Build Wealth in the Military (2026 Update): TSP Limits, Pay Raises

EDIT: I misspoke about the 2026 Roth IRA limit. The 2026 Roth IRA limit is $7,500 per person.

Is 2026 the year you finally take control of your military finances? With a 3.8% pay raise, new TSP contribution limits of $24,500, and proven strategies that helped one E-7 reach $600,000 in net worth by year 14, Spencer and Jamie break down exactly how to build wealth while serving, even if you're starting from scratch or recovering from financial setbacks.


In this episode, we provide a comprehensive 2026 financial reset for military families, covering everything from emergency funds and debt payoff to maxing tax-advantaged accounts and avoiding lifestyle creep. Perfect for anyone wanting to turn the new year into a fresh financial start.
Main Discussion Points

Know Where You Are Before You Start


• Track your spending using apps like Monarch Money, YNAB, Rocket Money, or simple spreadsheet

• Face your financial reality- write down all debt and net worth even if it's negative

• Government shutdown proved why emergency funds matter: 3-6 months of expenses minimum

• Example: $500 car repair covered by emergency fund eliminated stress entirely


Unique Military Financial Advantages


• Tax-free income: BAH, BAS, COLA not subject to federal income tax or payroll taxes (7%+ savings)

• State tax residency: Change to tax-free state (Texas, Florida, etc.) when stationed there! Spouse can too under Military Spouse Residency Relief Act

• TSP match: 5% automatic match after 2 years for BRS members. Don't leave free money on table

• Healthcare and housing covered through Tricare and BAH/base housing

• Example: Saving $300/month by changing state residency adds up to thousands annually


2026 Numbers to Know


• TSP contribution limit: $24,500 (up from previous year)

• TSP annual additions limit: $72,000 (includes match and combat zone contributions)

• Roth IRA limit: $7,500 per person ($15,000 for married couples, even if spouse doesn't work)

• Military pay raise: 3.8% coming. Automate at least 1% of increase into TSP

• E6 with 8+ years gets roughly $150-180/month extra income from pay raise


Priority Order for Tax-Advantaged Accounts


1. Contribute 5% to TSP (get full government match for BRS members)

2. Max Roth IRA: $7,500 for you, $7,500 for spouse

3. Go back and max TSP at $24,500

4. Only then consider taxable brokerage accounts


Total to max everything: $49,500 for married couples


Don't stress if you can't max—contributing 10-20% is still excellent and beats average American 5% savings rate


Invest Simply Using LADS Method


• Low-cost, Automated, Diversified, Simple

• TSP Lifecycle 2075 fund: 60% US stocks, 40% international, minimal bonds—perfect set-it-and-forget-it option

• Alternative: 80% C Fund, 10% S Fund, 10% I Fund

• Don't performance chase because last year's winner often becomes next year's loser

• Boring is beautiful in investing. Let it compound for 20 years


Path to Military Millionaire Status


• E7 example: $500/month starting as E3, by age 45 = $1 million at 7% return

• Real example from Reddit: E7 with 14 years, $600,000 saved, contributing $20-25k/year

• In 10 years that E7 will have $1.2 million just from money already contributed (before new contributions)

• Add military pension: $30k/year plus $40k from 4% rule = $70k annual income in retirement

• Time is your biggest asset. US stock market doubles roughly every 7-10 years


Common Mistakes to Avoid in 2026


• Not contributing to TSP at all (minimum 5%, goal 15%+)

• TSP loans for non-emergencies...change behavior instead

• New car trap: 7-year car loans becoming standard, shooting yourself in financial foot

• Lifestyle creep: Give half of pay raise to savings, half to lifestyle improvements

• Waiting for "perfect time." Spoiler: there's never a perfect time. Start this weekend


Capture Free Money


• Review LES monthly for accuracy

• File paperwork for CZTE, hostile fire pay, family separation allowance

• Follow up with finance multiple times if needed. Don't give up on money you're owed

• Request corrected W2s if aircrew touching tax-free zones in Nov/Dec

• Spencer recovered $20,000+ over career by being persistent with finance