- The Essential Military-to-Civilian Transition Resource

The Top 5 Things to Do the Minute You Transition
by Ashley Feinstein, Financial Writer

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Article Sponsored by: USAA

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The transition to civilian life is fraught with change. Minimize the stress of transitioning by adequately preparing for your new financial life. Here are the top five things you should do the minute you transition to set yourself up for financial security.

Ashley Feinstein1. Take Steps to Build Your Civilian Career
Many transitioning military haven’t interviewed for a job in a long time, if ever. There are numerous resources available to help prepare you for the recruiting process including interview preparation, resume and cover letter help and career counseling to help you find jobs that are a good fit with your skills and interests. The Transition Assistance Program (TAP) helps service members and their spouses transition from military service to the civilian workplace. An independent evaluation of the program showed that service members who participated in the program, on average, found their first civilian job three weeks before those who did not participate. TAP hosts comprehensive three-day workshops with qualified facilitators where attendees learn about the ins and outs of a job search, career decision-making, current occupational and labor market conditions, resume and cover letter preparation and interview techniques. Participants are provided with an evaluation of their employability and are educated on the most current veteran benefits.

The Army Career and Alumni Program (ACAP) offers two to four day programs for soldiers prior to discharge that walks through career preparation options available. The program provides career-enhancing tools, including resume and cover letter writing software made specifically for transitioning soldiers, software to research career interests and tutorials about relating military skills to civilian jobs. ACAP also provides model interview videos that transitioning military can watch to learn about how to interview for jobs in specific industries. In addition, ACAP sets up job fairs and career events, provides one-on-one career counseling and has its own website to help connect employers with workers with military skills.

Once you land your first civilian job, it’s important to negotiate your compensation with your new employer. In the civilian world, salary and some other components of total compensation are negotiable. Don’t be afraid to ask for what you’re worth. The worst that can happen is that they say no and you have to decide whether the original offer makes sense for you and your family.

However, salaries for what seem like the same position can vary by large amounts depending on the area of the country where it is based and the industry that it’s in. For instance, a “Project Manager” in San Jose, Calif. earns on average $20,000 more per year than the same job title in Anniston, Ala. according to By consulting an online resource such as this during your job search, you can help to insure that your salary expectations are in line with local averages.

2. Create a Civilian Budget
Your past employer, the military, provides many benefits that are no longer available to you in the civilian world. These extra costs will be important to consider when determining your civilian budget during career preparation as you will now be paying for them yourself.

For instance, you will want to do some research and budget for estimated housing costs in the location that you plan to live. Remember that you will no longer receive tax-free housing benefits. That being said, there are mortgage benefits available to those who are transitioning from the military. For more detail on those benefits and to see if you qualify, visit

You will also want to consider tax changes and incorporate them into your civilian budget. In addition to using post-tax dollars for housing, you will now also be subject to state income tax, which will vary depending on where you live. Once you decide where you will be living, make sure to take this into account in your budget.

3. Protect You and Your Family
If you are transitioning from the military before retirement you will most likely now be responsible for you and your family’s insurance. While serving on active duty, the military offers a maximum of $400,000 Servicemembers’ Group Life Insurance with an additional $100,000 option available for spouses. Your Servicemembers’ Group Life Insurance will expire 240 days after you leave the military. Your new employer may offer a life insurance plan but it’s often limited to a low multiple of annual income. Supplementary life insurance may be a good option depending on your needs. You may also convert your Servicemembers’ Group Life Insurance policy to a Veterans’ Group Life Insurance (VGLI) policy, but expect premiums to increase over time. Make sure to compare prices and coverage before committing to any life insurance plan or combination of plans.

You will also want to protect you and your family with health insurance. Review your options and compare prices before making a decision on a plan. If neither you or your spouse have employers that offer health insurance coverage right away, consider signing up for the Continued Health Care Benefit Program (CHCBP), which provides up to 18 months of insurance post transition. Make sure to account for health related expenses in your civilian budget. You may now be responsible for paying policy premiums, co-payments and deductibles. Many companies offer a health savings account (HSA) benefit or flexible spending account (FSA) where you can contribute tax-free money to cover health-related expenses. Estimate your medical expenses for the year and contribute that amount to the plan to maximize the tax benefit.

4. Get Your Retirement Plan in Check
Many military members take advantage of the Thrift Savings Plan (TSP) account, which is a tax-advantaged way of saving for retirement. When you leave the military, there are four options available to you when it comes to your TSP account.

• Leave the funds in your TSP account: This can be a good option because expenses are very low.

• Roll your money over to your new employer’s plan: Consider the investment choices and expenses of the new plan before making a decision.

• Roll your TSP into a traditional Individual Retirement Account: This option typically has a greater array of investment choices as well as lower fees than an employer program.

• Cash in your TSP: I recommend avoiding this option if at all possible. You will end up losing much of your savings in taxes and penalty fees. You may also want to participate in your new employer’s retirement program. If the company offers a defined-benefit plan or pension, make sure to understand your eligibility and its vesting options. If you leave before it becomes fully vested you most likely will not receive full payments in retirement. 401(k) plans are more common and there are two major types to consider:

• Traditional 401(k): Contributions are pre-tax from your salary and lower your taxable income. These contributions in addition to any employer match will grow tax-deferred and then distributions are taxed.
• Roth 401(k): More and more employers now offer a Roth 401(k) option, where employees make contributions with after-tax money. Neither investment earnings nor distributions are taxed.

If your employer offers a 401(k) matching program, make sure to maximize it! With a 401(k) matching program your employer will contribute to your 401(k) to match what you contributed up to a certain percentage. If you qualify, you can also contribute to a traditional or Roth IRA (individual retirement account), to boost your tax-advantaged retirement savings even further. Use a retirement planning calculator to determine what you want to receive in retirement so you can set goals for retirement and know how much you should be contributing on an annual basis.

5. Build a Transition or Emergency Fund
A transition fund is 3-12 months of living expenses used in order to provide financial protection for any gaps in work or emergencies as you transition and are conducting a job search. Make sure to keep the money in an easy to access, liquid place such as a money market fund or a high interest savings account so that you can use it if you need it without any penalties or fees.

Also, factor any moving expenses into your transition fund. For most service members, leaving the military is an authorized government expense. Allowances and benefits vary by service branch, type of discharge and type of separation but you may be eligible for various benefits.

By taking steps to build your civilian career, create a civilian budget, protect yourself and your family, get your retirement savings in check and build a transition fund, you are setting you and your family up for financial success in your civilian transition. Take these five steps as quickly as possible to secure your financial future.


Ashley Feinstein is a certified money coach and founder of Knowing Your Worth, where she empowers her clients to redefine success on their own terms by knowing their value and fearlessly going for it. Find out more, check out her blog at and connect with her on Facebook and Twitter at The Fiscal Femme.


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