The Veterans’ Guide to Financial Success | TIME

A life in uniform certainly isn’t easy, but hanging up your boots presents its own challenges—many of them financial. From landing a job to planning for retirement, here’s how to make coming home really pay off.

A life in uniform certainly isn’t easy, but hanging up your boots presents its own challenges—many of them financial. From landing a job to planning for retirement, here’s how to make coming home really pay off.

Without Uncle Sam dictating what to do, where to live, and even what to wear, many new veterans need another round of basic training—only this time, it’s learning how to find a job, buy a home, save for retirement, and more. “Veterans are trying to put down roots quickly and figure out a lot of things that are confusing,” says Pam McClelland, lead financial education specialist for the Consumer Financial Protection Bureau’s Office of Servicemember Affairs. “And confusion makes you vulnerable.”

Vulnerable—it’s the most unmilitary of traits. But that’s how veterans say they feel when it comes to managing their money. A study funded this year by First Command Financial Services, which advises military personnel, found that in 76% of middle-class military families, at least one person reported a health problem related to financial stress. Veterans have also become frequent targets of scammers going after military paychecks, pensions, and education benefits, usually with offers that turn out to be predatory loans. In fact, Rep. Tom Rooney, a U.S. congressman from Florida and an Army veteran, introduced legislation this year to increase penalties for “anyone who deliberately seeks out our most vulnerable veterans for a financial fraud.”

The military has actually been working double time in recent years to smooth the road through what it calls “separation” from uniformed life. All enlistees take a personal financial readiness class, which schools them in the basics of banking, credit, and investing. There are also dozens of nonprofit organizations, websites, and public-private partnerships to assist with the financial demands of civilianhood. But just because there’s plenty of advice available doesn’t mean it’s all easy to process. “Transitioning out of the service is a thrilling time,” says J.J. Montanaro, a financial planner with USAA, which specializes in advice for members of the armed services. “Finances aren’t [always] what people are thinking about.”

To help make the transition to civilian life easier, MONEY has created this guide to navigating the most common financial challenges. Ideally, people in the military should start planning at least two years before they expect to hang up their uniforms, so you’ll find key moves to make if you’re still in the service, as well as resources to consult once you’ve left. “The more you can learn, the better,” says McClelland, “because once you walk out that gate, life starts to happen.”

Know more about the Available Resources & Financial Info for Military Veterans

Career

For many veterans, the fear of not landing solid employment overshadows everything: 69% say that finding a job outside the service is a challenge, according to Prudential Financial Services. Fortunately, employers often seek out the leadership and organizational skills that vets have to offer. The average unemployment rate for veterans is now just 4.3%, compared with 5.1% nationally.

Gabriella MarksWhen Chris Sweetin started 3D Security Training Solutions, he’d had little business training. Then he learned that veterans were eligible for the Boots to Business courses sponsored by the Small Business Administration. “They taught me about bank loans and how to make a business plan,” says Sweetin. “Six months after we opened, we broke even.”

Still, start hunting long before you become a civilian, says Tom Wolfe, author of Out of Uniform: Your Guide to a Successful Military to Civilian Career Transition. “You can’t control the supply and demand in your particular area,” he says. “But you can control the timing of your preparation.” One great place to start: the Department of Labor’s Veterans’ Employment and Training Service (VETS) page.

While You’re Still in Uniform

Evaluate your experience. Enter your job title, subspecialty, and pay grade into the Skills Translator on Military.com and you’ll get a catalogue of your skills and suggestions on how to explain them in civilian terms.

Civilian-ize your résumé. Military acronyms—MILPO?—are practically unintelligible to civilian employers, says Mike Arsenault, VP of candidate services at Bradley-Morris, a recruitment firm that places military clients. “Have a civilian read your résumé over and change anything they don’t understand,” he says. Replace military job titles (sergeant, squad leader) with titles that show your actual responsibilities (manager, lead adviser). Explain specific accomplishments. “Don’t say, ‘I drove a Humvee around a base for three years,’ ” says Terry Howell, director of strategic alliances for Military.com and the author of The Military Advantage. “Say, ‘Kept a large base -incident-free for three years.’ ”

Tap into military networks. Get your revamped résumé on LinkedIn and other job-hunting sites and add a photo of yourself in a civilian outfit. Military personnel get a free, one-year premium membership to LinkedIn, which allows you to directly email members outside of your personal network and shows your profile at the top of the list of recruiters’ searches. You can ask about specific employers via LinkedIn’s military network or the military-only social network RallyPoint. VetJobs.com also has an active job board.

