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Leaving the Military
Once you have decided to leave, there are many things to consider, including what you will do next. If you plan to begin or continue your college education, you’ll need to determine what benefits are available to you under the GI Bill. Visit the Defense Finance and Accounting Service website or ask a question about military pay.
Insurance is something else you’ll need to consider. While in the armed forces, your health insurance is provided at no cost to you. When talking to potential employers, ask if they offer health insurance benefits. Consider whether you need to continue with the Tricare health insurance program. Your new employer may provide life insurance, but check with the Department of Veterans Affairs if you want to purchase coverage before you leave.
Retirement savings are another consideration. Your TSP savings have some tax consequences that are unique to you as a service member. If you have contributions that are subject to the combat zone tax exclusion, there are restrictions on the types of retirement plans they can be rolled over into. Visit the TSP website for more information.
Four out of ten people cash out their retirement savings when changing jobs. While it may not seem as though you have saved very much money, it can be very hard to save the same amount once you spend it. By cashing out, you may be subject to a tax penalty. You also miss out on the power of compound interest, which works for you when you have a sum of money already saved.
You’ll want to learn about the retirement savings plan that your new employer provides. Retirement plans can vary greatly, so once you get the information from your employer, be sure you read and understand it.
Remember, this is one aspect of your future you control. The earlier you plan for retirement, and the more you save toward it, the better your chances of having it work out as you planned.