The transition to civilian life can be challenging for many military members. The longer you serve, the more challenging it can be. After 20 years of service in the active duty and Air Force Reserve, I understand this firsthand.
When I transitioned to civilian life, I didn't know what I didn't know, so my learning curve was steep.
Many service members and their families face a common set of financial challenges post-military.
Stay connected with your military family.
Parting ways with the friends you've served with might be the toughest part of leaving the military. Service members enjoy a camaraderie revolving around day-to-day life on the installation and things like Family Days. And spouses often have their own “tribe” of supportive military spouses who they have to leave behind.
Some departing service members choose to live near their former installation, but that's not always practical. Prioritize keeping up with friends via phone, emails, social media and scheduled meetups. Also, consider maintaining a post-military support group to learn about education and job opportunities in the civilian world.
Understand your strengths when choosing a civilian career.
Service members have skills and talents that are highly valued in the workplace, like managing and leading people.
Whether you served four years or 30, you've learned about integrity, leadership, accountability and organization as well as how to strive for perfection. Not only are these traits important to employers, but they're also invaluable to your new civilian community.
To help transitioning military members and their spouses find their next career, USAA has teamed up with RecruitMilitaryOpen in New Window. See note 1 Their goal is to connect employers with top talent like you.
Pursue education.
Pursuing your dream job might mean going back to school, especially if you require additional skills to be qualified or more competitive in your chosen industry. One of the best ways to fund your education is to use your benefits from the Post-9/11 GI BillOpen in New Window. See note 1 You may also qualify to receive a housing stipend at the same time.
Understand your finances.
During your time in the military, you may have worked hard to establish a solid financial base. As you enter post-military life, you'll want to build on that foundation. Certain aspects of your finances will require a different approach now that you're a civilian. Read on to make sure you're covered.
Maintain adequate life insurance throughout the transition to civilian life.
Post-military, you'll lose access to Servicemembers' Group Life Insurance, or SGLI. While there are several ways to replace it, not all are created equal. Your new job might offer group life insurance. But remember, that you don't own it. If you lose your job, you may lose your life insurance, which can leave your family exposed during a financially difficult time. View group life insurance as a supplement to what you already own.
As you leave the military, you'll have the option to take Veterans Group Life InsuranceOpen in New Window, See note 1 or VGLI. VGLI is a great option for veterans who:
- Might not qualify for private life insurance.
- Find private life insurance to be prohibitively expensive due to medical conditions that resulted from military service.
While VGLI might be a good option for some military members, it might not be the cheapest long-term option. That’s because VGLI premiums increase every five years. Over time, a policy with fixed premiums might save you money.
Take time to pursue all options to make sure you protect the ones you love with life insurance.
Make sure you and your family have health care insurance.
Maintaining health insurance when leaving the military is very important. That’s why we’ve devoted this entire article to different ways to secure health insurance when transitioning to civilian life. But do your research first, as health care plans are diverse and can operate differently from TRICARE.
When you interview for jobs, be aware that some employers provide excellent coverage and others don't. Because health care is expensive, it's wise to weigh your potential employer's plans when deciding between multiple jobs.
Take some time to learn about out-of-pocket medical costs. Medical expenses will also be a key part of your post-military life. Include those expenses in your budget so you don't go into debt.
I learned about out-of-pocket medical costs shortly after my transition to civilian life. When I was stationed at Eglin Air Force Base, we took my son to the ER. They treated him, and we came home without a bill since we were under TRICARE.
Compare that to a second trip I took to the emergency room — as a civilian.
When I took my daughter to the ER on my civilian health care, I received a $2,700 bill — ouch. I learned how medical expenses can add up very quickly.
One way to save and then pay for medical expenses is through a health savings account, or HSA. This is a new term for many military members so learn more about a how you can benefit from an HSA.
To help transitioning military members understand their post-military civilian benefits, we created an article that dives into the ins and outs of civilian insurances.
Navigate the Department of Veterans Affairs.
If you have a disability or health condition made worse by your military service, apply for VA disability.
I unfortunately have a back and neck disability due to my time in the F-15. I loved the airplane, but the frequent 9G maneuvers took their toll on my spine.
When I add up the total cost of medical procedures and physical therapy that the VA has paid for over the past 12 years, it easily surpasses $50,000. I still live with the physical pain, but having $50,000 in debt would bring financial stress on top of pain stress.
While navigating the VA can be difficult, you might try several other free veterans service organizations like the American Legion, VFW and Wounded Warrior Project.
Create a civilian budget.
Even if your civilian salary is equal to that of your military salary, your take-home pay will likely decrease — meaning you will have less disposable income — for a few reasons:
- More of your income will be taxed since you lose BAH and BAS, which are tax-free.
- You'll probably pay out of pocket for health care premiums and medical expenses.
- Your expenses are likely to increase for items like civilian clothes and commuting.
This process begins by making expenses to your new income and adjusting your budget. If you're making more post-military, use this surplus as an opportunity to increase savings or pay down debt. This could be a better option than simply enhancing your lifestyle.
If you're earning less, adjust your budget to reduce expenses or find additional ways to earn more money. For example, your spouse might find a job, or you might supplement your income with a side hustle.
To help you understand what you would need to make as a civilian to match your military lifestyle, USAA has created a Military Separation Assessment. Should you take the $100,000 salary in Alaska or the $75,000 job in Arkansas? The Military Separation Assessment can help you decide.
Start a transition fund.
Beef up your savings before transitioning from military to civilian life. In case of an employment gap, paycheck delay or unexpected costs, consider having six to 12 months of living expenses saved on top of your emergency fund. This additional savings can cover things like:
- Rent or mortgage.
- Medical expenses.
- Auto costs.
- Groceries.
- Job search expenses.
My kids want to eat whether I have a job or not, so a transition fund can come in handy.
Since transition costs can be high, start saving at least two years before your expected transition date. Consider setting aside funds for this purpose by automatically depositing some of your paycheck into a dedicated savings account.
Use transition leave.
As you leave the military, you have two options for what to do with your hard-earned vacation days. You can either cash them out or take them as transitional leave.
If you're able, we recommend taking them as transition leave because it puts more money in your pocket. With transition leave, you also earn BAH, BAS and any special pay you'd normally receive.
On the other hand, if you cash out your leave, you only receive your basic pay for each day.
As you can see from all these considerations, transitioning from military to civilian life isn't as easy as it might seem. However, with adequate education and prep work, you can maintain your solid financial footing with a little less stress.
Leaving the military?
USAA’s leaving the military experience has helpful information
and tips.