Use leave time to interview. A lot of military people try to save their leave so they can get paid for it after separating. But it’s shortsighted to store up an extra few weeks instead of investing in your hunt for a job, says Doug Nordman, author of The Military Guide to Financial Independence and Retirement.

After Separating

Lose the military look. Invest in a new suit and business-casual duds: dress slacks or conservative skirts, button-down shirts with long sleeves, some nice shoes. Grow your hair out just a bit. “You don’t want to reinforce the stereotype of military people,” says Wolfe.

Target your search. Look into fields with a history of hiring vets, such as law enforcement and IT. Your security clearance can pave the way for defense industry and federal jobs. Contact search firms, such as Bradley-Morris and Lucas Group, that specialize in placing veterans. The “hiring our heroes” section of the U.S. Chamber of Commerce website also includes job postings.

Don’t forget unemployment. If you don’t land a job, you may qualify for unemployment benefits even if you separated voluntarily at the end of your tour. Contact your state’s employment office (dol.gov) for details.

Find a mentor. Once you do get a job, you’ll want to find a colleague who understands your background. Most vets will be happy to help. “The military is kind of like the biggest fraternity in the world,” says Ryan Guina, who writes a military benefits blog, the Military Wallet. If there’s no vet in your office, the nonprofit mentoring group American Corporate Partners pairs veterans with mentors who work on staff at one of several big, national firms. You can also post a query on the Veteran Mentor Network on LinkedIn.

Education

While getting help with college costs has long been an incentive for young people to join the military, the Post-9/11 GI Bill, signed into law in 2009, sweetened the deal with more generous benefits. You can now receive either $1,789 a month toward up to eight semesters of schooling or 36 months of free tuition and fees at any public college or $21,085 a year toward private college tuition. “It’s an amazing benefit,” says Howell of Military.com

Lissa GotwalsNathan Buckner was an observer/coach-trainer at the National Training Center and expected his management skills would help land him a job. But the contractors he worked with in the military wanted more business training. With money from the GI Bill, he’s now enrolled in the MBA program at Syracuse University.

While You’re Still In Uniform

Transfer your benefits. If you’ve served 10 years on active duty, you can transfer your GI Bill benefits to any family member. You can also transfer your benefits after only six years, as long as you commit to serving four more years. (Your spouse can begin using the transferred benefit right away, though children must wait until you’ve served the full 10 years.) Even if you aren’t sure if a relative will use the benefit, apply for the transfer. You can alter the allocation between family members later and reclaim the benefit for yourself anytime, but you can’t add beneficiaries after you leave the military.

Start piling up credits now. You can take classes remotely via the Defense Activity for Non-Traditional Education Support (DANTES) program. DANTES also offers the College-Level Examination Program (CLEP) tests, which can help you get a GED or place out of some introductory-level college courses. GI Bill funds can be applied to course costs.

Select the bill. You may need help determining what financial aid you are eligible for. The GI Bill Comparison Tool will help. You can also use GI Bill money toward a graduate program, trade degree, and more.

Look for the Yellow Ribbon program. If you want to attend a private or out-of-state college, you might qualify for additional financing, beyond the GI Bill, via the Yellow Ribbon Program. Yellow Ribbon schools, in partnership with the VA, agree to pay some of the tuition not funded by the bill. To apply, you must already be eligible for full GI Bill benefits, and acceptance is on a first-come, first-served basis. Go to benefits.va.gov and search for Yellow Ribbon for details.

After Separating

Lower your costs. Some schools will allow you to apply your military experience toward college credits. For example, if you’ve been working on a computer system, you might receive credit toward an entry-level programming course. You’ll need to ask your service branch to send your military transcript to your college’s admissions office. The school will determine what credits you will receive. The American Council on Education’s website includes a list of schools that accept this type of credit.

Don’t let your GI Bill benefits expire. You or your spouse must use your GI Bill money within 10 to 15 years of leaving the service, depending on what benefits you’re eligible for.

Find extra funding.The GI Bill may be the most generous source of veterans’ financial aid, but there are scores of smaller scholarship outlets as well. Many colleges and universities offer their own funding for veterans. Several companies do too; some are reserved for relatives of employees, but others are open to anyone. For instance, Google offers scholarships to veterans studying computer science or a similar technical degree. The scholarship finder at military.com can point you to more than 1,000 awards nationwide.

