January 17, 2017, by Eileen O’Shanassy – Anyone who has successfully completed their service in the military understands that making a successful transition to the civilian world is a major life event. Military uniforms and conduct are gone and replaced with civilian clothes and a much different way of life. One of the major adjustments could be with finances. Here are some tips to get your future finances on the right track after service in the military.
Lost Benefits
When a person leaves the military, they need to realize they will now be paying for some benefits that were once part of their military service. This involves such things as paying for medical care out-of-pocket. Housing will not be provided to former service members, but there are discounts available. They will not be getting a non-taxable allowance to rent a home and there will no longer be a mess hall available to get a meal. Once out of the military, a person won’t be getting a subsistence allowance. Housing, as well as food and other expenses, are now items that are part of their budget.
Transition Fund
There are members of the military who get discharged and go into a civilian job within a short period of time. There are many others who will need to have a transition fund. Financial experts believe a person leaving the military should save an amount equal to twelve months living expenses. This will help them not get behind on financial obligations when they look for civilian employment.
Thrift Savings Plan
Members in the military are able to participate in a Thrift Savings Plan (TSP). This is a method of saving for retirement that provides a variety of tax advantages. Many service members aren’t sure what they should do with this investment account when discharged from the military. Financial experts recommend a former member of the military look at all their available options. They could roll the money from their TSP into a new employer’s retirement plan. It’s also possible to roll the funds into a traditional Individual Retirement Account (IRA). Some individuals choose to leave the funds in their TSP account. Ask a financial professional if they have any more ideas for future financing after the military, professional investors routinely look at these kinds of accounts and can help set your own up.
Financial Considerations
A person leaving the military will have many financial decisions to make. They will have to determine where they will be living once they are out of the military. An individual will also have to decide if they’ll be renting or purchasing a home. Employment situation is also a concern. It’s also essential for a person leaving the military to know what veterans benefits they will qualify to receive and what discounts they are eligible for.
Life Insurance
Most people leaving the military don’t want to think about death, but having life insurance is essential. It is possible for a service member to purchase Veterans’ Group Life Insurance after being discharged. A person must apply for this type of policy within 120 days of their retirement. With this type of policy, medical underwriting is not necessary. This type of policy is an excellent choice for tobacco users as well as those who suffer from chronic illness or injury. A person in good health may want to explore their options with a commercial life policy.
Employment
This may be the first time in their adult working life a person leaving the military has had to interview for a job. This will require them to carefully assess their skills and learn the proper ways to approach the job market. There are several government programs available to help with this. They are known as Transition Assistance Programs. A person will learn how to write a resume, answer questions during a job interview and more.
The transition time from military to civilian life is a time for an individual to assess their financial goals and devise a plan for the future. They will need to address their debt and develop a saving as well as investing plan. Speaking with a financial service company can help lay the foundation for a very positive financial future.
Author Bio: Eileen O’Shanassy is a freelance writer and blogger based out of Flagstaff, AZ. She writes on a variety of topics and loves to research and write. She enjoys baking, biking, and kayaking. Check out her Twitter @eileenoshanassy.