Prepare for a Bigger Tax Bite
If your state of legal residence while in the military has no income tax, moving as a civilian to one that does could be quite a financial shock. And no matter where you live, you’ll lose your tax-free housing allowance. Keep the new reality of your finances in mind when negotiating the salary for a new job, for example, or deciding how much you can afford for a house.

Replace Your Life Insurance
Members of the military have access to inexpensive life insurance. Servicemembers’ Group Life Insurance (SGLI) costs just $312 per year for the maximum $400,000 death benefit. But that coverage expires 120 days after you leave the military. During the transition, you can convert your policy to Veterans’ Group Life Insurance with no medical examination.

That can be a good deal if you have a medical condition that might make it tough to qualify for life insurance in the open market. But VGLI is a lot more expensive, and the price rises with age. For those age 30 to 34, $400,000 in coverage costs $480 per year; the price gradually rises every five years until age 75. If you’re healthy, you may find a much better deal on your own and be able to lock in a fixed rate for 20 or 30 years. Shop for coverage at least six months before you leave the military, so you have time to get VGLI coverage if you don’t find a better option. Get quotes for individual policies at or For more information about VGLI and SGLI, visit

Replace Your Health Insurance
If you retire after 20 years in the military, you’ll qualify for health care in retirement, although you may still want to buy supplemental insurance. If you leave before putting in 20, health-insurance premiums can be surprisingly steep. Even if you get a job that provides insurance, you’ll probably have to pay at least part of the premium yourself, in addition to out-of-pocket expenses, such as deductibles and co-payments.

If neither you nor your spouse has a new job with health insurance, you can sign up for the Continued Health Care Benefit Program for up to 18 months. (This is similar to the COBRA benefits available to civilians who leave jobs.) You have 60 days after you leave the military to enroll in the CHCBP, which costs $1,065 per quarter for individuals or $2,390 for three months for families. Even at those prices, this can be a good option if you have a medical condition that makes it difficult to qualify for coverage.

Protect Your TSP
You can maintain your retirement account even after you leave the military, which can be a good deal because expenses are so low. Or you can roll the balance into a new employer’s 401(k) or an IRA, to get access to different investments.

If you roll TSP money into an IRA or another plan, keep track of any contributions that were made with tax-free combat pay. A portion of each withdrawal from the new plan will be tax-free to account for the tax-free contributions. Go to for details.

Build Your Emergency Fund
A stash of safe and accessible cash is even more important once you move into a civilian job that may be susceptible to layoffs. Keep at least six months’ worth of expenses in a money market or savings account.

Take Advantage of Transition and Education Resources
The transition office at your installation will explain the procedures you must follow when you leave the military, the benefits you’ll receive and the resources available to help. But it’s a good idea to do additional research on your own. Talk with someone who has already left the military and ask about financial surprises.  The military community-service office on your base and the Army Career and Alumni Program—there are similar programs for the other branches—offer valuable resources to help with the transition and new-job search. The Department of Labor’s Veterans’ Employment and Training Service program is packed with resources to help veterans find jobs.

Reassess Your Retirement Savings
When you’re close to leaving the military, you’ll have a much better handle on how much of a pension and other benefits you’ll receive. Once you gather those numbers, you can calculate how much more money you’ll need to save to ensure a financially secure retirement (the calculators in the tools section at can help you run the numbers). Doing this calculation can be a quick reality check about how much money you need to earn from a post-military job.

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