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Getting a head start is critical. At a minimum, the process should start a year before your expiration of time-in-service (ETS) date, but many people start planning even before that.

“Nobody should be leaving the military without having a job or solid education plan lined up,” advises Carl Castro, the director of the Center for Innovation and Research on Veterans and Military Families at the University of Southern California, and a retired colonel in the U.S. Army. But the center’s statistics show that 75% of departing military members do not have solid employment or school plans when they punch out of the service. And that’s a number we should be changing, he says.

Timeline For Transitioning To Civilian Life

The time to start planning is when you’re at least 12 months away from your known EAS (end active service) or retirement date. Retirees should actively begin the process between 18 and 24 months out, if possible.

12 to 18 Months Out

A military man looks for a civilian job on his computer

Now is the time to dip your toe into the civilian pool and get a feel for the jobs out there for which you'd be qualified. If you’re thinking of attending college after leaving the service, it’s a good time to start exploring your interests and options.

Step 1: Start working on your job search. A majority of veterans surveyed, 55%, list the search for a job among the most challenging things about transitioning out of the military, according to a report from Syracuse University’s Institute for Veterans and Military Families. Also, according to the report, 41% of veterans said they had challenges adjusting to civilian culture.

Step 2: Take time to engage with your service’s transition assistance program (TAP). TAP is a formal counseling and instruction program designed to assist departing military members and their families transition to civilian life as smoothly as possible and find work as quickly as possible.

Since October 1st, 2019, this program has been required by law. Each service branch runs its own program:

The process starts with a detailed self-awareness counseling session, followed by an intensive three-day workshop, called the Transition Readiness Seminar. You can select from three career tracks:

  • Employment
  • Entrepreneurship
  • Vocational training

You aren’t limited to just one: If you can arrange the time off with your chain of command, you can participate in two or all three tracks.

Most major installations have a TAP office on site. If you’re married, your spouse can also participate in MySTeP, or the Military Spouse Transition Program.

It’s a good idea to begin the transition process early, even if you’re currently planning to reenlist. The program costs nothing, and any number of situations could potentially occur to cause you to change your mind or take that choice away from you. For example, you could get involuntarily separated due to a reduction in force, or you could get medically retired because of an illness or injury you cannot currently foresee.

9 Months

By nine months out, you should be applying for any civilian education programs, colleges or universities you wish to attend. Just planning generically to “go to school” after you get out isn’t enough, Castro says.

Step 1: Know what you’re studying, what programs you’ll be applying to and in what cities.

Step 2: You should also be applying for any scholarships you can qualify for. Many of these scholarships involve a cash award or stipend. Just because you expect to receive GI Bill education benefits doesn’t mean you won’t qualify, especially for scholarships that are based on merit, rather than financial need.

6 Months

a military man is greeting by his family

The six-month mark should be the deadline date for completing your three-day transition readiness seminar. Though the sooner you can complete that seminar, the more time you will have to implement what you learn before you actually leave active service.

Step 1: If your transition plan involves professional certifications or retooling yourself to learn a new vocational skill set, you should have this process well underway.

You can use Post 9/11 GI Bill benefits to attend most trade schools, and online instruction also qualifies for Post 9/11 GI Bill benefits. You don’t necessarily have to wait until you ETS to enroll. You can take online courses even while deployed or on sea duty.

Step 2: Start researching and consider joining trade or industry associations, especially while enrolled as a student. Many such associations encourage students to enroll by offering discounted membership dues.

Typically, you’ll get a subscription to the association’s trade journal as part of your membership. It’s a great idea to start reading up on news and issues that specifically pertain to your industry. It will give you a leg up over other applicants when you get to the interview.

Step 3: Make use of DoD SkillBridge. This public-private partnership program provides uniformed servicemembers opportunities to participate in internships, industry training or apprenticeship programs over the last 180 days of service.

Step 4: If possible, have a few meetings with people actually in the industry you are targeting. Attend an industry event, or simply ask to take someone out to lunch so you can pick their brains. Find out who does a lot of hiring in the industry and who’s especially connected in that industry, in or out of town. Start taking note of those names and get contact information for them.

Most people are happy to spend a few minutes assisting a transitioning veteran. Invest the time to speak with these people before you start applying for jobs.

