When you or your spouse are in the military, it is easy to become accustomed to some of the financial benefits: a secure job, housing, insurance, and the use of the commissary. Regardless of whether you are separating voluntarily, involuntarily, or retiring, your finances will be affected by your transition. As you prepare for the transition to civilian life, you’ll want to consider how your income and expenses will be affected.
Note: When I use the term “you” in this post, I am referring to both the service member and their spouse (if applicable).
Preparing For Your Job Search
Are you going to work when you leave the military? If you plan to continue working after the military, start taking advantage of the Transition Assistance Program as soon as you can. Use the time leading up to your separation date to get your resume up to date, attend job fairs, send out resumes/applications, and connect with potential employers.
When I was working at an ACAP (Army Career and Alumni Program) Center, there was nothing more rewarding than the stories of service members that had secured employment before even leaving. Many times, they would be starting their new job within a week or two of their separation date.
Spouses are also eligible for Transition Assistance Program services. Working spouses should consider updating their resume and starting their job search as well before the transition.
VA Disability Claims
If you filed a claim with Veterans Affairs for injuries you incurred during your service, realize it can take several months for your claim to go through. Even if you have a notification letter from the VA regarding your disability percentages, your claim can be re-reviewed.
My husband’s disability claim took over a year (he was still in the service at the time) to be processed. He received notification of his disability percentages at the time of retirement, however, the claim was re-reviewed. It was another four months before we received a final determination and payments began.
If you are relying on disability payments as a source of income, realize that it may be some time before you start receiving benefit payments. Will you be able to pay the rent without your VA disability or will you need to rely on your emergency fund?
Increased Health Care Costs
If you are retiring, you’ll see increased costs under Tricare compared to when you were Active Duty. Depending on which Tricare plan you choose, you may have annual enrollment fees, co-pays, and an increased catastrophic cap (annual deductible).
If you will be entering the civilian workforce, be prepared for hefty health insurance costs. For family coverage, it is not unusual to pay several hundred dollars a month (and that’s after your employer has paid a portion)!
Regardless of whether you’ll be under Tricare or a private plan, you’ll want to consider the increased health care costs including premiums, co-pays, and prescription costs. When you don’t have a military base nearby to receive services at, health care costs add up quickly.
If you are retiring, you’ll be eligible for Tricare’s retiree dental program. If you will be working, you can look into your employer’s dental insurance plan. The retiree program is comparable in costs and coverage to many employer plans.
Costs Of Moving
While the military will pay to move your belongings to your new location, there’s other costs involved with moving. If you are going to be renting an apartment or home, you’ll have to put down a security deposit and pet deposit if you have pets. If you have less than stellar credit, you may even have to pay the first and/or last month’s rent as well.
Increased Monthly Housing Expenses
Living in base housing, your utilities, trash service, and even some lawn care was included. When you move off base, be sure to consider these costs of running a household: electric, gas, water, sewer, trash & recycling, lawn care, and snow removal. When you aren’t used to paying these costs, they can catch you by surprise.
Get Financially Prepared For Transition
When you find out that you will be transitioning to civilian life, start preparing your finances for the change in both income and expenses. Start building your savings to help cover the costs of moving, increased health care costs, and expense of setting up a new household. Pay off your debt to build a better credit score-both employers and landlords will be looking at your credit. Take advantage of the Transition Assistance Program to get your resume updated and reach out to potential employers so you can have a smooth transition from military life.
Kristina is an accountant, military spouse (retired Army), and mom to three. She writes about personal finance and saving money at Cents and Order. Follow her on Pinterest or Facebook to learn about budgeting, conquering debt, and cutting expenses.
Want more on military life?
- How to Find a Budget that Works for Military Families
- Military Life and Money: How to Keep Your Financial House in Order
- 10 Things Resilient Military Spouses Do Differently
How are you financially preparing for civilian life? Let’s chat in the comments!