before you worry about savings, investments, or real estate.

My wife knew this. When I was in college and we were still dating, she asked me how much I owed in student loans. I really didn’t want to answer the question.

Why not?

Even though I had an ROTC scholarship, worked almost full-time, and had free room and board because I was a resident advisor in the dorms, I still borrowed money through financial aid whenever I could. It wasn’t for tuition, books, or rent, it was for traveling with friends and eating out all the time.

Not smart.

I reluctantly totaled up all my student loans from 4 years at school. $32,000. Ouch.

My wife told me time to get out and stay out of debt!

We both took extra jobs, and paid off my debt as fast as we could. In about a year it was gone. We started off our marriage debt free and vowed to stay that way.

I don’t know if I really vowed. It was more she demanded and I accepted.

My wife is a smart woman. I’m glad I listened to her.


2. Have a high savings rate

So we have no debt. Now what?

Save as much of your paycheck as you can.

That doesn’t sound like fun!

This may not sound easy or fun, but it’s the key to retiring early.

Most investment advisors will suggest that you save 10 or 15 percent of your paycheck. Saving at that rate, you’ll still be working ‘til social security age.

For an early and comfortable retirement, have a goal of saving 50% of your pay.

I can hear you all screaming at me now.

That’s impossible, I don’t make enough as it is!

I hear ya, but it is NOT impossible. To do this, you need to change how you look at and spend money.

In my BLUF, you saw that I did some impressive stuff with paying off debt. I wish I could tell you those results can be had while owning two new cars, two current model iPhones, cable with the NFL package (hell yeah!), eating out all the time, taking vacations in Hawaii, living in big houses, and having beautiful furniture from all over the world.

Quite the opposite.

The only way those results are possible are by NOT doing those things. You need to maximize your savings by lowering what you spend in a big way.

It’s a sacrifice worth making until you are out of debt and have a large nest egg of savings. It may take ten of fifteen years, but ultimately, it will allow you to live the rest of your life comfortably.

Here are examples of things I did to make awesome boosts in my savings rate:


I didn’t spend all my BAH. Rent a house that costs a lot less than your allowance. That’s money in your pocket each month. In Monterey, CA while at DLI, I banked $1000 a month this way.


I owned dependable, practical, used cars that were paid off. My criteria: At least five years old, one prior owner, low mileage.

Buying a new car is insane. Leasing new cars is worse. Don’t even think about it. Even with military discounts, you are getting KILLED by depreciation.

If you really want to supercharge your savings rate, try having one car, or maybe even no car. Living near work can make this possible. Bikes are great exercise and cheap as hell.


We vacationed once a year. When we did vacation, we didn’t stay in hotels and rarely ate out. We used AirBnB and cooked most meals at home.

We didn’t fly to our vacation destinations. Instead, we took advantage of existing geography and went somewhere driving distance. The rest of the year, we would take several day trips on the weekends.

Eating Out

This is a social norm. Get together with friends and relatives and go out to eat.

I almost never eat out. I cook at home. I have people over for dinner instead of taking them out to eat. I just had relatives stay with us for a week. We ate most meals at home. They liked it!

When I do eat out, I skip the appetizers, alcohol, and desserts.

Gift Giving

We spend a fortune giving each other expensive gifts during several holidays throughout the year.


Because that’s what everybody else does. Well, everybody else is probably also in debt.

I have a deal with my wife. We don’t get each other anything!! Christmas, New Years, Birthdays, Valentines, Anniversary, I’m off the hook!

Not everyone will get away with this, but it saves a small fortune. Our kids know they get one modest present on their birthday and one at Christmas.

Bottom line, drastically reduce the amount of money spent on gift giving.

Other Crap

I don’t buy crap I don’t need. You don’t need the newest iPhone every year. Your wife doesn’t need new clothes every time she goes to the mall. You children don’t need new bedroom furniture sets every time they move. You don’t need a Harley, boat, or timeshare. If you have these things, sell them. Be practical.