3 Months

A military woman hugs her daughter

Now is the time to think about medical insurance for you and your family after your ETS date. Leaving the military qualifies as a TRICARE Qualifying Life Event (QLE). You don’t necessarily have to lose TRICARE coverage, though it may make sense for you to shop around.

Step 1: See if TRICARE can still work for your insurance needs. If you’re involuntarily separated under honorable conditions, a reserve component member separating from a mobilization lasting at least 30 days for a preplanned mission or in support of a contingency operation, or meet other specific criteria, you may be eligible for the Transitional Assistance Management Program (TAMP). This program provides premium-free coverage under TRICARE for 180 days after your regular TRICARE benefits expire.

You will be eligible for any of these TRICARE plans:

  • TRICARE Prime (required when it’s locally available where you live)
  • TRICARE Select
  • US Family Health Plan (enrollment is required in specifically designated locations)
  • TRICARE Prime Overseas (enrollment required)
  • TRICARE Select Overseas

TAMP is not valid during terminal leave. If you have terminal leave remaining, you will be covered by your original TRICARE coverage, whether TRICARE Prime, TRICARE Remote or TRICARE Select.

Step 2: If you don’t qualify for TAMP, you may be eligible for the Continued Health Care Benefit Program (CHCBP).

The CHCBP is designed to function as a temporary bridge between the TRICARE and military health care systems and civilian health insurance. It provides the same coverage as TRICARE Select, including prescription drugs. The CHCBP provides coverage for up to 18 to 36 months while you line up employment or purchase your own individual or family coverage.

Departing service members are eligible for up to 18 months of CHCBP coverage. Dependent spouses and children who lose TRICARE coverage are eligible for up to 36 months, as are unremarried former spouses who lose TRICARE.

2 Months

Moving to a new state poses challenges for departing veterans. You need to insure your car and register it with a new DMV, for example, and enroll children in new schools.

When you plan your final PCS (permanent change of station) move, you should consider a variety of different factors:

Step 1: Decide on Housing

If you are involuntarily separated under honorable conditions or retiring, you may be able to get permissive temporary duty to do job searching and house hunting before you ETS.

Most readers are no doubt aware of the VA home loan program, which allows qualifying veterans to purchase a home with no down payment. The home loan program for veterans is a terrific military benefit. In addition to the zero down payment requirement, VA home loans offer the following benefits:

  • No private mortgage insurance (PMI). Not having to pay for PMI can save you hundreds of dollars per month.
  • More flexible credit underwriting compared to conventional loans.
  • Generally lower interest rates.

The VA home loan doesn’t have a formal minimum credit score requirement. But participating VA mortgage lenders usually do, with floors of about 620 being common. The higher your credit score, the better terms for which you are likely to qualify. You should start working to improve your credit score early.

If you want to remain near your current duty station, you don’t have to wait to purchase a home. You can buy a home while you’re still in, and use a VA mortgage — as long as you live in the property. You can’t use a VA loan for a home you plan to rent out.

To get a VA loan, however, you do need to get your monthly debt payments down to a reasonable level. Your debt-to-income ratio — your monthly debt payments divided by your monthly income — typically needs to be at 41% or below.

Step 2: Take Advantage of Housing Benefits

a family moves into a new home

In addition to the Veterans Affairs Mortgage Guaranty program, there are several other veteran housing benefits and programs you may qualify for after leaving the service. For example, disabled veterans may be eligible for grants to help with housing accessibility, to include remodeling costs or even the cost of building a new custom home from scratch.

The VA also works with local agencies to assist veterans who have become homeless or are at risk of becoming homeless. You may qualify for subsidized housing or a voucher you can use to rent a home or apartment.

The Military Housing Assistance Fund may also help with some of the up-front closing costs of buying a home.

1 Month

Navy service members assemble

At one month out, you’ll have one foot in military life and the other foot in civilian life. Creating a detailed checklist can help as you navigate this pivotal time in your transition to civilian life. Tasks to accomplish at the one-month mark include:

  • Meet with your admin NCO and go over all your paperwork.
  • Lock in a job or enroll in school, if you haven’t already.
  • Decide on transportation details including car insurance.
Step 1

Ensure you’ve got all your points, all your decorations are correct and there are no gaps in your service record. You should also verify your final pay and your retirement status, if applicable.

