Whether you are returning to school, transitioning to a new job or retiring,
your financial situation will undergo a great deal of change. Your salary and
benefits may not measure up to your current earnings and benefits. You will
soon discover that shopping and paying medical costs can create serious sticker
shock. Getting into debt is not the best way to start a new life.
Careful planning is the only way to avoid problems. It may take you a while
to find a new job. Start by identifying your income and expenses. Check with
friends and family to find out what you may have to pay for your rent or mortgage,
groceries and daily expenses. Create a budget and be conservative. Research
your earning potential and make sure you can afford to pay your bills and live.
Your Army Community Service office is equipped to help you take control of
Prior to final separation, the finance office will audit your pay account
and research your entitlements as well as your liabilities. You will then draw
final pay and you may cash in any unused leave.
If your financial situation is shaky, you need to stabilize your finances before
you leave federal service. Your Army Community Service office has trained debt
counselors who can help you take control of your money and debts. Be
leery of commercials for debt consolidation. Consolidation may help, but only
if it's part of a total financial management plan. If you're married, make
sure you and your spouse work together as partners.
Thrift Savings Plan
The Thrift Savings Plan (TSP) is a defined-contribution retirement and investment
plan that offers savings and tax benefits. Since your contributions and earnings
are yours to keep even if you separate from the military, you need to be sure
you understand the requirements and penalties you can incur if your TSP is
not managed correctly.
If you are planning to retire, schedule your appointment with the installation
Retirement Services Officer (RSO) as soon as possible. The RSO is a valuable
resource for all retirement issues who can provide a wealth of information
and help ease your retirement concerns. Retirement is a major transition in
your and your family's life, so be sure to include your spouse in any appointments
you schedule with the RSO.
As part of your pre-retirement counseling, you and your spouse must be counseled
on the Survivor Benefit Plan (SBP). You and your spouse must agree, in writing,
if you want SBP and on the level of coverage you want.
If you entered active duty after July 31, 1986, you will be required to select
the method for calculating your retirement pay. You can learn more about your
options at the Military Pay and Benefits website at http://www.defenselink.mil/militarypay/.
Once there, select Retirement.
You may be eligible for separation pay. The type of separation and conditions under which
you are being separated will determine if you qualify for separation pay. The Finance Office
at your installation can compute the actual amount. Separation pay entitlement must be specified
on your separation order to be payable. Separation pay is authorized only:
- If you have finished your first term of enlistment or period of obligated service, AND
- have at least six years of service, AND
- are separating involuntarily, AND
- are not yet eligible for retirement, AND
- are separating with a fully honorable discharge.
If you think you qualify, discuss this with your commander and local personnel
and finance offices. This benefit is computed on the basis of 10 percent of
your yearly base pay when you separate, multiplied by the number of years of
active service you have. Separation pay is taxable.
Unemployment Compensation for Ex-Service Members (UCX)
Service members separating from active duty may qualify for unemployment compensation
if they are unable to find a new job. Under 5 USC 8521, a former service member
is eligible to receive unemployment compensation only if the discharge or release
is, at a minimum, Under Honorable Conditions. Receiving separation pay may also
influence your receipt of unemployment compensation. (Retirees will almost certainly
receive a lesser amount, or no amount, since the weekly amount of retirement
pay is usually "offset" against the amount of unemployment compensation.)
Your state employment office handles unemployment compensation. Benefits vary
from state to state. Because of this, only the office where you apply will
be able to tell you the amount and duration of your entitlement. Your nearest
state employment office is listed in your local telephone directory. To receive
unemployment compensation, you must apply. The best time to do that is when
you visit the Local Veterans Employment Representative (LVER) at your state
employment services office for assistance in finding a new job. To apply for
unemployment compensation, you must bring your Certificate of Release or Discharge
from Active Duty (DD Form 214), your Social Security card and your civilian
and military job history or resume.
Eligible veterans may obtain loans guaranteed by the VA to purchase or refinance
homes, condominiums and manufactured homes. VA home loans feature a competitive
interest rate and a lower down payment or, if the lender agrees, no down payment
at all. More information is available from the VA homepage at http://www.homeloans.va.gov/.
FHA Mortgage Insurance
The Federal Housing Administration (FHA) of the Department of Housing and Urban
Development (HUD) insures mortgage loans for the construction, purchase and improvement
of homes. FHA-insured mortgages allow veterans to borrow with a minimum down
and payments over longer periods of time. More information is available by visiting
the FHA homepage at http://www.hud.gov/faqs/faqbuying.aspx.
Business loans are available to veterans through programs of the Small Business
Administration (SBA). In addition, SBA offers loans specifically to Vietnam-era
and disabled veterans. More information is available by visiting the SBA homepage http://www.sba.gov/.
In order to prepare yourself to apply for a mortgage, car loan or other type
of credit, you may wish to obtain a credit report. You can do this, usually for
a small fee, by contacting a credit reporting
Ask your bank which credit reporting agency they use, then contact that agency.
Once you receive a copy of your report, check it carefully for errors. If you
find any, contact the credit reporting agency to correct them. Keep in mind that
they may ask you for documentation such as receipts or cancelled checks.
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