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Bottom Line Up Front

  • Begin planning for your civilian transition with an emergency fund and a new budget.
  • Be proactive in seeking employment and have a plan for housing (buying vs. renting).
  • Consider insurance and taxes as you plan for long-term financial stability in retirement.

Time to Read

7 minutes

July 12, 2022

If the military has been your way of life for several years, transitioning to civilian life after serving is a major change. You may feel excited—but also overwhelmed. There’s a lot to consider as you get ready, so it’s best to start preparing in advance. The guide below can serve as a checklist for financial matters to help ease the transition.

Emergency Fund/Transition Fund

Having a savings fund in place for emergencies is a smart financial practice for anyone. Financial experts recommend having 3 to 6 months of living costs saved to help cover unexpected expenses. For a major life change such as transition from the military, you’ll want to have money set aside that you can draw from during this time. If you’ll be searching for a new job or relocating, you may need to pay for a professional wardrobe and travel to interviews, moving expenses that may not be covered by your new employer, car repairs and more.

Treat your emergency fund like a recurring monthly bill and have a set amount directly deposited into that account each month. Knowing you have a financial cushion in place can provide peace of mind when you‘ve got a lot of decisions to make about your future.

Budget and Re-Budget

A servicemember’s income is different from a civilian’s. While in the military, you may have your salary, as well as basic allowances for housing and meals. You may also have discounts on child care and entertainment. Creating a budget can help you understand current costs as well as new expenses you may have during your transition time and beyond, such as the full cost of housing, groceries, and life and health insurance. A budget can help you see where you might be able to save on expenses and have more cash flow during the transition time.


Many experts advise starting your employment research a year or more before you leave the service. Learn as much as you can about the positions you’re seeking, including pay and benefits, so you can better understand if the compensation will fit your new civilian budget. Highlight your transferable skills—military skills and experience that can be applied to future employment settings.

Check out the Department of Veterans Affairs' Vocational Rehabilitation and Employment program or find military-friendly employers through nonprofit organizations such as Hire Heroes USAGrow with Google is another resource that has tools and resources to help transitioning servicemembers, veterans and military spouses search for and build careers. You may also want to take advantage of your GI Bill and Tuition Assistance benefits to expand your knowledge and add new job skills through continued education.


While in the military, you have a Basic Allowance for Housing (BAH) to make housing costs more affordable where you’re stationed. As a civilian, you’ll likely be responsible for all your housing costs, so it’s important to consider the BAH value you received when negotiating a new job salary.

If transitioning to civilian life now gives you the opportunity to settle down in one place for several years and have a “forever home,” this can be an exciting time. A VA loan can provide more favorable terms and financing to military servicemembers and veterans who want to buy a home.

Health Insurance

Servicemembers are covered by valuable TRICARE health benefits. But as a civilian, health insurance will be a new expense that you’ll be responsible for if you won’t yet have access to health insurance from a new employer or through your spouse’s benefits. During your transition time, it’s important to have another plan set up so you won’t have a gap in your health coverage.

You may be eligible for one of the transitional military health care plans, such as the Transitional Assistance Management Program (TAMP). After TAMP expires, you can apply for temporary transitional medical coverage under the Continued Health Care Benefit Program. Another option is looking at joining the Reserves or National Guard, both of which offer TRICARE Reserve Select, which is an affordable health insurance program. If you’re officially retiring from the military, you can purchase coverage through TRICARE Prime.

Life Insurance

While serving in the military, you’re automatically insured under Servicemembers’ Group Life Insurance for the maximum amount of $400,000 unless you choose otherwise. If you’re in average-to-good health, you’ll likely want to consider a commercial or nonprofit organization life insurance policy at least 6 months prior to leaving the military to get the coverage you need to protect your family at a cost-effective price. If you’re a tobacco user, chronically ill or injured, then Veterans’ Group Life Insurance, which doesn’t require evidence of good health, is an option, and you’ll need to apply within 1 year and 120 days of separation from military service.

Saving for the Future

The Thrift Savings Plan (TSP) or Blended Retirement System (BRS) you have for retirement savings as a servicemember is a plan you may want to keep growing after you leave the military, even though you’ll no longer be able to make new contributions.

During your transition time, it may be best to not make any sudden moves with your TSP or BRS funds, as the money can stay there until you have a new job or more time to make a decision. Possible moves to consider later include rolling your TSP or BRS funds to a new employer’s retirement plan or to a separate individual retirement account. You can also choose to keep your TSP funds right where they are until you retire.

Navy Federal Credit Union's retirement resources can help you learn more. Meeting with a personal finance counselor can help you make a decision about your retirement funds that’s right for your situation and future goals.


As a servicemember, you may receive more favorable tax treatment than you will as a civilian. For example, a portion of your income may not have been taxed if you maintained residency in a state without income tax while living in a state with income tax. Review your current military income and tax benefits to understand how much money you’ll need to earn as a civilian to have the same purchasing power.

Staying in the same state or relocating to a new one could affect your taxes at a local, state and federal level. It may be helpful to meet with a tax advisor so you have a clear understanding of how your taxes will be affected after leaving the military.

Transition Assistance Program—A Comprehensive Resource

Taking part in the Department of Defense’s Transition Assistance Program (TAP) will also provide you with information and training to help you make a successful move from military to civilian life; it includes counseling to career readiness.

We’re Here to Serve You

Navy Federal is proud to be your dedicated financial partner while you’re serving—and after. We can help support you to reach your financial goals as a veteran

Next Steps Next Steps

  1. Begin planning for civilian life at least 6 months in advance, or as early as possible. Make sure you have cash on-hand or easily accessible to cover expenses associated with making the transition to civilian life.
  2. Consider any and all supplemental income and financial support you’ll lose after retiring. Creating a budget is a great way to understand future expenses and can help you find employment that does more than just make ends meet.
  3. Take advantage of educational resources and assistance programs during your transition. This includes the DoD Transition Assistance Program (TAP), the VA office of Vocational Rehabilitation and Employment and our MakingCents resources.


This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.