Step 2

Meanwhile, you should be actively filling out job applications. With one month to go, you are in the home stretch. If you aren’t already locked in with a job, you should have multiple interviews booked for the week you get out of the service and arrive at your permanent home of record.

When it comes to their earning potential right after they leave the military, most departing service members may be in for a shock: The majority of exiting veterans lose money when they leave, says Castro.

“The military is actually a very well-paying organization,” he says. “It’s one of only a few large organizations that pay a middle-class salary and benefits.”

Use the Bureau of Labor Statistics website to quickly find the mean, median, top quartile and bottom quartile salaries or hourly wages for 800 different occupations and detailing the mean and median wage for 800 different occupations and 400 various industries.

Other sites, such as Salary.com and Glassdoor.com, can help you further refine your estimate. Additionally, you can also check trade and industry association publications and surveys for more detailed information specific to your trade or profession.

Step 3: Line Up Transportation

In the military, you may not have needed your own car. But now that you’re leaving, you may want to join the ranks of the commuters and buy a new or used car. Your transportation requirements may change. For example:

  • That beater that got you from the commissary to the PX and back to the barracks may no longer cut it for a 30-mile highway commute.
  • Your spouse may be working, too, and need to commute.
  • You may want a car that presents a more professional appearance.
Step 4: Save on Auto Insurance By Shopping Around

a woman sits in a car and accepts the keys to the car from the salesman

Military people have special auto insurance needs. They frequently move from state to state, they need insurance while driving overseas in places like Korea, Germany or Japan, and they occasionally need to put cars in storage while on deployment or sea duty.

The military auto insurance market is dominated by USAA, GEICO and Armed Forces Insurance. But once you’re out of the military, you may not require or qualify for the military benefits provided by these insurance companies anymore. There’s no reason to pay for benefits you no longer need.

You may be able to find a much better deal overall on your car insurance by shopping around. USAA and GEICO are usually very competitive, even for those who have left the military, but not for all drivers. Your rates depend on a variety of other factors.

Step 5: Arrange for Adaptive Equipment for Disabilities if Applicable

You may have already incorporated adaptive equipment into your life if you’re living with a disability, and the military is a great help in getting this set up.

Transportation

If you’re living with a disability, you may need a car with some adaptive technology so you can drive it. For example, you may need a vehicle fitted with special controls, a wheelchair lift and fastenings, power ramps or other features.

If you’re disabled, you may qualify for the automobile allowance and adaptive equipment benefit. This is a one-time grant of up to $21,488.29 in order to buy or equip a vehicle to accommodate your disability.

You may be able to receive this benefit if at least one of these conditions apply:

  • Loss or permanent loss of use of at least one foot or hand.
  • Permanent decreased vision in both eyes. The VA defines this as 20/200 vision or less in your better eye (with glasses) or greater than 20/200 vision but with peripheral vision reduced to 20 degrees or less in your better eye.
  • A severe burn injury.
  • Amyotrophic lateral sclerosis (ALS) (Lou Gehrig’s disease).
  • Ankylosis in at least one knee or hip (adaptive equipment grant only).
Housing

If you are a service-disabled veteran and you own or will own your own home, you may qualify for a specially adapted housing grant of up to $85,645. This money can be used to remodel a home or install adaptive equipment such as elevators, lift chairs, special showers, toilets or kitchens, widen doorways to accommodate a wheelchair, install ramps, or other modifications as needed to accommodate your disability.

2 Weeks to ETS

While you’re still technically in the military at this point, it’s time to start thinking a bit further into the future. While most of your moves so far have been based on transitioning to civilian life, now is the time to consider how life may look like one or five years down the road.

Step 1: Understand Your Current Expenses

a woman and man work on their budget from their kitchen table.

Castro cites everyday costs of living that are generally hidden to many service members on active duty. For example, the basic tax-free allowance for your housing subsidy disappears. Veterans will have to pay housing costs with after-tax dollars. You’ll have to come up with a deposit just to move in many cases, which can run as high as the first and last months’ rent, which you’d have to provide upfront.

“Service members don’t understand the cost savings that the commissary or the exchange provides them,” says Castro.

To really get a handle on your current and future expenses as you transition out of the military, you should make use of the newest budgeting tools.

