Paycheck Chronicles

Do You Have An "Out Plan"?

It has been a busy week in my military news world.  In addition to things like 2013 BAS and BAH rates, I've also received news of enlistments, promotions, and retirements.  It seems that everyone is in some sort of state of transition.

While our family isn't currently transitioning, our minds have been turning towards the future.  My husband has been in the military for over two decades, and the prospect of retirement is growing larger in our minds.  The twenty-year plans I made when we married are looking more like five-year plans, and I don't feel completely ready.  In fact, I feel a little panicky.  I think of friends who are leaving the military unexpectedly, and wonder how they are managing.  It is hard enough to plan for separation from the military when you think you know the year and the circumstances, but what happens when that date comes sooner than expected?

No matter when or how you leave the military, there are several things that are important for you to do to prepare yourself financially.  If you are able to do them while your service is still secure, you'll find yourself less stressed when the time comes.

1.  Estimate your income and evaluate your expense.  Will you be receiving retirement or involuntary separation pay from the military?  How much, and for how long?  Will you be eligible for unemployment?  Might you receive Department of Veterans Affairs (VA) disability payments?  I receive a surprising number of letters from retirees or disabled veterans who don't understand their payments and aren't sure if the payments they are receiving are correct.  It can be complicated, but it is important to understand your payments and entitlements.

Then, look at your fixed expenses.  If you are planning ahead, you can look at new obligations under the light of "getting out."  For example, I'd really like to buy a new house.  However, this might not be the right time to be taking on a large, new, long-term payment.  Same goes for car loans and other debts.  Ideally, we'd all leave the military debt free.  While that might not happen, knowing where you stand is a good start.

2.  Get copies of everything:  orders, medical records, payments, whatever you can imagine.  Make a binder, or five, documenting all aspects of your time in the military.  You will be surprised how often you will need to refer to these records, and it is a heck of a lot easier to collect them as you go along than to try to reconstruct them, especially once you've left the service.

3.  Attend separation classes, as early and often as possible.  If you are married, take your spouse.   While the services require one or two sessions near to separation, most experts recommend earlier and more frequently.  These classes cover a wide variety of information in a relatively short amount of time, and it is a lot to work through.  Taking your spouse helps you to be on the same page as you make decisions and move through the process.  Taking the class early allows you time to do further investigation and gather necessary information.  Taking the class more than once helps to ensure that you didn't miss anything, and helps to fill in gaps from the first time around.

4.  Do your own learning about your post-service benefits.  While the classes are good, they can not possibly cover every possible program and situation.  Ultimately, you are responsible for knowing the benefits to which you are entitled.

5.  Transfer your Post 9/11 GI Bill, if you are eligible and that is your intent.  Transferring the Post 9/11 GI Bill must be done before you leave your active service, and in most cases it incurs a service obligation.  Best bet?  As soon as you are eligible, transfer one month to each eligible beneficiary to mark their place in the system.  You always retain the right to modify or revoke their benefits later, but you can't add new beneficiaries once you leave the service.  Once you've made the transfer, print out your approval letter and even a screen shot of the benefits as you've transferred them.  Put them in that binder you've created for these types of documents.

6.  Build up your emergency fund, and if you have  time and resources, build a transition fund as well.  Life can be unexpectedly expensive, and it is always better to be prepared for the worst.  How much should you save?  That depends on a huge number of factors and I can't possibly begin to estimate for you.  However, keep in mind:  I've never heard anyone complain that they saved too much money.

7.  Take advantage of educational opportunities, for the servicemember AND the spouse.  Tuition Assistance, MyCAA, even just the "how to use computer programs" available at many family support centers.  The more education and skills you acquire before leaving the military world, the better!

All of these steps can be started years before you reach the end of your time in the military.  They are easier to do as you go along, and you'll find the transition less stressful as a result.  However, if you find that time has sped along, jump in now and get started.

I look forward to hearing from readers on the other side of the fence.  What did you learn during your transition out of the military?  What advice would you give families as they start the journey?  Your experience is valuable, please share!


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