Joshua Andrews, CFP® Professional, USAA | Date published: Sept. 17, 2021. | 8 to 8.5 Minutes

The transition from military to civilian life can be a challenging experience for anyone. Read on to learn more.

The transition to civilian life can be a challenging experience 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, Josh Andrews now serves as an advice director and Certified Financial Planner™ professional at USAA.

“When I transitioned to civilian life after 12 years of active duty, I didn’t know what I didn’t know, and my learning curve was steep,” said Andrews.

Like Andrews, many service members and their families face a common set of financial challenges post-military. Read on for steps you can take to overcome these challenges in your transition to civilian life.

Stay connected with your military family.

“Parting ways with the friends you’ve served with might be the toughest part of leaving the military,” says Ingrid Bruns, a USAA advice director and 30-year military spouse. “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 spouses that they have to leave behind.”

Some parting service members choose to live near their former installation, but that’s not always practical. Prioritize keeping up with friends via telephone, 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.

“Civilian neighborhoods and workplaces are unlikely to provide you with the same level of support and camaraderie that military life provides — but you can find reasonable substitutes,” Bruns says. “Coaching youth sports or volunteering in the community can help you recapture some of the spirit of teamwork you’ve left behind.”

Understand your strengths when choosing a civilian career.

Post-military service members often change jobs several times and can be challenged by new financial obligations like rent and health insurance.

“But service members have skills and talents that are highly valued in the workplace,” Bruns says.

“Ex-military members are skilled at managing and leading people.”

She adds that transitioning military spouses have also developed valuable leadership and organizational skills.

Whether you served four years or 30, you’ve learned about integrity, leadership, accountability, organization and how to strive for perfection. Not only are these traits important to employers, but they’re invaluable to your new civilian community and can help you find volunteer opportunities.

However, finding a job doesn’t come easy for all veterans. A Pew Research study reports eye-opening statistics about the difficulty some face when finding a job post-military.

• 57% of veterans found employment in fewer than six months.
• 21% took six months to one year to find employment.
• 22% took longer than one year to find employment — or didn’t find a job at all.

To help transitioning military members and their spouses find their next career, USAA partnered with RecruitMilitary, an organization that connects 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. The Post-9/11 GI Bill is a great way to fund your education and receive a housing stipend at the same time.

Understand your finances.

During your time in the military, you’ve worked hard to establish a solid financial base. As you enter post-military life, you 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 ensure you’re covered.

Maintain adequate life insurance throughout the transition to civilian life.

Post-military, you’ll lose access to Servicemembers’ Group Life Insurance (SGLI). While there are several ways to replace it, not all are created equal.

While your new job might offer group life insurance, remember that you don’t own it. If you lose your job, you may lose your life insurance, which can leave you 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 Insurance (VGLI). VGLI is a great option for veterans who:

1. Might not qualify for private life insurance, or
2. Find it to be prohibitively expensive due to medical conditions resulting from military service.

While VGLI might be a good option for some military members, it might not be the cheapest long-term option. VGLI premiums increase every five years. Over time, an individual life insurance policy with fixed premiums can save you money. You should pursue all options available to you to ensure you protect the ones you love with life insurance.

Ensure you and your family have health care insurance.

There are many 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.

Learn about out-of-pocket medical costs. A 2019 study reported that 66% of people who filed for bankruptcy cited medical issues as a key contributor to their financial downfall. Since medical expenses will be a key part of your post-military life, include those expenses in your budget so you don’t go into debt.

Andrews learned about out-of-pocket medical costs shortly after his transition to civilian life.

“When I was stationed at Eglin Air Force Base, we took my son to the ER,” Andrews said. “They treated him, and we came home without a bill since we were under TRICARE.”

He compares that to a second trip he 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,” Andrews said. “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. This is a new term for many military members so check out this article to learn more.

To help transitioning military members understand their post-military civilian benefits, USAA devoted two episodes of the “Military Moves” podcast to the topic.

• Military Moves Podcast Episode 7: Understand Your Civilian Benefits Part 1
• Military Moves Podcast Episode 8: Understand Your Civilian Benefits Part 2

Navigate the Department of Veterans Affairs.

If you have a disability due to your military service, apply for VA disability.

“I unfortunately have a back and neck disability due to my time in the F-15,” says Andrews. “I loved the airplane, but the frequent 9G maneuvers took their toll on my spine.”

Andrews adds that if he were to add up the total cost of medical procedures and physical therapy that the VA has paid for over the past 10 years, it would easily surpass $50,000.

“I still live with the physical pain,” he said, “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.

It all comes down to adjusting your budget to match your new income. If you’re making more post-military, use this surplus as an opportunity to increase your savings or pay down debt, rather than simply enhancing your lifestyle. If you’re earning less, adjust your budget to reduce expenses or find additional ways to earn more money. Your spouse might find a job, for example, or you might supplement your income with a side hustle.

To help you understand what you would need to make as a civilian in order 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,” says Andrews.

Since transition costs can be high, start saving at least two years before your expected transition date. Consider automatically depositing some of your paycheck into a savings account set aside for the transition.

Use transitional 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 transitional leave because it puts more money in your pocket. With transitional leave, you also earn BAH, BAS and any special pay you’d normally receive.

If you cash out your leave, on the other hand, 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.

For more information and helpful tips on how to leave the military, visit usaa.com/leavingthemilitary. In addition to the Military Separation Assessment, you can take advantage of an in-depth military separation checklist that will guide you through the transition from military to civilian life.