Step 2: Plan for Increased Insurance Expenses

a man shops from his computer for insurance policies

In the military, the vast majority of all your medical care costs are taken care of for you. That changes when you leave the service. Without a government or employer subsidy, health insurance can easily cost more than a thousand dollars per month. And you will still likely have significant copays and deductibles.

You’ll also have some other insurance expenses to consider — expenses you didn’t have living in the barracks or on post housing:

  • Long-term care insurance.
  • Disability income insurance.
  • Renters or homeowner’s insurance.
Disability Insurance

In the military, if you get sick or injured, your paycheck keeps coming. That's not always the case in the civilian world. If you get sick or hurt and can no longer work, your income could stop. This can put an enormous financial strain on you and your family and can even lead to eviction, foreclosure and bankruptcy.

That's where disability insurance comes in. Disability insurance replaces a fraction of your pre-disabled pay, up to the limits of the policy.

Workers’ compensation covers injuries on the job, of course. But 95% of disabling injuries and illnesses are not work-related and don't qualify for workers’ compensation.

Some employers offer short-term disability insurance, long-term disability insurance, or both, but it's not portable. That means you can't take it with you if you leave your job.

Disability insurance is medically underwritten. Carriers can and will turn you down for significant pre-existing conditions. But you can buy your own from a health insurance broker who sells disability insurance or directly from the carrier.

The most valuable policies are "own occupation" policies. That means that the language in the contract obligates the insurance carrier to pay benefits if you cannot work in your own occupation.

These policies are much more likely to pay benefits than an "any occupation" policy, which will not pay benefits if you are still capable of working in any occupation for which you are reasonably suited by education and training.

The best time to shop around for disability insurance is when you are still in good health, with no pre-existing conditions and a clean medical record.

Step 3: Plan for Other Increased Expenses

A woman sits at a table working on her expenses with a laptop computer and receipts in front of her.

“The vast majority of young servicemembers do not understand how much it costs to live in the real world,” Castro says. “They don’t understand how much rent costs. They don’t understand how much utilities cost. Water. Electricity. Gas. Trash collection. Dental and health — all these things that will now have to come out of their own pocket. And if they have kids, and if you want to have good schools, and live in a safe neighborhood, that’s even more money,” says Castro.

“If you want to live in a major city, like Los Angeles, New York or Chicago, you need to have $20,000 to $30,000 saved.” he says.

Start putting together a good-sized stash of cash, so you can quickly pay first and last month’s rent in your chosen city.

Step 4: Plan to Pay More Taxes as a Civilian

A lot of service members don't realize how much of their compensation from the military is tax-exempt, says Castro. For example, the basic allowance for housing (BAH) is tax-exempt. But when you leave the military, you have to pay your rent or mortgage principal payments with after-tax dollars.

The same goes for moving allowances, family allowances and some educational benefits for dependents. All these things were tax-free while you were in uniform but will have to be paid for with after-tax dollars in the civilian world. And there's no chance to earn tax-free combat-zone pay.

The difference can amount to hundreds of dollars per month.

There are a few tax breaks that veterans receive at both the federal and state/local tax levels. For example, many states exempt all or part of military retirement pay from state income tax. Some states also provide property tax breaks to veterans.

Savings and Retirement Planning for Veterans

Two people are having a retirement planning meeting, and you can only see their hands, a computer, and paperwork

In the military, the government provides a substantial pension for those who make it a career.

Once you're out, chances are you'll need to save money for your retirement. Few private-sector employers still offer a traditional, guaranteed defined benefit pension, where you know exactly how much you're getting each month in advance regardless of what the financial markets do. You need to save that money yourself.

As a civilian, you’ll likely have a choice of several different tax-advantaged account types for saving for retirement. Most people who are successful in retirement use them in combination, contributing to them over many years. Let’s take a look at some of the most prominent:

IRAs

The term IRA stands for “Individual Retirement Account.” As of 2020, you can contribute up to $6,000 to all your IRAs combined in any tax year. If you’re age 60 or older, you’re allowed another $1,000 per year in allowable contributions. Contributions are generally tax-deferred, depending on your income. Withdrawals are taxed at ordinary income rates. Higher-income earners will see their ability to deduct contributions reduced. You must begin to take withdrawals (required minimum distributions), or RMDs, by April 1st of the year in which you turn 72.

