The Top 5 Things to Do the Minute You Transition
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.
1. Take Steps to Build Your Civilian Career
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 Salary.com. 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
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 http://www.benefits.va.gov/homeloans/.
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
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
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
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 KnowingYourWorth.com and connect with her on Facebook and Twitter at The Fiscal Femme.
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