Health

As long as you’re in uniform, you’re eligible for the military’s comprehensive, low-cost insurance program, TriCare. (Active-duty personnel generally don’t pay TriCare premiums.) Unfortunately, many vets find that coverage hard to match in the civilian world. Even if you nab coverage through an employer, you’re likely to see your premiums and deductibles increase substantially. “Many vets are really surprised by the cost of employer insurance,” says Norfolk financial planner Rob Aeschbach.

While You’re Still In Uniform

Get your teeth cleaned. And your bad knee checked out. And your eyeglasses prescription refreshed. “Your co-pays will almost certainly be higher after you leave the service,” says author Nordman.

Check on your Veterans Affairs benefits. Some vets believe they don’t qualify for VA health care services if they haven’t been injured in combat. In fact, most vets with two years of service can receive care at any of the 152 VA medical centers and more than 1,000 outpatient clinics nationwide. Eligibility and cost depend on several factors, including your discharge status, service dates and locations, income, whether you have any service-related injuries, and more. You can check your eligibility via the Health Benefits Explorer. You can find it in the Health Benefits section on va.gov.

Decide whether to join the Reserves. If you sign up for the Reserves or National Guard, you’ll have access to essentially the same TriCare insurance that you had on active duty, though you’ll pay a monthly premium (about $50 for an individual and $200 for a family), as well as co-payments for doctor’s visits.

Post-Military

Price insurance options. The military offers its own COBRA-like plan called the Continued Health Care Benefit Program, for up to 18 months. But you can probably do better through your state insurance exchange, says Montanaro. (Go to healthcare.gov for more information.) Note: If you are leaving the military as a result of downsizing, you’re likely eligible to receive your same health care benefits for six months at no additional cost.

Get help with claims. The Obama administration has been working to speed up the disability claims process, which can take anywhere from months to years, and to clear out an enormous backlog. “The VA has been so far behind in processing claims that some vets just give up,” says Jason Hull, a former military officer who is now the chief technical officer of an online financial advice firm in Fort Worth. (The government recently said that the backlog of VA disability claims had fallen to an eight-year low.) Experts say that working with an accredited claims preparer increases the chance of speedy approval from the VA, and in most cases you won’t be charged a fee. The National Veterans Foundation can help you find a counselor who can assist you with VA claims.

Pay attention to your state of mind. The suicide rate for veterans is about double that of nonmilitary folks. If you find that you are struggling, you can get free counseling services through Military OneSource (800-342-9647) or giveanhour.org. You can also find online screening tools for PTSD, various anxiety disorders, and other mental-health issues at afterdeployment.org.

Finances

According to a survey from the National Foundation for Credit Counseling and Pioneer Services, 55% of vets believe they aren’t prepared for a financial emergency. “Even those who get a well-paying job often find that losing their military benefits poses a strain,” says Eric Engquist, assistant vice president of military transitions at USAA.

Victoria WillPriscilla Juan started making post-military financial plans a year before separation. She ultimately put away $10,000 by planning ahead and maintaining a tight budget. A divorced mother of two, she is studying marketing while working for the Iraq and Afghanistan Veterans of America.

While You’re Still In Uniform

Create a transition fund. Many service members don’t think about the need to keep a cash cushion because they’re accustomed to a stable source of income, says Engquist. But there’s a good chance the post-military job search will take longer than you think. You should have enough to cover six to nine months of living expenses. Start by putting at least 10% of each paycheck into a liquid account, such as a money-market fund or high-yield savings account.
If you own a home, apply now for a home-­equity line of credit, which can be a good fallback source of cash and will be easier to qualify for while you’re still in the service.

Polish your credit. A mediocre credit score (below 680) can hurt your ability to get a low-rate loan. A credit history littered with overdue bills can also hurt your job hunt, since some employers check reports as part of their hiring process. Active-duty military personnel and their spouses can get free copies of their FICO score (saveand­invest.org). Also check your credit report at AnnualCreditReport.com and fix any mistakes. Within a year, you should be able to improve your score significantly by reducing your debt and paying your bills on time.

If you’re deployed overseas, protect your credit report from identity-theft scams. Contact any of the three credit reporting agencies (equifax.com, transunion.com, and ­experian.com) and request an “Active Duty Alert” on your file. That requires lenders to verify your identity before approving new credit lines and removes your name from preapproved credit offers for two years.