Roth IRAs

Roth IRAs are similar to IRAs, except there’s no tax deduction on contributions, and no tax on withdrawals. There are also no required minimum distributions (RMD)s on Roth IRAs.

A 10% penalty applies to all IRA amounts withdrawn before age 59½, except in certain hardship circumstances. With Roth IRAs, the penalty applies only to the earnings (assuming the 5-year rule has been met.)

Your eligibility to contribute to a Roth IRA begins to phase out with an income of $124,000 for single/head of household filers, and phases out completely when your income reaches $139,000.

For married couples, your eligibility to contribute to a Roth IRA begins to phase out when your income reaches $196,000, and phases out completely when your household income reaches $206,000.

Thrift Savings Plan

A businesswoman checks her retirement plan with a smile on her face.

As you probably know, the Thrift Savings Plan is a voluntarily-funded retirement plan for military members and federal employees. If you have any loans outstanding from your TSP, you need to pay them off within 90 days of separation. If you’ve been participating in the federal government’s Thrift Savings Plan (TSP), you need to decide what to do with that money once you leave the military. Here are your choices:

Stay in the Plan

If your balance is $200 or more, you can keep your money in the plan and leave it there until you have to start taking withdrawals starting at age 72. This avoids taxes and preserves the tax-deferred benefit of the TSP. You don’t have to pay taxes on dividends, interest or capital gains within the TSP as long as the money remains in it.

The Thrift Savings Plan has some of the lowest administrative expenses available anywhere, so it can be a very good place to leave long-term money.

Roll It Over

You can roll the money over to your own IRA, or once you’re employed, to a qualified employer retirement plan. When properly conducted, the rollover is tax-free. The best way to do this is via a trustee-to-trustee transfer, so that the money is wired directly from your TSP to your new retirement account. If you withdraw the money directly, planning to deposit it in your new retirement fund, and don’t handle things correctly, you could accidentally trigger taxes and penalties.

The advantage of rolling it over to an IRA or 401(k) is you get more investment options. This is especially true with an IRA.

The disadvantages include the higher expenses in mutual funds ordinarily available in the market. You also cannot take loans out of an IRA. However, if you roll over your TSP into a 401(k) and your plan allows, you may be able to take a loan out of your 401(k). Check with your new plan's administrator or sponsor to see whether your 401(k) allows for loans.

The Roth Advantage

The other advantage of rolling it over to an IRA is you can later convert your IRA to a Roth. You will pay income taxes on the amount you convert, except for any contributions you made on a non-deductible basis. But once it's in the Roth, that money will grow tax-free, under current law, for as long as you live, provided the money has been in the account for at least five years.

Furthermore, with a Roth IRA, you don't have to worry about required minimum distributions — money you have to take out and pay taxes on — once you turn age 72. There are no RMDs in Roth accounts, as long as the money meets the five-year rule.

Roth IRAs can be mighty, especially for younger people who are not yet in their peak earning years. If you expect to be in a higher tax bracket when you retire than you are today, you may wish to consider transferring your TSP to an IRA, then converting it to a Roth.

Some 401(k)s also offer a Roth option. Once you've been hired, check with your new employer for details.

Withdraw the Money

You can take the money out as cash. However, you'll pay income tax on any amount withdrawn. The government will withhold an additional 20% with which to pay income taxes. This is on top of any early withdrawal penalties that would apply.

Most retirement planners recommend against unnecessarily taking early distributions from retirement plans. It generates an immediate tax liability, and you lose the benefit of years of tax-advantaged compounding interest — especially in the TSP, where expenses are so low.

Civilian Employer Retirement Plans

Most established civilian employers offer at least some kind of retirement plan to full-time workers. In most cases, these plans allow you to contribute pre-tax dollars (e.g., contributions are tax-deductible).

The most popular of these plans is the 401(k). Contributions are made via payroll deduction, pre-tax (except for Roth accounts). Employers may make a matching contribution.

The SIMPLE IRA is another similar plan popular among smaller employers.

The 403(b) is a similar type of plan for employees of non-profits, such as schools and hospitals.

The Section 457 plan is a salary deferral plan for certain public employees, such as police and firefighters.