Buy what you need and save the rest.

I realize this seems like a huge sacrifice. I felt like it was while I was doing it.

Then I woke up one day, not too long ago, and realized I was pretty well off financially, even though I still had several years to retirement. That’s not a bad feeling!


3. Investing well

Now that you have no debt and a high savings rate, it’s time to invest that money.

I do what Warren Buffett suggests and what many early retirees have done.

Invest all your money in the S&P 500 Index fund.

Make sure it has low fees.

Nothing else.

Financial advisors will suggest that you can beat the market by listening to them. They won’t beat the S&P 500, but they’ll charge you while trying!

This is what order you should invest your savings in once debt is gone:

First, fully fund your TSP to $18,000 max a year. The TSP has a fund that mimics the S&P 500 Index. Buy that one.

TSP (and IRA) accounts are basically a legal way to “cheat” on taxes. The tax benefit allows this money to grow much faster. This is why they are so important.

Next you fully fund an IRA for you and your spouse. Each of you can contribute $5,500 a year. Same thing. Max it out and put it in the S&P 500 index. Easy.

When these retirement accounts are fully funded, then you start funding a normal brokerage account that can hold mutual funds. All it needs is S&P!

The S&P 500 historically has grown at an average rate of about 8% a year. Some years it has gone up much more than this, and some years down much more.

The important thing to remember is you NEVER panic when the market drops and NEVER sell. It will drop. It’s doesn’t matter. It always comes back. Your money will be there when you retire. With interest.


Bonus: Real Estate

What I’ve outlined so far is the best way I’ve seen to invest and retire early, and it requires absolutely no skill and no work. It’s autopilot investing.

Image of red roof over a rental property made out of stacks of money to illustrate the idea of investing in real estate. | The-Military-Guide.com

Only do it if you’re fascinated by it.

I used this method to save up a fat nest egg early in my career. I then caught the real estate bug and started buying rentals.

I’ll admit, it’s more work than what I outlined above, but it allowed me to boost my passive income even faster and it acts as a hedge against having all my investment in the market.

My rental income has almost caught up with my military pay.


In Conclusion

I want to help military members navigate these tricky financial waters. Comment below or send me an email. I’m happy to answer any questions.

If you are interested in learning more about how I’ve done real estate and investing, read my first blog post.

My Wife Knows Money

Rich on Money



WHAT I DO: I help you reach financial independence. For free. I retired in 2002 after 20 years in the Navy's submarine force. I wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

  1. Thanks for the read!

    I am a 2ndLt leaving the Basic School in February and heading down to Pensacola, FL for flight school. I contribute 5% to Roth TSP, and have maxed out a separate Roth IRA for the past two years and plan to continue. As a bonus, I want to get a head start on property investing. My next goal is to buy a house/condo/apartment (most likely in Pensacola), rent to my roommates, and continue to rent when I leave. In theory it sounds like a great idea, I wonder why more people don’t do it. I have found that the most common excuse is that it is just too much work. Do you have any advice for me in regards to buying my first rental property? Thank you for your time!

    • You’re welcome, Matt!

      First, you should read Rich’s blog posts about his real estate. Next you should read all of Bigger Pockets’ free material (and maybe buy a book or two). I know the founders well and they have one of the nation’s largest networks of real estate investors.

      It’s not just the time and the work (and the hassle). How well will your roommates take care of your place? How about total strangers after you move on to the next duty station? It’s also the risk. Will you be adequately compensated for the money you invest, and could you have achieved a higher return somewhere else? Or could you at least achieve the same return with less risk?

      At this point in your career, you don’t have a lot of time. However you have a relatively high income and you can easily contribute more to the Roth Thrift Savings Plan. Pay off your consumer debts. Try to save at least 15% in the Roth TSP (in the L2050 fund or more aggressively in the C, S, & I funds). Continue to maximize your Roth IRA contributions. Get 99% of the market’s return (with diversification) and about 1% of the effort. Live with roommates and save your excess housing allowance (in a money market or CDs) for the first down payment on your first property.

