Considerations for Separating or Retiring from Military Service

By Meghan Northcutt, AFC® Candidate, FFC Candidate

Separating and retiring from military service can be a difficult time; it comes with excitement and worry simultaneously. The time has come for you to consider what your life will look like after your military service commitment is completed. Here are three considerations to help increase the success of this major transition.

  1. Tax-free Allowances: When considering new employment and comparing civilian salary to the pay received during your military career, it is imperative to think about tax-free allowances. Remember that the civilian salary should be compared not only to base pay but all pay, inclusive of housing and substance/food allowances. If uniforms are required, inquire about reimbursement for the purchase of such items in lieu of the annual clothing allowance for battle uniforms.  

  2. Insurance: Depending on the type of discharge category, medical and dental insurance may no longer be provided. Research the options applicable; these options may include coverage under the Affordable Care Act, the Continued Health Care Benefit Program, and civilian employer plans. Whereas Tricare Prime has no out-of-pocket expenses for qualifying military families, expenses for coverage, co-pays, and prescriptions are nearly guaranteed with civilian employment. Outside of medical and dental insurance, life insurance costs are another factor to consider. Servicemember Group Life Insurance (SGLI) is not available after the servicemember transitions out military service. Veterans Group Life Insurance (VGLI), civilian employer plans, and other commercial plans are applicable options to continue life coverage.

  3. Installation Services: Many services exist and differ from installation to installation. The list is long and includes everything from commissary and Exchanges to child care facilities. Maintaining the same lifestyle off installation may have a significant increase in cost; determine which of the services are of significance and research the civilian costs.

Create a mock budget with the salary expected from the civilian employment and include all expenses. What does your lifestyle look like after all financial commitments have been met? What changes are required with the change in benefits? Considering these changes in your budget will help cast a more realistic perspective on the transition, which will lead to an increase in your success in handling this major change.

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