Unlocking Financial Freedom: The Power of HYSA and Roth IRA for Transitioning Military Spouses by Maegan Brown
Navigating the transition from military life to civilian life can be overwhelming, but financial wellbeing can be your beacon of hope and a shred of control over your future. Financial wellbeing is defined as managing your money well to reduce stress and increase security. It’s not about having a huge sum in the bank, but more about being prepared.
As you step into this new chapter, finances might feel like one of the more intimidating parts of the transition, but financial preparation can make all the difference in ensuring a smooth and successful journey ahead. What I love about financial wellbeing is that it’s something anyone can start at any stage of their military journey—no matter what the DoD, the VA, or life throws at you.
We like to remind our transitioning spouses about micro-actions. These are small steps you can take. Things that move you toward bigger goals, but don’t overwhelm you, especially when you’re already dealing with transition. Military spouses have what it takes to succeed in any environment—and just a few micro-actions will create a big impact.
Here’s our recommendation for two actions you can take to immediately improve your financial wellbeing—open a High-Yield Savings Account (HYSA) and a (Spousal) Roth IRA.
These accounts are key to building long-term wealth so read on to learn why and what they can do for you!
Account 1: High-Yield Savings Account (HYSA): Your Secret Weapon for Smart Savings
The High-Yield Savings Account (HYSA) is one of the simplest yet most effective ways to start building financial security. Think of it as a way to level up your savings game.
Why You Need It:
A HYSA gives you a much higher interest rate than a regular savings account, meaning your money works harder for you while it’s sitting there. Over time, this interest can really add up—especially when compared to a standard savings account.
For example, if you deposit $5,000 into a HYSA offering a 4% annual percentage yield (APY), you’d earn $200 in interest in a year. On the other hand, a regular savings account with an APY of 0.01% (the current rate at USAA, Chase, Bank of America and the likes) would only give you 50 cents in interest FOR THE WHOLE YEAR on that SAME deposit. I don’t know about you, but I’d much rather earn an extra $199.50 just by making a simple switch!
Why It’s Perfect for Military Life:
You might already have a basic savings account, but a HYSA is even better for keeping up with inflation and growing your savings faster. Ask yourself: would an extra few hundred (or thousand!) dollars a year help your family hit your savings goal, or even reach them faster? If the answer is yes, then a HYSA is definitely for you!
The best part? It’s easy to open and manage online, which is perfect for military families on the move. Whether you’re saving for an emergency fund or building a cushion for peace of mind, a HYSA helps you earn more while keeping your money accessible when you need it most.
How to Open a HYSA:
Opening a HYSA is quick and painless. Start by comparing banks or credit unions with great interest rates, low fees, and solid online access. By the way, many financial institutions now offer HYSAs specifically for military families so ask about that too. Once you find one that fits, gather your personal info and open your account in minutes. I personally opened ours while lounging on the couch during a time when my husband was away at endless trainings. Be sure to check out the account terms—things like minimum balance requirements, withdrawal limits, and direct deposit rules.
I use SoFi for my HYSA and it’s been the perfect match for me. I even got my dad (who’s over 60!) to open an account too, so it’s never too late to get started!
Now that we have super charged your savings, let’s consider how you can elevate investing for your retirement, YES even without any employer.
Account 2: Roth IRA: Your Path to a Tax-Free Retirement
A Roth IRA is one of the most powerful tools for retirement, and it’s especially beneficial for military spouses. Imagine having your own retirement account that you can open and contribute to at any time, no matter where you are in your employment journey or military life transition. Exciting? Definitely!
Why You Need It:
Unlike traditional retirement accounts, a Roth IRA lets you contribute after-tax dollars, meaning your money grows tax-free. And when you retire, withdrawals are tax-free as long as you meet the requirements. The cool part? You don’t pay taxes on your earnings, which can really boost your long-term savings. You can also have this in addition to employer-sponsored retirement accounts, truly accelerating your path to that retirement oasis.
What Is a Spousal Roth IRA?
Did you know your ROTH IRA can also be something called a “Spousal Roth IRA”? A Spousal Roth IRA enables a working spouse to make contributions to a Roth IRA on behalf of a non-working or low-earning spouse. This is especially helpful for military spouses who may face career interruptions. Sound like it may be a little complicated?