      Now spend your time getting qualified. O-1s don’t have a lot of time (or qualifications) and you’ll earn far more from practicing your craft than from managing real estate on the side. Choose your investing asset allocation by deciding how much you’ll invest in passively-managed index funds and how much you’ll invest in real estate. Learn more about real estate while you’re getting qualified, but don’t jump in until you finish your military training.

      By the time you’re qualified you’ll be much better at picking out distressed & discounted rental properties and analyzing their cash flow. That’s the real “head start”.

      Any time you find a big fat return from an asset, invert the question and find the asset’s hidden risks. Make sure the price you pay accounts for the risk you’re taking on.

  2. Rich, how will you gain access to all of the money in TSP/IRA in the years between military retirement and 59 1/2? I read the posts from Mad Fientist about this issue. Just wondering what your approach will be. Also, where would you put “pay off your mortgage” on this list? Do you count it as regular debt and therefore focus on that before investing? Thanks and great work.

    • BK,

      Doug gave a very thorough, thoughtful answer to your questions.

      I guess I would say that you don’t have access to your TSP until 59 1/2. It’s just like a 401k or an IRA in that sense. The exception to this is a Roth TSP. You are allowed to take out the money you contributed penalty free before 59 1/2, but this is not always wise for a complicated reason. I’m going to paste an excerpt from a website that explains this:

      The rules on the Roth option of the TSP are confusing. You will not be “penalized” if you take money out of your Roth balance before 59 1/2, however, you will have to pay federal income tax on the earnings in your Roth balance because your withdrawals will not be considered “qualified” for tax purposes. For Roth withdrawals to be considered qualified (and therefore tax-free), you must have had your Roth TSP for at least 5 years and be at least 59 1/2. It sure feels like a penalty, though it is technically not one.

      I’m of the Dave Ramsey crowd philosophy when it comes to mortgages. I currently have several rental properties, and they are all paid off. I paid off my primary residence mortgage before I even started buying real estate. I did this on just my military salary and frugal living. It is possible. For me, paying off your mortgage comes before any other non-retirement account investing.

      • I retired, with forethought, at 54 (I turned 55 later that year). If you retire “in the year you turn 55 or later”, you have full access to TSP, penalty free. I invested the maximum every year since TSP started (painless), so nice chunk of change in that account.

    • Thanks, BK, good questions on two perpetual debates!

      I’m not Rich, but in my family we retirees have rolled our (traditional) TSP accounts over to traditional IRAs and we’re converting them to Roth IRAs. We’ll do that at a lower tax bracket (now) than when we’d have to start RMDs, and of course Roth IRAs don’t have RMDs. When our daughter and our son-in-law leave the military, they’ll leave their assets in their Roth TSPs until five tax years before they’ll need to tap the funds– and then they’ll roll them over to a Roth IRA.

      Mad FIentist does a great job on explaining the Roth conversion ladder.

      “Pay off the mortgage” is more controversial. If you have a stream of income from a military pension or rental properties, then you’re amortizing a fixed payment with steady income that tends to rise with inflation. In addition, you can leave more of your assets invested in real estate (or equities) with returns that may exceed the cost of the loan. My spouse and I are currently refinancing our home & rental property mortgages into a new 30-year mortgage fixed at 3.25%. We’d earn nearly that much from seven-year CDs, let alone the yield on an equity dividend fund. However we’re using our military pension to pay down that mortgage, and I’ll make the final payment when I’m 86 years old.

      I’d be a little more hesitant to carry a mortgage in retirement with only an investment portfolio of equities and no other annuitized income. The success rate is high but there’s still a failure rate. The only way to insure against that failure is with an annuity, even if the annuity is “just” the income from Social Security offsetting the mortgage payment.

      There’s another side to that discussion which is every bit as important: the emotional aspect of behavioral financial psychology. If carrying a mortgage keeps you from sleeping comfortably at night, then the financial logic is not much help. In that case it’s better to pay down the mortgage rather than to continue to grapple with the financial aspects of offsetting liabilities with assets.