These plans are defined contribution plans, not traditional pension plans. There’s no guaranteed retirement income from a workplace pension, except for government employees and a vanishingly few private sector employers.

In the civilian world, your retirement income security is likely to be almost entirely dependent on how much you save, how soon, and how well your investments perform.

No one’s going to do it for you, says Castro. You’ve got to take responsibility and contribute as much as you can to these tax-advantaged retirement accounts, as early as you can.

You can contribute to IRAs and employer retirement accounts at the same time, though contribution and income limits apply.

It’s a good idea to check the full program overview of the federal Thrift Savings Program to get a clear understanding of what your options are.

Military Retirement

a retired military veteran salutes the U.S. flag

The military provides for a generous retirement pension, though it’s not as generous as it used to be. Depending on when you joined, you may be eligible for one of four different retirement schemes:

Legacy High-3 (military retirement pay)

Servicemembers who entered the military between September 8th, 1980, and December 31st, 2017, are eligible for the Legacy High-36 (High-3) system. This pay is:

  • Received after 20 years of honorable service.
  • Not matched with TSP contributions.
  • Calculated based on 2.5 times the highest 36 months of basic pay.
  • For service members who began service by December 31st, 2017, to qualify.

Calculating your own High-36 retirement benefits is the best way to know how much you’ll receive.

CSB/Redux

If you took a $30,000 career status bonus after 15 years of service with an agreement to complete 20 years, then you fall under the CSB/Redux plan. In this plan, your retirement benefits are much less generous than they are under Legacy High-3.

CSB/Redux is calculated as follows:

  • 40% of the High–36 average basic pay after 20 years of service.
  • An additional 3.5% for each year served beyond 20 years.
  • A cost-of-living adjustment that is one percentage point lower than the Consumer Price Index increase normally granted to those in the Legacy High–3 program.

The CSB/Redux pension has a reset feature, though. At age 62, the government recalculates your pension using the multiplier to the High-36 system. The government also recalculates the cost of living using the full CPI, not the reduced one, to calculate a new, higher base salary. However, the future cost-of-living increases will be at CPI, minus 1%.

Blended Retirement System

The Blended Retirement System (BRS) is the military’s newest pension plan, replacing the previous High-3 system. While High-3 was based on the servicemember’s highest-earning three years in the military, the BRS has three components:

  • matching TSP contributions.
  • retention bonuses earned mid-career.
  • A monthly lifetime income based on your length of service.

While the legacy retirement pension was based on 2.5% per year served, the BRS calculation is based on a lower 2% calculation.

You can also calculate your pension under the BRS system.

Final Pay

To be eligible for the Final Pay system, you would have had to have joined the military prior to September 8th, 1980. It’s unlikely you can qualify for this plan. It was based on your final month’s base pay, rather than your final 36 month’s base pay. You got credited 2.5% for every year of service, which meant 50% of your final month’s base pay (with COLA) after 20 years, and 100% after 40 years of service.

Providing for a Surviving Spouse

It’s important to note: When you die, your military pension dies with you. Payments will cease immediately on your death. This can have devastating financial consequences for a surviving spouse, who may depend on that pension for living expenses.

Unless the military spouse is entirely financially independent, you need to take steps to ensure your spouse is financially protected if you should die first. To address this, the military offers the Survivor Benefit Program. If you enroll, your pension benefit is slightly reduced. But in return, your pension will continue to pay out as long as your surviving spouse lives.

If you’re married, you are automatically enrolled in the Survivor Benefit Plan. You cannot decline it without your spouse’s written permission.

If you aren’t covering your current spouse, you may also choose to provide this benefit for your child or children, a former spouse, or even a parent. This might be a good idea if you have a parent who relies on you for financial support.

Life Insurance Considerations

U.S. military war veterans assemble for a ceremony

In the military, you were eligible for Servicemembers' Group Life Insurance, or SGLI. This is term insurance available at very advantageous rates. Your next of kin would also receive a $100,000 death gratuity in the event you died while in service.

But when you leave the military, you lose both of those benefits. If you take no action, you will not have life insurance in place unless you've already bought it yourself. This could have catastrophic financial consequences for your family if something happened to you as a family breadwinner.

