I am Kim Langford from Kiplinger’s Personal Finance magazine and I know you need to make a lot of decisions when you shift from military to civilian life. The transition of this on your base will help explain the procedures you must go through to benefits you’ll receive; but, you also need to make some important personal finance decisions to replace some of your benefits, adjust your post military budget and protect your investments for the future.
If you stayed in the military for at least twenty years, and you qualify for health care retirement that you leave before them, your health insurance bills can be surprisingly steep. If you have to buy health insurance on your own, you can lower your premiums by raising your deductible. If you have a deductible of at least eleven hundred dollars per single coverage or twenty-three hundred for family coverage, you can qualify for health savings account which gives you tax-free money from medical expenses.
You’ll also need to find new life insurance. Your service members group life insurance SGLI expires 120 days after you leave military. You can convert the policy to veterans group life insurance; but if you’re health, you can generally find much better deal on your own. Make smart decisions about your thrift savings plan. You can keep the money growing tact and firm in the account even after you leave military, which means a good deal, because expenses are so low, or you can roll in into a new employer’s 401k or an IRA after you leave the military, which you may prefer if you like different investing options.
Get ready for new expenses. After you retire, you have to pay taxes in the state where you actually leave, which could have you pay it in state income tax for the first time. You’ll also lose your tax-free housing allowance after you leave, so you need to earn higher income to end up with similar take home pay.
Build your Emergency fund, which becomes even more important after you leave military and just take a civilian job, which is much more susceptible to lay-offs. Keep at least six months-worth of expenses in the money market or savings account.
Talk with someone who has already left the military and ask about unexpected expenses, lost benefits, and other financial surprises. The military community service on your base has valuable benefits to help with the transition and new job search. Make the most of it’s free counseling information seven months before you leave the military.
This is Kim Langford, personal finance columnist and wife of an army doctor. For more information to help military families with their personal finances, go to www.kiplinger.com/links/military.
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