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After the Military: Your FinancialTransition to Civilian LifeA drawdown is looming. You're separating at the endof active service. You've decided to retire after a longcareer. No matter why you're leaving the military, abig part of preparing for your civilian life is takingsteps to proactively address the financial issues youmight face. Here are some tips to help ease thetransition.
Get your road map readyAn impending separation from service may be bothexciting and anxiety-provoking for you and yourfamily. Your lifestyle, income sources, and benefitswill be changing. Major decisions that may affect yourfinances include:
• Where you decide to live• Whether you'll be selling or purchasing a home• Whether you and/or your spouse will need to find
new employment• Your plans to return to school• Your eligibility for benefits (e.g., from the military or
a future employer)
To help you prepare for your transition to civilian life,the Department of Defense, along with otheragencies, has developed a program called TransitionGPS. All servicemembers who are retiring,separating, or being released from a period of at least180 days of active duty must participate in thisprogram. Transition GPS includes preseparationcounseling, briefings, and workshops that covertopics such as education and training, employmentand career goals, financial management, and VAbenefits. You'll also prepare an Individual TransitionPlan. For more information, visit the DoD TransitionAssistance Program (TAP) website atwww.dodtap.mil.
Prepare a realistic budgetHaving a realistic budget is important. Once you leavethe military, it's likely that your living expenses willincrease because you won't be receiving tax-freeallowances, and costs for insurance, housing,
groceries, and other day-to-day expenses may behigher. Preparing a budget that reflects your newsources of income and expenses, and adjusting itwhen necessary, can help you stay on track as youadapt to your new financial circumstances.
Here are some questions to consider as you prepareyour working budget:
Income
• Will you be eligible for separation pay or cashing inunused leave? These can be sources of short-termincome if necessary.
• What about retirement pay? Make sure youunderstand how much you'll receive, if applicable,and what other sources of retirement income you'llbe eligible for.
• What salary can you expect from your new career?• Will your spouse be working?• Will you be eligible for any veterans benefits that
will provide ongoing income?
Here's a tip: If you're unable to find a job right away,you may qualify for unemployment compensation, butyour eligibility may be affected by any retirement orseparation pay you receive. Unemployment benefitsvary from state to state, so for more information you'llneed to contact your local unemployment office.
Expenses
• Will the general cost of living (for example, gas,food, and utilities) be higher in your new location?
• How will your health expenses change? Will youhave access to employer-sponsored healthinsurance?
• What will your housing costs include (e.g., rent ormortgage payment, property taxes, andinsurance)?
• Will you need to purchase and insure a vehicle?• What about other expenses, such as commuting
costs, clothing, and child care?
Here's a tip: Have a plan in place to reduce your
Your military career hastaken you in manydifferent directions. Nomatter where you want togo next, planning asearly as possible mayhelp ease your transitionfrom servicemember tocivilian.
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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018
Securities and investment advisory services offered through Woodbury Financial Services, Inc. (WFS), member FINRA / SIPC . WFS isseparately owned and other entities and/or marketing names, products or services referenced here are independent of WFS.
IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is notspecific to any individual's personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purposeof avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or herindividual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believedto be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any timeand without notice.
expenses if necessary. Identify items in your budgetthat you consider discretionary and would be willing tocut at least temporarily. It will likely be much easier topay off debt now while you have a steady paycheckfrom the military rather than later when your jobsituation might be uncertain.
Save for transition expensesSome of your costs will be covered through transitionassistance (for example, storage and shipment ofhousehold goods), but it's likely that you'll haveexpenses for which you won't be reimbursed, such ashousing deposits. Having some savings set aside in atransition fund that you can easily access may helpyou avoid having to dip into your long-term savingsand investments to cover unexpected expenses. It willalso decrease the odds that you'll rack up credit-carddebt that you'll have to pay off down the road.
Before leaving the military...
Housing Determine how much you can afford to pay for housing, and contact a local real estateagent who can show you properties available to rent or buy. Visit and evaluate the areawhere you'd like to move.
Health care Schedule medical and dental appointments, and review and copy your records. Learnabout your postseparation or retirement health insurance options and determinewhether you'll need transitional insurance.
Life insurance Review your life insurance needs. Decide whether it's cost-effective to convert yourSGLI policy to VGLI, or whether you should purchase an individual policy. If you haveFSGLI coverage for your spouse, remember that it's not convertible to VGLI, so look atoptions for replacing your spouse's coverage.
Estate planning Update your estate plan, including your will, powers of attorney, and other documentsto reflect your new situation.
Retirement planning Decide what to do with your Thrift Savings Plan (TSP) account, if you've contributed. Ifyou're seeking employment in the civilian sector, learn about any new options forretirement savings, such as contributing to a tax-deferred employer sponsoredretirement plan. If you're retiring, consider how your military retirement pay fits into youroverall retirement income plan.
Education planning Make sure you understand your education benefits that can help you pay for college orvocational training. Consider transferring Post-9/11 GI Bill benefits to dependents.While you're still on active duty, take tests that can help you earn college credit or alicense or certification, and find out whether any of your military training may besubstituted for college credit.
Career planning Attend relevant employment workshops and counseling. Attend job fairs and networkwith potential employers and recruiters. Military spouses can connect with the SpouseEducation and Career Opportunities (SECO) program for career planning help atwww.militaryonesource.mil/seco.
Here's a tip: Don't wait until the last minute. Makesaving for your transition a priority, and start as farahead of time as possible to ensure that you haveseveral months of savings set aside to covertransition expenses.
Review and revisitAfter your transition is complete and your income andexpenses have stabilized, update your budget toreflect your new circumstances. It's also a good timeto review your financial goals. Now that your focushas shifted from your short-term priorities, you canrefocus on pursuing your long-term goals to preparefor your next stage in life.
To learn more abouttransitioning back tocivilian life, visit the DoDTransition AssistanceProgram (TAP) website atwww.dodtap.mil.
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