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Military Retirement

Downsizing After Military Service: Financial Tips for Your Retirement

2025-03-11

As you transition to retirement, your financial situation will change. You will have to adjust to no longer having a full-time job and to living with a reduced income. Simplifying your finances, streamlining your lifestyle, and even downsizing your home, could help you to better adapt to this stage of life and provide benefits you may not realize now.  

Understand Your Financial Picture 

As a retiree, you must ensure you have sufficient income to live comfortably. Start by assessing how much retirement pay and/or pension and Veterans benefits you will be receiving and understand how much savings and investments you have. Then, create a budget that reflects your new circumstances so that you’ll be prepared for whatever expenses are ahead of you.  

Consider Downsizing Your Home 

Between the upkeep, property taxes, and the mortgage, your home is typically your biggest expense. Downsizing may mean you will have more money available for your retirement from the sale of a larger home and the move to a smaller home. Additionally, having a smaller home will reduce your home maintenance and utility costs. If you move to a different state or country, your new location may have lower property taxes or may offer different benefits for Veterans and military retirees. 

Before you decide whether to downsize, consider: 

  • Getting a fair estimate of your current home value. Use online tools to find what other homes in your area are selling for and estimate the value of yours. Alternatively, you could hire an independent appraiser to give you a fair estimate. 
  • Understanding what a new home will cost. Research recent sales of smaller homes in the areas where you are considering moving using online home-shopping tools. You can also choose to meet with a real estate agent or home mortgage advisor, who can provide you with current listings. Don’t forget to include closing and moving costs when figuring out how much you will have to pay for a new home. 
  • Recognizing tax implications. Find out if there will be tax implications from the sale of your home, and if your finances can manage it. Also, if you are moving, there may be higher or lower income or property taxes in your new location. You’ll need to factor that into your future budget. 

Reap the Tax Benefits of Simplifying Your Life 

As you move into your next phase, there are a few ways you can simplify your lifestyle: 

  • Reduce your personal belongings. Getting rid of excess goods can help reduce stress and may even save you money. For example, you may not need as much furniture as you once did. Assess what you have and decide what you need to keep and what you can get rid of. Donating household goods to various charities may also provide a deduction for your taxes. Always consult a tax professional to discuss your specific situation. 
  • Organize paperwork by digitizing it. Technology has eliminated the need to physically store paper files, photographs, books, magazines, and other printed materials (e.g., product warranties, instructions, recipes, etc.). With digital storage, you can greatly reduce clutter. As an AAFMAA Member, one of the most useful and important benefits you have is the ability to store your essential documents in your Digital Vault, for online access anytime you need it. 
  • Eliminate unnecessary expenditures. Review your monthly expenses to see where you can eliminate expenses, such as monthly subscriptions and other recurring incidental costs that no longer reflect your lifestyle. 

Update Your Accounts 

Once you have moved into a new home you can settle into, it’s crucial to update your contact information at financial institutions and federal agencies. You should also change your address with the U.S. Postal Service. Failing to do so in a timely way can result in not receiving the services your family depends on. See who to contact and how to update your information. Now is also a good time to plan how to manage your online accounts when you’re no longer here to access them on behalf of your family.  

Assess Your Life Insurance Needs 

Retirement is a life milestone, which means it is a good time to revisit your estate plans and make sure your life insurance is adequate to your needs. If you have life insurance already, you may need to update your information and adjust your beneficiaries. 

AAFMAA Member Benefits can help you navigate through every stage of life. Call 800-522-5221 and follow the prompts, or email [email protected] to discuss your life insurance needs and Membership benefits. 

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