When a military career comes to a close, the transition into civilian life can bring excitement, uncertainty, and everything in between. While most resources highlight the servicemember’s retirement benefits, career shift, and financial planning steps, working military spouses often find themselves without a dedicated guide. Your financial decisions are just as critical in shaping your family’s stability during this new chapter.
As a working spouse, you may have access to your own employer-sponsored benefits, retirement accounts, or insurance coverage. Coordinating these alongside your partner’s military retirement benefits requires careful planning. With the right steps, you can maximize opportunities, minimize stress, and ensure your household's financial security.
Here are 5 smart money moves to help you navigate the transition with confidence:
1. Use It Before You Lose It
If you’re currently enrolled in a Flexible Spending Account (FSA) through FSAFEDS, it’s time to review your balance. FSAs operate on a “use-it-or-lose-it” basis, meaning that unspent funds may not carry over once your spouse retires.
Consider upcoming medical or dependent care expenses that you can cover before the transition. Schedule routine doctor or dental visits, refill prescriptions, or purchase eligible over-the-counter items. These simple steps can ensure that the money you’ve already set aside goes to your family’s benefit rather than being forfeited.
2. Reassess Your Employer Benefits
Military retirement qualifies as a “life event,” which may open a special enrollment period for your own workplace benefits. This is the perfect time to review what your employer offers and how it compares with your spouse’s retiree coverage.
Look closely at medical, dental, vision, FSAs, and Health Savings Accounts (HSAs), if eligible. If your family has access to multiple options, take time to compare premiums, deductibles, and out-of-pocket costs. Coordination of benefits — when one plan serves as primary coverage and another as secondary — can provide valuable protection, but requires a clear understanding to avoid billing surprises.
For example, you may find that your employer’s dental plan is stronger than what’s available through the retiree plan, while your spouse’s medical coverage offers better long-term savings. A careful review allows you to strategically combine coverage, ensuring your family gets the most value at the lowest cost.
3. Review and Consolidate Retirement Accounts
Retirement planning doesn’t stop with your spouse. Your own retirement savings are an essential piece of the bigger picture.
Start by listing all of your past employers and identifying whether you left retirement accounts behind. Old 401(k)s or similar plans are easy to lose track of, and unclaimed funds can quietly erode due to fees. Consolidating accounts simplifies management and reduces the risk of oversight.
That said, consolidation isn’t one-size-fits-all. Compare whether rolling old accounts into your current employer’s plan or into an IRA offers the best investment choices and lowest costs. Some employer plans have strong matches or institutional-level funds, while an IRA may give you more flexibility.
Don’t forget to review and update your beneficiary designations. Life changes such as marriage, children, or divorce can easily leave old names on file, and in many cases, beneficiary designations override what’s in a will. Keeping this current ensures your money goes where you intend.
4. Check Your Tax Withholding
Taxes are another area that often catches military families by surprise. While your spouse served, you may have benefited from the Military Spouse Residency Relief Act, which provided exemptions from certain state taxes. Once your spouse retires, that exemption may no longer apply.
Check your current W-4 or state withholding elections with your employer to confirm they align with your new situation. If your family is moving after retirement, research your new state’s tax treatment of both military retirement pay and earned income. Some states provide generous exemptions for retired military pay, while others tax it like any other income. Adjusting your withholding now prevents costly surprises at tax time.
5. Revisit Life Insurance Needs
Military families often rely on Family Servicemembers’ Group Life Insurance (FSGLI) for spouse coverage, but this ends when your partner leaves active duty. It’s important to reassess whether you need additional life insurance and how much coverage makes sense.
Even if you aren’t the primary breadwinner, your contribution to the household has financial value. From childcare to household management, the cost of replacing these services adds up quickly. A life insurance policy can help your family cover these expenses and maintain stability during an already challenging time.
When evaluating policies, compare group options available through your employer with individual policies. Consider not only affordability but also whether the coverage will grow with your family’s needs over time.
Moving Forward with Confidence
The transition from military to civilian life marks a major turning point for your entire family. As a working spouse, you play a vital role in ensuring that your family’s finances remain strong during and after this change. By spending down FSAs, reassessing benefits, consolidating retirement accounts, adjusting tax withholding, and revisiting life insurance needs, you’ll address the most immediate financial considerations on your side of the equation.
These steps don’t just protect your own financial future — they also strengthen your family’s overall plan, creating a smoother and more confident transition into civilian life.
Every family’s situation is unique, and professional guidance can make a world of difference. A financial advisor who understands both military benefits and civilian employer plans can help you coordinate accounts, compare options, and set long-term goals tailored to your needs. With a proactive approach, you’ll be well-positioned to make the most of this new chapter.
Military Spouses, We Understand You
If you're a retiring military spouse, it's crucial to work with a team of financial professionals who understand your unique needs and challenges. AAFMAA Wealth Management & Trust LLC (AWM&T) specializes in providing personalized financial planning solutions exclusively for military families like yours. We offer a comprehensive range of wealth management services, including financial planning, investment management, and trust services, tailored to meet your needs. To receive personalized advice and support for your retirement planning, please contact an AWM&T Relationship Manager or call us at 1-910-307-3500.
About Us
Founded in 2012, AAFMAA Wealth Management & Trust LLC (AWM&T) was created to meet the distinct financial needs of military families. We proudly deliver experienced, trustworthy financial planning, investment management, and trust administration services – all designed to promote lasting security and independence.
We are proud to share the mission, vision, and values of Armed Forces Mutual, our parent company. We consistently build on the Association’s rich history and tradition to provide our Members with a source of compassion, trust, and protection. At AWM&T, we are committed to serving as your trusted fiduciary, always putting your best interests first. Through Armed Forces Mutual's legacy and our financial guidance, we provide personalized wealth management solutions to military families across generations.
© 2025 AAFMAA Wealth Management & Trust LLC. Information provided by AAFMAA Wealth Management & Trust LLC is not intended to be tax or legal advice. Nothing contained in this communication should be interpreted as such. We encourage you to seek guidance from your tax or legal advisor. Past performance does not guarantee future results. Investments are not FDIC or SIPC insured, are not deposits, nor are they insured by, issued by, or guaranteed by obligations of any government agency or any bank, and they involve risk including possible loss of principal. No information provided herein is intended as personal investment advice or financial recommendation and should not be interpreted as such. The information provided reflects the general views of AAFMAA Wealth Management and Trust LLC but may not reflect client recommendations, investment strategies, or performance. Current and future financial environments may not reflect those illustrated here. Views of AAFMAA Wealth Management & Trust LLC may change based on new information or considerations.
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