When it is time for you to leave active duty in the military, there are many things for which you must prepare. One of the important aspects is how to set yourself up financially – not only immediately after you transition to civilian life, but for the long-term as well to build up your nest egg. Here are some tips from financial experts on how best to do this.
Save, Save, Save
No matter if you are enlisted for the minimum time or if you are a career military person, you need to be saving month to month. This will prove crucial to providing a financial cushion during the military to civilian transition period. Even if you serve long enough to draw a pension, it will most likely not be enough (by itself) to provide the comfortable life that you deserve. If you have not started saving yet, do so immediately because every bit will help when you are in the outside world.
If you are planning on attending college after your military service is finished, make sure to take advantage of the GI Bill. If you have served at least three years in the military, the GI Bill will cover all of your schooling and fees if you are an in-state student at a public university. It will pay a portion of the tuition and fees for other schools.
Private Student Loans
If you need money for schooling beyond what the GI Bill provides, you can opt to take out a student loan from a private lender. Use a student loan calculator to estimate what the repayment schedule would be after graduation. If you have kept your credit clean and have a clear goal in mind, private lenders are much more likely to give you favourable interest rates. Private student loans are also preferable in some case because you can use the extra to help with living costs while enrolled in college
After leaving the military, you will need to decide what to do with the money you have deposited into your TSP, if you have one. While you are not required to withdraw any of the money in it, you may not be allowed to keep making deposits into it. You can certainly leave the money where it is and open up a new retirement account, such as an IRA or a 401(k) plan with your new employer. However, a decision like this is completely up to you, but you may want to discuss your retirement options with a financial planner.
If you have retired from the military after 20 years, you will be eligible for health insurance through the plan you had while still enrolled. However, if this is not the case for your enrolment status, you will have to look for another health insurance plan. It is crucial that you carry health insurance after leaving the military because even one accident or health issue has the potential to wipe out any savings you may have and put you in debt owing tens of thousands to healthcare providers.