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How Military Families Can Better Plan Finances? Research Team | Posted On Monday, April 15,2019, 06:17 PM

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How Military Families Can Better Plan Finances?



From a wider point of view, being employed in an armed force offers various financial privileges like housing till retirement and subsidized Canteen Stores Department, CSD. Big ticket purchases like cars and electronics can be made from CSD. Medical expenses are fully covered when in service for armed forces personnel. Retirement life is settled with a sizeable sum of money flowing each month as pension.

But having said that, signing up for military service is signing up to take bullets, living in forbidden locations where climatic conditions are extreme and staying away from family for a  prolonged period of time. Looking at all this, financial privileges offered on joining armed forces just don’t seem enough. After all, money cannot replace a human life.

Although, most things work in the favor of armed forces personnel from the financial point of view, it doesn’t obviate the requirement of a financial plan. “Armed forces personnel don’t care much for financial planning as they are covered with Army Group of Insurance, AGI. Once they retire from service, they receive a lump sum. This lump sum depends on the tenure and grade of the armed forces personnel, and they end up spending this money on purchasing a house and funding children’s education. They don’t think of other investment options at all”, says Krishna Kumar, retired armed forces personnel, currently working as Admin in our organization.

This article describes the importance for armed forces personnel to have a financial plan and points to note.Want to know more on Investment Planning? We at will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

How Military Families Can Better Plan Finances?

Need For A Plan

Certain factors underline the importance of having a financial plan for families of armed forces personnel. First of all, many of these families are single income households. The wife would move with the soldier when he gets transferred which makes it difficult to settle down and build a career of her own. This makes the household of the military personnel, dependent only on a single income. Families often find it difficult to cope with expenses, if there is  loss of income.

Secondly, realizing dreams like a family holiday, big ticket purchases like a  house or car, and tuition fee for children needs long term financial planning. Many financial decisions are made by the spouse in the absence of the serving soldier. With no financial knowledge, they are often misled into buying wrong financial products and become victims of mis-selling. 

Third is the early retirement of the armed forces personnel. Jawans may retire in their mid 30s and if they wish to continue service, they would be promoted to JCOs who would retire in their 50s. These retired armed forces personnel often find it difficult ito take up a new career as they may lack knowledge and the necessary skill set. 

Things To Keep In Mind

The approach to financial planning varies across individuals, but the basics remain the same. Protecting your wealth is the most important thing that you must do. Armed forces personnel are always covered for medical expenses and hence health insurance might not top the list of financial requirements.

Armed forces personnel must consider buying health insurance to cover children who have attained adulthood. Children above 25 years are not covered under parents’ government offered health insurance. For retired individuals, the government offered health insurance scheme is good. But, top up plans that cover expenses from Rs 5 Lakhs to Rs 1 Crore would be cost effective.

Military personnel have life insurance when in service, but the sum assured might not be enough. The sum assured under life insurance depends on the rank and ranges from Rs 50 Lakhs to Rs 75 Lakhs. They may consider availing a term insurance plan to supplement cover. Military officers must top up their life insurance to make sure  they are well covered. In addition, they must consider availing personal accidental plans and critical illness cover.

The next thing is an emergency corpus. It is advisable to invest at least 6 months’ salary in liquid instruments like liquid funds. Having a higher emergency corpus is important for covering expenses for the period immediately post retirement. This corpus can also be used to cover emergency family expenses. It is wise to deposit one to two months worth expenses in a savings account and the rest in liquid instruments.

Before investing, assess your risk taking ability and have short and long term financial goals by considering current assets. Long term goals generally need higher equity investment. Generally 20% of the corpus is invested in equity instruments by the armed forces personnel. 

Armed forces personnel  receive pension post retirement. Up to 50% of the monthly pension can be received as commutation or lump sum. This is nothing but advanced payment of pension and this commutation is a considerable sum. This is not taxed and hence it is a very attractive option for retired armed forces personnel. This can be used for big ticket purchases like buying a house and paying children’s tuition fees. Commutation must be used wisely.

Perks When In Service

  • Army group insurance 
  • Free medical facility for self and family 
  • Subsidized rations 
  • Fully furnished government accommodation
  • Subsidized canteen
  • Mess / club / sports facilities 
  • 60 annual leaves 
  • 20 casual leaves 
  • Leave encashment of up to 300 days

Retirement Benefits

  • Pension, paid at 50% of the last salary drawn
  • Death benefits or retirement gratuity
  • Canteen facility
  • Insurance
  • Free medical treatment for self and dependants
  • Resettlement
  • MBA for retired offers
  • Can invest in Senior Citizens Savings Scheme, SCSS, post retirement, regardless of their age.

Finally, military personnel must make sure that their WILL is in order. By default they are required to write a will to make sure that military proceeds are smoothly passed on to legal heirs. They must also write a will on personal assets and update it post retirement.


Indian soldiers, sailors and airmen are putting their life at risk to safeguard our lives. They sacrifice their early 20s and 30’s to serve the nation. Financial benefits offered by the Government would not return them their youth which was spent  serving the country. Retired armed forces personnel must consider financial planning seriously, as they retire in their 30s and finding a career post service might be an issue. Right financial planning would pave the way to lead a stress-free life.

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