  3. I’m in the military as an E4 looking to save and do business the same way but how should I start since I make a significant lower amount than officers. Also I don’t make BAH so I cant save no where near 1000 however I paid off my car an have few bills. any advise tips or articles books suggested would be great help. I stay on biggerpockets podcast learning a lot but I just wanna jump into it now without getting loans.

    • Tysan,

      It is possible! As of today, I am an E5 (5yrs) and in an overseas short-tour dorm (no BAH or BAS). I have a mortgage and a good pile of debt from remodeling that house. Recently I found my way to minimalism and eventually Mr. Money Mustache.com. In these past three months, I’ve gone from barely paying bills each month to putting aside $600-$800 a month.
      You do NOT have to be an officer to become financially independent, and should only follow the career path you think is best for you. The most important thing is how you spend your money, and knowing when NOT to spend it (I promise you make more than enough to live well… the difference is knowing what living well w/o excessive consumerism it.) Check out MMM, you will not regret it.

    • As Rich says, it looks like you’re doing fine, Tysan. You’re learning and building skills, and the money will follow as you earn your promotions.

      Maintain your control of your expenses, learn your job and pass those promotion exams. Get your college degree if that interests you or pursue more professional certifications. As you approach the end of your active-duty obligation then consider your next step– continuing your enlisted career, or getting a commission, or leaving active duty for a combination of Reserve/National Guard duty and a bridge career with a real-estate side hustle.

      I agree with the cash-only approach (for now). There’s no reason to take the risk of leverage until you feel more confident in your skills and finding a bargain and managing it.

      If it helps, here’s some numbers on how your savings can grow with each annual pay raise, longevity raise, and promotion.

    • Tysan,

      My advice to you is simple. You have to find a way to make more money. Enlisted pay is quite low. If you want to stay in the military and make it a career, OTS, and switch to an officer’s salary (still not very high). Also consider getting out and making more money on the outside. If you’re married, consider having your wife work. Also, side hustle. Find other jobs to do on nights and weekends to make money.

  4. SNMontague,

    No debt is what I’m all about. I’ve even stuck to no debt in my real estate investing. It’s a liberating feeling.

    The advice in my article isn’t for everybody. Some people just need to have it all now vs. later. Buy now, pay later. It’s fun while it lasts, but you retire poor (if you retire).

  5. Peter,

    True what you said about interest rates rising. It won’t concern me, as I tend to wait until I have enough cash to buy, then purchase outright. All my real estate is debt free, including primary residence. To those who decide they must use a loan, I say PAY IT OFF FAST!!

    I do not have the temperament or personality to be a landlord, that’s why I use a management company. Once i get a rental in place, it’s on auto-pilot. I don’t deal with any of the BS.

    I agree marriage and personal health is important, but you still have to make money somehow.

  6. Excellent points on all matters. And true. But not all have either the temperament or personality type to be landlords or flip real estate. And with real interest rates rising, the end to cheep money in terms of the mortgage industry may be coming to an end. In my observations the two most important factors to over all financial independence are two behavioral, life style choices in our primary control. Marriage, family and personal health.

    Monthly case flow from retirement. investment or property X really is irrelevant if 50%+ of said assets go to a previous spouse or child support from previous relationships. This is endemic in the military. Marry the right person the 1st time around. Second is heath care. Again, cash flow is of little importance if one is spending 20K a year on maintenance medication or out of pocket to manage type 2 diabetes, as an example, or chronic pain. Again diet, exercise, stress management, life style, behavioral choices impact financial independence or lack of it, more so than bad investments or lack of proper planning.

  7. Great post! The advice couldn’t be more clear. It’s simple to understand but can be tough to follow! My husband and I have a similar approach to finances, and it’s helpful that we have always seen eye-to-eye on this issue. Having no debt drastically increases your flexibility in life!

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