Financial Strategies for a Successful Transition to Civilian Life

Transitioning from military service to civilian life is a significant change, especially for those who joined the military at a young age. This short guide is designed to help you navigate these changes with confidence and clarity, providing you with the tools and knowledge you need to achieve financial wellness.

This Veteran Saves resource offers essential information and practical tips tailored for Veterans. It focuses on the unique financial aspects of moving to civilian life, ensuring you're well-prepared for the transition.

We understand that life in the military is different, and want to help you bridge the gap, making your financial transition out of the military as smooth as possible. With this resource, you'll gain the confidence to handle your finances effectively and set yourself up for a successful future.

Budgeting for Success

Creating a Spending and Savings Plan is essential for managing your finances, ensuring you live within your means, and saving for future goals.

Understand Your Current Spending Know what you're spending, what you can afford, and how it aligns with your priorities using the America Saves Spending and Saving Tool.

Collect Necessary Documents Gather three months’ worth of financial documents like pay stubs, bank statements, and bills.

Calculate Your Income Add up all income sources, including salary, pension, disability payments, and other benefits to determine your total monthly income.

Track Your Expenses List all expenses, from housing and food to transportation and entertainment, to see where your money goes.

Set Your Financial Goals Decide on short-term and long-term financial goals based on your current spending and saving patterns.

Make a Plan to Achieve Your Goals Identify steps to reduce spending or increase income to meet your financial goals.

Stick to Your Plan Set up automatic savings, adjust your plan for life changes, and seek encouragement through the America Saves Pledge.

By following these steps, you'll be on your way to achieving your financial goals and living comfortably. For more details, visit 6 Steps to Establishing A Spending & Savings Plan for Veterans and Transitioning Service Members. You can also check out the Spending and Savings Tool.

Veteran Civilian Employment Compensation Breakdown

Understanding your civilian compensation package is important for managing your finances and maximizing your benefits. Here’s a detailed breakdown of common elements in civilian compensation packages. 

Salaries

• Base Salary: This is the fixed annual amount paid to an employee by their employer. Unlike military pay, it does not include additional allowances. Understanding your gross pay (before taxes) and net pay (after taxes and deductions) is essential.

Health Benefits

• Health Insurance: Employers typically offer health insurance plans that cover medical, dental, and vision care. Be sure to review the premiums, deductibles, co-pays, and specific coverage details to choose the plan that best meets your needs.

Retirement Plans

• 401(k) Plans: Many employers offer 401(k) retirement savings plans. Understand the employer’s contribution match, vesting schedule, and investment options to make the most of your retirement savings.
• Pensions: Although less common, some employers offer pension plans, which provide a fixed monthly benefit upon retirement based on your salary and years of service.

Other Benefits

• Life and Disability Insurance: These benefits provide financial protection in the event of serious illness or injury. Check if your employer offers both short-term and long-term disability insurance.
• Paid Time Off (PTO): This includes vacation days, sick leave, and holidays. Understand your employer’s policies on PTO accrual and usage.
• Tuition Reimbursement: Some employers offer programs to reimburse education expenses, helping you advance your skills and career. Additionally, Veterans can use their GI Bill benefits for certain apprenticeship programs through their jobs, receiving a monthly housing allowance and a stipend for books and supplies while participating in these programs​.

Retirement Planning

Your military retirement benefits are a valuable asset. Integrating them with civilian retirement plans can enhance your financial security.

Understand Your Military Pension

• Familiarize yourself with the specifics of your military pension (if you have one), including payment amounts and eligibility criteria.

Roll Over Your TSP

• Consider rolling over your Thrift Savings Plan (TSP) into a civilian retirement account like a 401(k) or IRA to maintain tax advantages.

Maximize 401(k) Contributions

• Contribute enough to your employer-sponsored 401(k) plan to get the full employer match. Increase your contributions over time to further secure your retirement.

Tips for a Successful Financial Transition

Build an Emergency Fund

• Save for the Unexpected: Take the Veteran Saves Pledge and choose building an Emergency Fund as your savings goal. Veteran Saves will support you with regular email reminders, resources, and tips to help you stay on track. Start small and gradually increase your savings over time. At America Saves, we believe in the power of small steps, which is why our motto is ‘Start Small. Think Big.’ We recommend beginning with an emergency fund goal of just $500.

Continue Education

• Leverage Education Benefits: Take advantage of education benefits like the GI Bill to improve your skills and increase your earning potential. In addition to pursuing schooling, GI Bill benefits can be used for some apprenticeship or on-the-job training programs. Eligible Veterans can receive money for books, supplies and housing. Learn more here.

Seek Professional Advice (if you feel you need it)

• Consult a Financial Advisor: Consider consulting a financial advisor who understands the unique financial needs of Veterans. They can provide personalized guidance to help you achieve your financial goals. The Veteran Benefits Banking Program (VBBP) provides [1] free consultation with a credit or financial counselor to eligible Veterans.
• Active Duty service members can set up a meeting with a financial counselor by calling Military OneSource at 800-342-9647.
• The Foundation for Financial Planning offers pro bono counseling to service members and Veterans: Foundation for Financial Planning.

Veteran Saves also wants to be your partner! Take the Veteran Saves Pledge today and we’ll stick with you on your savings journey. Along the way, we’ll send you emails and texts full of tips and resources to keep you motivated and on the right path!