Military Retirees Are Fleeing California

By Bob Smith, Commander, U.S. Navy (Retired)

California is bleeding talent.

Every year, thousands of military retirees cross the state line with their families, pensions, and decades of experience, headed for anywhere but here. They’re not trickling out — they’re fleeing.

Why? California is the only state in the nation that fully taxes military retirement. And it offers little in return. High taxes, unaffordable housing, and the crushing cost of daily life, send a clear message to retiring service members: this state may have trained you, stationed you, even buried your friends — but it has no intention of keeping you.

I Was in That Room — And No One Was Staying

When I attended the Transition Assistance Program (TAP) last year — the mandatory course for separating and retiring service members — the instructors were blunt:
“California has more military retirees than any other state. And 98% of them leave.”

The instructor asked for a show of hands: “Who’s staying in California?” I was the only one in a room of about 50 people. Many vocalized, “I can’t get out of this state fast enough.”

They asked why, and the top three reasons came fast:

1. California taxes our military retirement pay

2. Housing is unaffordable,

3. The overall cost of living

California requires military retirees—many still in their 40s and preparing for second careers—to start over in the most expensive environment in America. California is losing military retirees at a rate more than 13 times higher than the next state.

Military retirees continue to contribute. 96% of them embark on second careers, bringing exceptional experience in leadership, logistics, engineering, medicine, public safety, education, and more. They pay income taxes again, start businesses, vote, volunteer, and mentor. In fact, the percentage of veteran registered voters is higher than that of the non-veteran population. These are precisely the types of citizens California should strive to retain.

Instead, we push them out.

If California eliminated taxes on military retirement pay, the state would lose a few million dollars in the short term—a minor detail in our bloated budget. However, if California made it financially feasible for military retirees to stay, we could gain significantly more in income tax from second careers, home purchases, and community involvement. It would create a mutually beneficial situation: the retiree would find stability, and the state would gain high-value residents.

Furthermore, California’s substantial Department of Defense presence depends on seasoned veterans who have spent 20 to 30 years working on the systems located here. When these retirees leave the state, their expertise goes with them, undermining California’s defense workforce and affecting our national readiness.

“What About Other Public Servants?”

It’s a fair question — and to clarify, I’m not arguing for or against exempting public safety pensions; that’s a separate debate. However, it’s important to understand that the circumstances are not the same. Public safety officers often spend their entire careers in the same city or county. They buy homes, raise families, and build equity in the communities where they retire. Their roots are already deep when they hang up their uniforms.

The career military experience is different.

They relocate every two to three years, often moving across the country or overseas. By the time they retire after 30 years, they have moved their families 10 to 15 times. They start over, typically without a home, equity, or local support network. This makes California’s sky-high cost of living and full tax on military pensions unappealing and unfeasible. While nearly every other state offers military retirees a chance to rebuild their lives with financial stability, California consistently ranks among the worst, sitting at 49th and 50th in cost of living and housing affordability for military retirees.

Additionally, public safety officers in CA retire with higher pensions—up to 90% of their final salary after 30 years, compared to 75% for military retirees—and much higher average payouts.

A Values Test: Veterans Out, Undocumented In?

Even if California attracted no additional retirees to stay, the potential “lost revenue” from exempting military pensions would amount to millions, not billions.

Meanwhile, the state has poured billions into programs like Medi-Cal for undocumented immigrants.

Why is California incentivizing undocumented individuals to stay, while actively disincentivizing the retention of veterans who’ve spent decades serving this country?

This is more than a budget decision. It’s a values test. And right now, we’re failing it. California should follow the lead of every other state in the country and exempt military retirement pay from state income taxes. Bills like AB 53 and SB 1 have bipartisan support and even interest from the governor’s office, yet they have stalled every year in Sacramento for the past eight years. Again, this is the only state left. When 49 other states agree that fully taxing military retirement is a bad idea, of course, California stays with it.

If there’s broad public support and bipartisan sponsorship, why does the exemption keep getting stalled? Could it be political? California has already seen a 30% drop in its veteran population, with projections showing a 50% decline soon. Is that the outcome the supermajority quietly prefers?

Pew Research indicates that 63% of military veterans identify with or lean toward the Republican Party. In my experience, even the most progressive service members would likely be viewed as moderates by California standards. This aligns with research showing that many Democrat veterans still maintain conservative views on key issues, especially regarding national security, border security, law enforcement, and personal responsibility. Notably, Independents now outnumber Democrats among veterans. Perhaps these aren’t just statistics; they may be the very reasons this exemption continues to be quietly sidelined.

California has made a choice: to make it easier for undocumented immigrants to stay and harder for military retirees and veterans to do the same. You don’t need a military background to see what’s wrong with that picture.

You need common sense.

Bob Smith is a retired Navy veteran running as a Republican for California’s 24th Congressional District. During his 26 years of active service, he participated in several combat tours supporting Operation Iraqi Freedom (OIF) and Operation Enduring Freedom (OEF). He has held various leadership roles in Washington, D.C., with a focus on major defense acquisition programs. www.bobsmithforcongress.com

*****

Please help spread the word about the value and readability of SBCurrent.com by sharing this article with friends and neighbors. Use the button below or copy the URL to share, ensuring they too stay well-informed. Thank you.

*****