By Alecia D. Blair
Whether you have spent four or 24 years following your service member around the country and world, don’t forget that your spouse’s separation or retirement from the military is your military transition, too.
During a military transition, you will tackle challenges pertaining to your family’s financial readiness (spending plan and emergency savings), your career, and your own retirement savings. But don’t sweat it. As a military spouse and planner extraordinaire, you’ve been coming up with plans A, B, C, and D for years. You will take on this challenge just as you have any other in the military—with resilience and grace. You’ve got this, and we are here to help.
Check out four tips to help you pre-plan for your transition away from military life.
1 Revisit the family spending plan.
Does your family already have a spending plan (budget)? If so, that’s great. It’s time to adapt it. If you don’t have a spending plan, having a realistic, conservative one is essential to a smooth military transition.
Check out the Transition toolkit on saveandinvest.org for tips to compare your service member’s military to civilian compensation and benefits. If you need to start from scratch, there’s no need to reinvent the wheel. Check out SaveandInvest’s and USAA Education Foundation’s information on spending plans/worksheets.
When modifying your spending plan for a military transition, you will be losing tax breaks when you transition out of military life, so take this into account. If you need a second set of eyes on your spending plan (and financials in general), visit your installation’s financial readiness/education office and speak to a personal financial counselor for free.
Remember, communication is key. Make sure you and your service member are on the same page about the family financials.
2 Do you still need an emergency fund? Yes! Now more than ever.
Having a healthy emergency fund is always in style, especially if your family is moving beyond the military.
The benefits your service member receives (housing, health care, taxes, etc.) will change a lot in the civilian world, so having at least three to six months of emergency savings will help your family better handle financial surprises instead of taking on debt. As FINRA Investor Education Foundation plainly puts it, “Expect to pay more money out of pocket than you’re used to.”
3 Now’s your time. What do you want to do?
Chances are you’ve followed your service member around from duty station to duty station for a while. As a result of his or her service, your professional and/or education options have been limited. So now may be the time to ask yourself, “What do I want to do?”
Is now the right time to return to school? In many cases, a service member can transfer his or her GI Bill to a spouse or dependents, so look into this option. Proceed with caution before taking on debt to return to school. Plot your course carefully, and look for creative ways to reduce education expenses whenever possible.
Is a career or job change in your future? If so, dust off that résumé and polish it up. Many military installations offer free resume and job preparation services, so visit a location close to you.
4 Are you contributing toward your own retirement? You should be.
If you aren’t already contributing to your own retirement account, now is a great time to do this for many reasons:
- Employment changes may allow you to save more toward retirement.
- There are often tax advantages to saving toward retirement.
- Your retirement savings account will help supplement your service member’s retirement, which means a higher standard of living in your golden years.
- Plus, seeing your own retirement savings account increase is empowering.
Look for opportunities to invest in your retirement through your employer’s sponsored plan or through an individual retirement account (IRA), among other options. And if you’re already saving for retirement, can you now afford to save more?
Change is constant in the military. A military transition is a major change for you, too. This is a perfect opportunity for you, as a military spouse, to ask yourself what’s next and guide your family into this next chapter and toward a solid financial future.
About the Author
Alecia D. Blair is the Military Saves communications project manager, AFC® candidate, and FINRA Foundation fellow.