Article

How retirement plan design can help employers recruit and retain a valuable employee group: Military spouses

10 July 2025

Key takeaways

Military spouses are often highly educated, adaptable, and loyal employees, but many struggle to save for retirement because of frequent relocations, job changes, and low-paying work options.
Employers may unknowingly exacerbate the problem with protracted 401(k) vesting schedules and limited leave benefits that fail to meet military spouses’ unique needs.
With thoughtful retirement plan design and work from home policies, companies can boost recruitment and retention of this valuable segment of the civilian workforce.

Who are military spouses?

Military spouses are defined as individuals married to members of the armed forces. About 85% are female, and 82% are 40 years of age or younger, according to a 2024 study by the Department of Defense (DOD).

Military spouses represent a compelling demographic for employers. Half have either a bachelor’s (32%) or advanced degree (18%), according to Pentagon research. Military spouses also tend to have traits coveted by employers, such as resilience, adaptability, and strong organizational skills. All of these positive attributes can translate into lower turnover and help employers save on recruitment, training, and onboarding expenses.

To attract military spouses, companies must understand their unique circumstances—in particular, compared with civilians, they typically lead itinerant lifestyles. Roughly every 2.5 years, the military requires personnel to relocate, according to the Military Family Advisory Network (MFAN), a nonprofit that helps families navigate military life. Known as a “permanent change of station,” these moves could require uprooting multiple times over the course of a service member’s career. In fact, 81% of military spouses said they have moved due to an active-duty spouse’s transfer, according to a DOD survey.

If remote work is not an option, a military spouse will have to resign from their role when they relocate.

Why military spouses struggle to save for retirement

These frequent job changes and relocations can be a financial sacrifice. About half of military spouses have experienced the problems of finding new employment (49%) or losing their income (45%) after a move, according to a Pentagon study. Spouses also have higher rates of unemployment—about 20% in 2024—compared with about 4.2% for the general labor force during that period.

Those who find jobs are often underemployed. About 41% of military spouses make $25,000 to $75,000 before taxes, and roughly one-fifth (22%) of currently serving families had less than $500 in an emergency savings fund or no fund at all, according to a study by MFAN.

Combined, these factors make it challenging for many military spouses to save for retirement.

How companies fail to attract military spouses

Companies’ hiring and benefit choices may be contributing to the problem. Recruiters (and the artificial intelligence programs used to screen resumes) may overlook applicants with employment gaps. Further, military spouses may not apply to companies that do not provide the benefits they need, such as extended family leave and flexible paid time off.

In addition, traditional retirement benefits—such as a defined contribution (DC) plan that takes six years for full vesting—may not appeal to a military spouse anticipating their next relocation will come long before that period has elapsed.

Retirement plan designs that accommodate military spouses

Employers might consider adjusting their current retirement plans to better attract and support military spouses. These alternative designs include:

Retirement plan portability. Many employers historically have designed 401(k) plans with vesting schedules and waiting periods intended to incentivize employees to stay for the long term. These restrictions are understandable for decreasing turnover rates; however, they harm the retirement readiness military spouses are working towards and can discourage spouses from applying to these employers. Instead, offering a portable retirement plan would allow employees to carry their savings with them from one job to the next, minimizing losses in retirement savings. This flexibility is especially important for military spouses, who may work for multiple employers across different states or sectors. With portable plans, they can continue growing their retirement savings without needing to restart or cash out each time they change jobs. Ultimately, portability supports continuous financial growth and reduces the long-term impact of career mobility.
Immediate 401(k) plan vesting. Traditionally, companies have used multiyear vesting schedules to encourage long-term employee retention. However, this approach often disadvantages military spouses, who may be forced to leave a job due to relocation and, as a result, forfeit unvested retirement assets. Vesting schedules can penalize employees for circumstances beyond their control. Moreover, data suggests that vesting schedules haven’t helped employee retention— in 2022, forfeitures made up only 2.5% of total employee contributions in plans with vesting requirements, indicating limited impact on employee loyalty.
Pooled Employer Plans (PEPs). Pooled Employer Plans can be beneficial to military spouses by addressing the challenges of frequent relocations and employment uncertainty. PEPs allow multiple employers to participate in a single retirement plan, permitting them to offer greater portability and consistency in retirement savings across jobs and locations—an advantage for military spouses who often move and change employers due to their spouse’s assignments. These plans also reduce administrative burdens and costs for small employers, increasing the likelihood that more companies, including those in military communities, will offer retirement benefits. By simplifying access to retirement savings and maintaining continuity regardless of job changes, PEPs empower military spouses to build long-term financial security and retirement readiness despite a mobile lifestyle.

Other company policies that can help attract military spouses

In addition to retirement plans, other company benefit choices can foster an environment that caters to military spouses. These include:

Flexible leave and work policies. Military spouses may need additional support during deployments and active-duty relocations. Employers with robust leave policies, such as extended family leave and flexible paid time off, can help military spouses maintain a strong work-life balance. This approach could also boost loyalty and company retention. Among active-duty spouses who are employed, 64% said it was due to flexible scheduling and 39% said they had a remote work option, according to the DOD. Employers who offer a remote work option provide the flexibility and continuity spouses need to stay with an employer regardless of location while also reducing turnover and tapping into a highly skilled but often underemployed talent pool. Remote businesses are more likely to tap into flexible talent—52.1% of primarily remote companies hire independent professionals, compared to just 38% of nonremote businesses. By leveraging independent talent, these companies can expand their capabilities and enhance their service offerings. Remote work also contributes to improved productivity—79% of managers believe their teams are more productive when working remotely. By leveraging independent talent, these companies can expand their capabilities and enhance their service offerings.
Participation in the Military Spouse Employment Partnership (MSEP). This initiative, run by the Pentagon, connects partner employers with military spouses. To participate, employers need to demonstrate they are committed to recruiting, hiring, promoting, and retaining military spouses. In addition, they need to show positive business practices. Since 2011, MSEP has grown to more than 950 employers and nonprofit organizations, and participating companies have hired more than 360,000 military spouses. The organization looks for employers that can offer jobs with geographic portability, such as access to remote work, and positions across states or regions. Military spouses may also be attracted to companies with the “Military Friendly” designation, knowing they will likely find a culture that understands their unique circumstances.

Financial benefits for companies that hire military spouses

Ultimately, to effectively recruit military spouses, employers need to balance standard benefit offerings, such as health, retirement, and remote work, with the flexible practices that military life demands. Doing so creates advantages for both military spouses and for employers.

In addition, companies that embrace remote work can save thousands of dollars annually by eliminating costs such as office rent, utilities, coffee, furniture, and supplies. Companies will also have better talent acquisition outcomes, since flexible policies will attract a larger pool of applicants. For the hiring of some military spouses, employers may be able tap federal incentives, such as the Work Opportunity Tax Credit.

Making a company’s 401(k) plan more flexible and remote friendly is a good place to start to better attract military spouses. Portable and flexible plan design choices can help these valuable employees save for retirement while boosting staff retention rates.