Financial Advice for Transitioning Military Personnel

If you are in the process of transitioning from the military into the private sector, chances are you’ve been hard at work seeking civilian employment.  However, there are other factors to consider in addition to preparing your resume and confirming job interviews.  Whether you are still in the planning stages of your transition, currently experiencing a gap between your service time and employment, or starting out with a lower salary than anticipated, it’s crucial that transitioning service members make the necessary arrangements to protect their financial security during this somewhat tenuous time.


Here, we review some important aspects to consider both before and during your transition:

  1. Start a Transition Nest-Egg – It’s never too soon to begin saving for your post-military life.  Plan to save enough to carry your basic living expenses for approximately one year, separate from your TSP funds.  While you may be lucky enough to transition straight into a civilian job, it’s still important to have a financial cushion to sustain you through any possible financial breaks.
  2. Pay Down Your Debt – A percentage of your income should be dedicated to paying off any remaining debt you have incurred.  As your transition date grows closer, increasing your debt payments will help reduce some of your financial post-military strain.  Of course, the balances with the highest interest rates should take first priority.
  3. Get Insured, Protect Your Loved Ones – The topic of life insurance is frequently neglected due to the sensitivity of the subject matter, but it is still an important part of your transition plan.  Transitioning military personnel are eligible for Veterans’ Group Life Insurance upon retirement.  To avoid medical underwriting, be sure to apply within 120 days of your departure.  However, if you wish to save costs, are generally in good health and a non-smoker, you may want to consider a commercial life insurance policy.  Remember to sign up at least six months prior to your retirement to ensure the best coverage for your family at the most affordable cost.
  4. Make Proper Use of Your TSP – Your Thrift Savings Plan is an important military benefit, but it must be handled responsibly.  Your choices are generally narrowed down into three basic options. 1) Leave your funds intact in your TSP account.  2) Roll your TSP funds into a conventional Individual Retirement Account.  3) Roll your funds over into your employer’s 401K plan, if offered.  Whatever your preference, your Thrift Savings Plan provides you with a tax-advantaged financial safety net.  However, think twice before cashing in, especially if you are 59 ½ or younger, as the income tax and withdrawal penalties would significantly reduce your profit.
  5. Watch Your Taxes – When it comes to post-military transitions, relocation often plays a major role.  Therefore, recent veterans must remember that different states often have different income tax laws.  Consider these variations when searching for jobs.  One that offers a lower salary in a state with fewer income tax deductions may actually pay off better than a slightly higher-paying position in a state with more exorbitant income taxes.  Researching these factors along with general cost of living details is a must during your transition.
  6. Consider Health Insurance Options – While you may have access to TRICARE as a military retiree, the service isn’t free, and you may decide to enroll in your employer’s benefit plan.  Of course, employer provided health insurance plans are never created equal as far as what they offer and the costs involved. Therefore, be sure to carefully compare your employer’s benefits against your TRICARE policy before making any final decisions. If you do choose an employer plan, remember to take these extra costs into account when negotiating your salary.




The military-to-civilian transition phase can offer you the opportunity to truly take stock of your ultimate life goals, both personal and professional.  Creating a solid, realistic financial strategy will allow you to accurately recognize your future expenditures and budgeting needs; and help you make the most of your opportunities.

Fred Coon, CEO


Stewart Cooper & Coon specializes in career transition services for senior-level military decisions makers and government agency employees by assisting candidates in locating companies who welcome both their leadership and organizational talents.