If you expect to leave the active duty military in a year or less, you should start building a transition fund. For one thing, you may not be able to get a job right off the bat, especially in this down economy. You should set aside at least six months’ living expenses to carry you through your separation. Don’t be tempted to touch your Thrift Savings Plan. If you cash it in, you’ll pay a 10 percent penalty, as well as having to pay income tax on what you withdraw.
There’s also the issue of healthcare. Your Tricare coverage lasts for six months after separation. If you’re still out of work when that coverage expires, you’ll need to buy individual coverage for the interim. Shop around and consider a high-deductible health plan, which typically costs less out of pocket. You may not need all the bells & whistles of a “Cadillac” plan, just something to protect you from a major medical expense.
Also consider getting some disability insurance. And life insurance, especially if you have a family. Your Servicemembers’ Group Life Insurance (SGLI) expires 120 days after separation. As a veteran, you can segue into Veterans Group Life Insurance, but do so before your SGLI expires and you’ll be able to get VGLI without medical underwriting. Keep in mind that the premium goes up every five years. The Veterans Affairs Department has an online calculator to help you calculate your life insurance needs.
For an additional perspective, check out this video:
Alex A. Kecskes has written hundreds of published articles on health/fitness, "green" issues, TV/film entertainment, restaurant reviews and many other topics. As a former Andy/Belding/One Show ad agency copywriter, he also writes web content, ads, brochures, sales letters, mailers and scripts for national B2B and B2C clients. Please see more of his blogs and view additional job postings on Nexxt.
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