by In addition to the high concentration of active-duty people, San Diego has one of the largest military populations in the country, with around a quarter million veterans living in the county.
For more than a century, Bank of America has provided resources and services for our military men and women, including assisting them in adjusting to civilian life after their active duty careers. The bank has also been a banker of San Diego and the U.S. military.
In particular, we assist clients in comprehending the various financial resources and difficulties associated with switching careers. When leaving the military and entering the civilian world, for instance, there are a number of financial factors to take into account. These include housing allowances, deployment pay, and some tax perks that disappear after official duty.
In order to attain financial wellness in a new phase of life, it can be helpful to comprehend this new environment and go confidently into civilian life.
These seven suggestions will assist you in navigating the financial shift.
1. Create a fund for transition.
Getting the job you want could take several months. At the same time, you might have to pay cash up front for new costs like accommodation and transportation. Try to put aside enough cash for a few months’ worth of necessities. You can work toward this goal by starting small and setting aside a few bucks each month.
2. Be aware of how much your civilian salary will cover.
Your take-home pay will probably be less than the wage you were quoted in your employment offer because a large portion of your civilian income will be subject to taxes. Make a budget that accounts for rent, food, auto payments, debt repayment, and other expenses after estimating your monthly take-home pay after taxes.
3. Recognize the changes in taxation
Veterans and their families might benefit from several tax incentives, but you’ll likely have more taxes deducted from your new civilian wage. For instance, most states provide veterans with property tax relief, and many Veterans Administration benefits are tax-free.
You must now pay more attention to the IRS’s April 15 deadline. While serving in conflict zones, you might have been automatically granted an extension to file your income tax return; but, if you want to file your return after April 15 as a civilian, you must request an extension. Although extensions are typically given until October 15, you still have until April 15 to pay any taxes that are due.
4. Look After Your Health
You should be aware of your alternatives for the future because your health care coverage usually expires the day you leave the service. For instance, you might be eligible for group insurance through a new work, or you might be able to maintain your TRICARE coverage by paying out of pocket through the Continued Health Care Benefit Program. You might also consider purchasing coverage through a state exchange if you don’t already have a job lined up.
5. To safeguard yourself and your loved ones, think about getting insurance.
You certainly place a lot of importance on protecting and supporting your loved ones, but you might not have considered included life insurance in your financial strategy. Your workplace might provide these policies, or you might want to look into purchasing an individual coverage to make sure your family is protected even in the event of a job loss. The VA provides a calculator to determine coverage requirements.
6. Recognize your VA benefits
For those leaving the service, the Department of Veterans Affairs provides a number of benefits, such as:
-
Financial and tuition assistance through
programs such as
the Post-9/11 GI Bill, the Montgomery GI Bill and the Veterans Educational Assistance Program
- Career counseling
-
Homebuying help via the
VA home loan
, which guarantees a portion of a mortgage or home loan, allowing you more favorable terms
- Financial assistance to accommodate a service-related disability.
A complete list of benefits is available on the VA website.
7. Start thinking about retirement
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You may first prioritize short-term demands during your transition from active service to civilian life, but it’s also a good time to start considering longer-term objectives, such as retirement. You might have funds saved up through the Thrift Savings Plan already. You will have access to a wider variety of retirement investing alternatives as a civilian, such as employer-sponsored 403(b)s and 401(k)s. You might think about opening an Individual Retirement Account if you are unable to participate in employer-sponsored programs.
On our Better Money Habits website, Bank of America, a firm that has proudly supported the U.S. armed forces for more than a century, offers free financial education tools tailored for military personnel from active duty to life after the military.
Tony Guminski, a veteran of the U.S. Army, is a vice president of commercial banking and co-chair of Bank of America’s Military Support and Assistance Group in San Diego.