Apply for a VA mortgage. Ready to become a homeowner? If you don’t have the usual 20% down payment, you can buy a house with a loan backed by the U.S. Department of Veterans Affairs (VA). You’ll usually get a VA loan at a competitive rate­—recently about 4%, similar to other bank loans—even if your credit isn’t perfect, and closing costs are likely to be lower than what you’d pay on a conventional or FHA loan. If you’re disabled, the government will also waive its funding fee, usually 1% to 2% of the loan. Most VA benefits don’t kick in until you’ve left the service, but you can apply for a VA mortgage while still on active duty (you generally need to have served for at least 180 days to qualify).

After Separating

Make a budget. The first civilian paycheck is often a shock, says financial planner Aeschbach, who is also a retired Marine. Between tax-free exclusions for active duty and nontaxed benefits, such as housing and moving allowances, service members may have earned up to a third of their income tax-free. “When I got out of active duty, I landed a job that paid 20% more than what I was making, but I realized I actually took about a 10% pay cut,” says Phil Dyer, a Towson, Md., financial planner and former military officer. For help estimating how much you’ll need to earn as a civilian to match your take-home military pay, go to the pay calculator at gijobs.com. A good place for general financial advice is at the Consumer Financial Protection Bureau.

Buy life insurance. Active-duty service members are automatically enrolled in a group life-insurance plan with a death benefit of up to $400,000 for uniformed personnel and $100,000 for spouses. You can convert that policy into a veterans group life insurance (VGLI) policy, which won’t require a physical. If you’re healthy, however, you may find that a nonmilitary policy is cheaper: A vet in his twenties would pay $32 a month for $400,000 in coverage. Meanwhile, for the same coverage a 25-year-old, nonsmoking male veteran from Texas with “preferred plus” health would pay $18 to $20 a month for a 20-year term policy, according to Jeff Rose, an insurance agent and author of Soldier of Finance. See rates at benefits.va.gov. AccuQuote is a good resource for insurance policies and more.

Retirement

Most service members know that the military offers a generous pension—50% of your recent base pay. The trouble is, only about 15% of active-duty personnel will spend the 20 years in the force required to receive any benefit. (If you join the Reserves you can continue accruing time toward a military pension.) Even if you do qualify, 50% of your pay might not set you up for life. “People think, ‘I’m in the military. I have this great retirement.’ The reality is that they need to be saving,” says planner Montanaro.

While You’re Still In Uniform

Pump up your savings. Fewer than half of today’s service members participate in the military’s Thrift Savings Plan (TSP), which is similar to a company 401(k). You can contribute up to $18,000 pretax a year for 2015, though people 50 and older can put away $24,000, and those serving in a combat zone can save up to $53,000. While some service members complain that they can select only from a handful of broad index funds and a life-cycle fund, the expense ratios on all of those are among the lowest in the country. “In this case, simple is good,” says Aeschbach. Congress also just passed a revised military retirement plan, which would make enrollment in the TSP mandatory and provide an initial 1% government match. (President Obama has not said whether he will sign the bill into law.)

Open a Roth IRA. Putting money in a Roth is a good move for just about anyone. You invest post-tax money but then your investments grow tax-free and your contributions can be withdrawn with no penalty at any time if you find yourself strapped for cash. But a Roth is particularly smart for service members. The money you earn while in a combat zone is officially tax-exempt, so saving in a Roth (up to the 2015 federal limit of $5,500 a year) is effectively investing 100% tax-free. The wider array of investment vehicles available with a Roth is also a good way to diversify your overall portfolio.

Select a Survivor Benefit Annuity. If you’re retiring after 20 years of service or more and are eligible for a pension, you’ll be automatically enrolled in this annuity plan, which allows your spouse or kids to receive your pension benefits after you die. Most veterans pay up to 6.5% of their monthly pension to participate, and their families then receive 55% of the veteran’s monthly pension upon his or her death. You can also decide on a lower payout at a lower cost, or opt out altogether. “Depending on your health, you may be able to buy a large life–insurance policy for a lower monthly premium than the SBP [Survivor Benefit Plan],” says blogger Guina.

After Separating

Look into a buyback. If you’ve taken a federal job that qualifies you for a civil pension, you may be able to boost that pension by adding your active-duty service to your civilian time. The catch? You’ll need to “buy back” your military time—in essence, convert it to the federal system—at the cost of 3% of your annual active-duty pay (payable either as a lump sum or payroll deductions). You can calculate how much a buyback would cost you by clicking on at dfas.mil. Says Guina: “Before you sign up, make sure you’re ready for the long-term commitment.”

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