After you ETS, you are eligible for Veterans Group Life Insurance, or VGLI. You don't have to take a medical exam to enroll. You will pay a higher premium than you did in SGLI. But if you are in good health when you leave the service, VGLI may not be the best deal for you. Try shopping around to other life insurance companies. Carriers who require a medical exam before they will issue a policy will generally charge a lower premium than carriers that don't require one, says Castro.

And don’t wait. “Buy life insurance when you’re young, while it’s cheap.” Castro says. “And it’s cheaper when you’re young.”

Health Savings Accounts

A health savings account lets you save for medical expenses using pre-tax dollars. You can only use these accounts if you are enrolled in a high deductible health plan. As of 2020, you can contribute up to $3,550 for an individual plan covering only yourself, and $7,100 for a family plan. Many employers offer a combination HSA/HDHP as an option among their health plans. They may make contributions to the plan on your behalf.

For tax year 2020, these plans have to have a minimum deductible of $1,400 for an individual, or $2,800 for a family plan. Out of pocket costs, including deductibles, coinsurance and copays, are limited to $6,900 for an individual and $13,888 for a family.

You can use the account to pay qualified medical expenses. Amounts you don’t need for medical expenses accumulate tax-deferred. At age 65, they are available to supplement your retirement income.

High deductible health plans and their attendant HSAs can be a good option for those who are in good health, whose family members are in good health, or for those whose employers contribute to their HSAs.

If you or a family member have health challenges that will require you to purchase significant health care products and services and/or prescription drugs, you may be better off with a lower-deductible plan, even though premiums will likely be higher.

Expert Advice on Transitioning to Civilian Life

Carl Castro photo

Carl Castro, PhD, joined the USC Suzanne Dworak-Peck School of Social Work faculty in 2013 after serving 33 years in the Army, where he obtained the rank of colonel, as the research director for the USC Center for Innovation and Research on Veterans & Military Families. Castro began his military career as an infantryman in 1981. Castro has authored more than 150 scientific articles and reports in numerous research areas. His current research efforts focus on assessing the effects of combat and operations tempo (OPTEMPO) on soldier, family and unit readiness, and evaluating the process of service members’ transitions from military to civilian life.

Castro has been recognized for his contributions in the field, most recently as a recipient of the 2017 Charles S. Gersoni Military Psychology Award from the American Psychological Association.

Interview with Col. (RET.) Carl Castro, Ph.D.

Q: What are some things today’s service members can be doing a year before ETS to set themselves up for success?

A: First, get your medical issues documented. A lot of service members don’t do a good job documenting their health issues. If you do that 12-18 months before you leave, they’ll all be dealt with and entered into your records. Then you have time to get everything documented. A lot of people don’t do it and when they get to the VA and say “I got this injury on active duty,” and the VA tells them “I don’t see it in your records.” and then they say “Well, I didn’t think to document it,” And that starts an adversarial relationship with the VA.

Second, start saving money now. Plan out where you want to live — maybe you have a list of four or five cities. How much does it cost to live there? How much will it cost to get started? Rent an apartment? Most service members, when they leave the military without a job, don't get a job offer for a few months.

And third, have a plan. And plan very concretely. Are you going to school? Ok. What school? What are you going to study? When does school start? Just saying, "I'm gonna go to school when I get out" isn't a plan.

Q: What are some common mistakes people make leaving the military?

A: Military folks come across as too formal. Too rigid. They don’t fit in. In many ways, coming from the military into the civilian world is like being an immigrant. It’s a different culture. You were used to the military culture and now you’re entering the civilian culture.

A lot of people are saying, "Ohh, my brother works in this company, he knows the guy who's going to get me a job "That's not a plan. That's not a real job. That's a pig in a poke.

You know, I mentioned that most guys don't get a job offer for a few months, then they get discouraged. They mope around and say, "nobody understands the military." Or they blame their resume. Well, the resume isn't why you didn't get the job. The reason you didn't get the job is you showed up to the interview, and you were stiff as a board, you called everybody "ma'am" and "sir" and made everybody nervous. You weren't relaxed and confident. It's not because the resume was in the wrong format.

I’m not saying you don’t need to have your resume together. You do! But that’s not the reason you didn’t get the job.

Q: What should people leaving the military do about insurance for themselves and their families?