It’s not!
Your account stays the same regardless of if it’s a Roth IRA or Spousal Roth IRA, no need to “convert” to different accounts as employment fluxes. This really just demonstrates that you can keep your contributions going regardless of employment status, even if you need to adjust the rate at which you contribute, you never have to stop simply because your employment status changes.
Why It’s Perfect for Military Life:
Think of a Roth IRA as your own personal treasure chest for the future—one that you can take with you wherever you go. And what’s great is that you can start small and let the compounding interest do the heavy lifting.
A Spousal Roth IRA is a great way to keep building retirement savings—even during career breaks or periods of transition. I can personally vouch for how helpful this has been: when I was between jobs, the Spousal Roth IRA was my safety net to continuous retirement savings.
Even now, after my husband’s medical separation, we continue contributing to our retirement accounts, despite an intentional employment gap for him. Trust me—future us will be thankful for this!
How to Open a Roth IRA:
To get started, choose a brokerage firm or bank that offers Roth IRAs, like Vanguard, Fidelity, or Charles Schwab. Once you’ve picked one, you’ll fill out a simple online application, providing basic info like your Social Security number and bank details for contributions.
My favorite part- yes the part I won’t shut up about? You can contribute at any time, and your earnings grow tax-free. After opening the account, make sure to actually invest the money, whether in stocks, bonds, or mutual funds, based on your personal risk tolerance and goals. And if you’re really going for maximum impact- don’t forget about the annual contribution limits, they typically change annually!
OK but can Small Steps Really Make a Difference?
Would you believe me if I said I opened my Roth IRA and started investing only $25 a month? Technically it was $50 every other month because I was in college working 5 jobs and wanted to be sure I was always prepared to have the $50 removed from my account. What I didn’t realize then (but I know now) is that compound interest is your best friend!
Let’s say you contribute $100 a month to a Roth IRA. After one year, you’d have contributed $1,200. Fast forward 40 years, and those consistent $100 monthly contributions would total $48,000. With an average 7% return, your Roth IRA could grow to around $160,000—that’s $112,000 earned thanks to our friend compounding interest. And when you retire, you can withdraw those earnings tax-free. It really is taking small steps now, to set your future self-up for big things.
My Unwavering Stance
Both a HYSA and a Roth IRA serve different purposes, but they work hand-in-hand to boost your financial security. A HYSA is perfect for short-term savings (think emergency fund or travel fund for your ETS move or a desperately needed family vacation), while a Roth IRA helps you plan for a secure retirement, regardless of where you are in your military or employment journey. They both are critical tools for your milspouse financial wellbeing toolbox!
Financial wellbeing isn’t just about having money; it’s about taking control of your financial future. Serving alongside your spouse means you might not have control over many aspects of life, but investing in yourself and your financial education is something you can always take charge of—no matter where the military sends you or what stage of military life you are in. You have more power than you think to shape your financial future.
Future you will most definitely thank you for investing in you.
Hi, I’m Maegan Brown. You can read about me and what I do for MilSpouse Transition on our about page. As part of my “Operation: Financial Wellbeing” posts, I’ll wrap things up with some recommendations—things I’ve seen, read, or heard that might resonate with you.
The financial space has many different people with many different beliefs, I aim to share different perspectives for readers to find what resonates with them. Personally, I do not always agree with everything “experts” share; I take what I need and leave what I do not. I hope you can do the same. Remember, finances are a deeply personal journey.
What I watched: How to Get Rich with Ramit Sethi on Netflix
What I read: “The Psychology of Money: Timeless lessons on wealth, greed, and happiness” by Morgan Housel
What I listened to: On Purpose with Jay Shetty: The BIGGEST Money Mistake That’s Keeping You Broke
Legal Mumbo Jumbo: Here’s the legal stuff, but don’t worry—I’ll keep it simple! The info in this blog is just for educational purposes, not financial advice. Before making any big decisions, it’s a good idea to chat with a financial professional who can help you figure out what’s best for you. Just remember, what we’re sharing here is general info and might not apply to your specific situation—so it’s always good to get personalized advice! The views in this blog are my own opinions and not those of my employer.
