To Stay or Leave the Military-Are Your Finances In order?

Deciding whether or not you should separate from the military is challenging. Leaving the military and heading into the civilian world means that significant changes would be on the horizon. Many that will impact your financial well-being. If you are trying to figure out whether to stay or leave the military. Here are some finance questions you should ask yourself before you make a formal decision.

How Long Will Your Emergency Fund Last?

Unless you are separating from the military and transitioning immediately into a civilian job, you need to consider how long you can financially sustain yourself and your family. Usually, you will need to sit down and evaluate all of your expenses first. This involves more than just looking at your current budget. Why? Because the military handles some costs that you’ll be shouldering as a civilian.

For example, once you separate, you won’t have access to military housing. So, if you were living on-base or on-post. You need to consider the cost of rent and utilities at a minimum.

And this doesn’t mean how much it is was in the last city you are stationed in. It means the prices in the area you want to move to after separating. The cost of living can be shockingly different. So you need to research what the expenses look like in your destination city.

Similarly, your health insurance costs might shift dramatically. Your grocery bill might change as well.  Especially if you won’t have continued access to the Commissary. The same goes for gas, as on-base or on-post stations might be significantly cheaper than regular stations at your destination.

Once you have a better idea of your post-military expenses. Take a look at your savings balance. By dividing that by your costs gives you an estimate of how long that money will last.

What Do You Need to Transition to a Civilian Job?

While the military can certainly provide you with transferable skills, that isn’t all you’ll need to land a civilian job. Since you’ve been living in uniforms for at least a few years. There is a decent chance that you don’t have a large, professional wardrobe. Similarly, you might not have tools or other items that you would be expected to supply. while the military essentially provides you with everything you need to handle your duties, the civilian world doesn’t always do that.

Consider what sort of investment you’ll need to make to shift into a civilian position. Then, determine whether that is a cost you can reasonably shoulder if you chose to separate.

How Much Will You Take Home in Your Professional Field?

What you may earn in the civilian world could differ drastically from your military pay. In some cases, you might make more while. In others, you could bring home less.

To get a reasonable ballpark, you’ll need to figure out what your skills are worth on the civilian job market in your destination city. Get online and start researching jobs that you could reasonably expect to land.

If you are transitioning to a new field (either by choice or because your military job doesn’t have a direct civilian equivalent), make sure that you aren’t overly optimistic when identifying possible opportunities. While some employers easily see how your military experience could provide you with the skills you need, others are more cautious when it comes evaluating candidates that don’t have experience in a similar role. As a result, you may be facing a bit of an uphill battle or be stuck having to take a lower-paying position for the sake of getting direct experience.

Examine The Salary Ranges

Once you have some potential jobs in mind, examine the associated salary ranges to figure out an estimate. This gives you an idea of your base pay. However, that’s only part of the equation.

Now, you need to realize that the amounts that will be deducted from your paycheck will be different than what you experienced in the military. For example, you’ll contend with medical insurance costs as well as retirement account contributions that exceed what you’re used to seeing removed from your pay, so you need to keep that in mind. Research some averages payroll deduction amounts to figure out what to expect.

After that, you’ll have a decent picture of how much you could take home as a civilian. That way, you can see if it is enough to handle your financial needs before you formally decide to separate.

If You’re Married, How Will Separating Impact Your Spouse’s Career?

Spouses of military members often have challenges when it comes to sustaining or advancing a career. Frequently changes of station have an impact, but that becomes a potential non-factor if you separate.

Before you make a decision, determine how your spouse’s earning potential and career could change. Sit down together and examine job opportunities that align with their skills and capabilities. Then, take a look at salary ranges to see if they will be earning more or less if you leave the military.

By taking your spouse’s income into consideration, you can get a holistic view of your household’s possible financial situation. This may make separating look more or less viable, depending on your unique circumstances.

Are There Education Cost or GI Bill Benefits Considerations?

If you are eligible for Post-9/11 GI Bill benefits and you or your dependents intend to further their education soon, then that needs to be a consideration. For example, after separating, your college costs might be covered, and you could be eligible for stipends to offset certain other expenses, such as books, supplies, and even housing. By choosing a school that participates in the Yellow Ribbon Program, you might receive more financial support. Additionally, some military members can transfer unused GI Bill benefits to dependents, which can also reduce household expenses.

Before you separate, you need to take these education costs and benefits into account. They affect your household budget, so it’s important to understand what you may or may not have to handle if that is part of your plans.

Are You Willing to Abandon Your Possible Pension?

In many cases, healthy military members only receive military retirement pay or benefits if they serve for at least 20 years. The military uses a predominately pension-based system and, if you don’t stay for the minimum amount of time, you essentially forfeit all of it. Military personnel typically can’t get a partial retirement benefit. In most cases, it’s an all or nothing proposition.

Now, the situation is different if you are leaving due to a disability (where you may get access to disability benefits) or intend to join the National Guard or Reserves (which allows you to keep accumulating time). Similarly, if you plan on working for the federal government, you can potentially make a military service deposit into the Federal Employees Retirement System (FERS), allowing you to receive additional credits that increase your federal retirement. However, outside of those scenarios, your time-in-based military pension practically disappears if you separate.

Should You Stay or Leave the Military?

Whether this is a relevant decision-making point may depend largely on how many years you’ve already served, as well as factors (beyond the financial) that are part of the equation. However, it is something you should think about before you formally decide.


Did you have to decide whether you should stay or leave the military? Were there finance questions you asked yourself before choosing? Tell us about your experience in the comments below.


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