A: If you want life insurance, you need to get it when you're young, not when you're old. Same with the others. I wish I bought disability insurance when I was younger. I wish I purchased long term care insurance when I was younger. That's nursing home insurance. I don't have it. I wish I had bought it.

Insurance is not an investment. It's protection. So when I die my family has enough to carry on.

Checklist for Before (And Just After) You Leave the Military

a military service member drinks coffee as he makes a checklist for his departure from service

The best way to go about being organized as you plan for your departure from the military is to keep a notebook, spreadsheet or some other method to keep all the tasks you need to complete in order. A checklist is a must. As you go through the steps of your transition, mark the following off your list, plus other tasks that may apply to your situation.

  1. Develop your resume.
  2. Make an appointment with the transition counselor on your installation.
  3. Attend your service’s transition assistance program (TAP).
  4. Document all service-related injuries and illnesses.
  5. Review your DD-2648 (Military Transition Checklist).
  6. Begin networking.
  7. Identify potential career paths.
  8. Review your GI Bill and tuition assistance benefits.
  9. Take CLEP exams to knock out prerequisites and course requirements.
  10. Enroll in relevant coursework or certification programs.
  11. Complete your DoD Form 2586 — Verification of Military Experience and Training.
  12. Request permissive temporary duty orders for house hunting and/or job searching.
  13. Get household goods (HHG) transportation counseling.
  14. Research continuing health insurance benefits.
  15. Apply for scholarships.
  16. Verify retirement pay.
  17. Enroll in the survivor benefit program.
  18. Schedule a physical with your local installation or VA health care facility.
  19. Schedule final check-ups for family members.
  20. Attend career fairs.
  21. Get appropriate civilian attire for job interviews.
  22. Visit your JAG to update your will, beneficiaries and other important documents.
  23. Decide whether to sell your leave or take terminal leave.
  24. Save money.
  25. Research the cost of living and career prospects in your new city.
  26. Compare VGLI with other life insurance options.
  27. Get copies of your health and dental records.
  28. Verify your DD-214 is accurate.
  29. Claim unemployment insurance, if applicable.
  30. Change your car insurance to your new state (with new minimum liability coverage).
  31. Sign up for career counseling/transitions services.

Military Transition to Civilian Life Resources

  • DoD SkillBridge
    A partnership that connects transitioning service members with job training opportunities, internships and work experience over their final 180 days of service.
  • Veterans Employment and Training Services (VETS)
    A U.S. Department of Labor program to promote veterans and military spouses in the work force and protect veterans’ employment rights. They administer state grants for the Jobs for Veterans program, which supports state workforce agencies, enabling them to hire dedicated staff to provide career transitioning and training services to veterans.
  • Veteran Jobs Mission
    A consortium of more than 200 major private sector companies who have committed to hire 1 million veterans. (At press time, they’re at 594,006.)
  • VetJobs
    An online job board with hundreds of thousands of listings. All listings are from employers who are specifically interested in hiring veterans.
  • ClearanceJobs.com
    A job board specifically for those holding secret or top-secret clearances. If you already hold a clearance from the military, you are very attractive to many employers, because you've already been vetted, and the employer can potentially save significant amounts of money paying for a clearance investigation for another applicant who doesn't already have one.
  • Military Skills Translator
    A web resource that helps transitioning service members and veterans translate job skills acquired in the military to civilian skill sets.
  • Department of Veterans Affairs - Montgomery GI Bill
    The VA’s home page for Montgomery GI Bill and Post 9/11 GI Bill benefits for education, trade or vocational school and apprenticeship programs.
  • Wounded Warrior Resources
    The MilitaryOneSource.com page listing a variety of programs and support organizations for wounded or disabled veterans.
Author Bio

Jason Van Steenwyk has been writing professionally about business, investing and personal finance since 1999. He first learned the trade as a staff reporter with Mutual Funds Magazine, part of the FORTUNE Group of magazines at Time, Inc.

In addition to his work for Mutual Funds, Jason has published feature articles in many business and financial consumer and trade publications, including Wealth and Retirement Planner, Registered Representative, Annuity Selling Guide, Bankrate.com, Senior Market Advisor, RealEstate.com, NerdWallet and many more.

He is also a 22-year veteran of the Army National Guard.

Sources