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If you’re a financial advisor, banker, or lender, these 3 key points will undoubtedly help you provide solid, actionable financial counseling to transitioning Veterans. Why is that so important? Because after spending years or even decades receiving a steady paycheck and full medical benefits, many military members are unprepared for the economic realities of civilian life.

Too often these Veterans discover that their lack of appropriate financial pre-planning has left them in a severe bind after their transition out of the service. That’s why it is critical to educate Veterans on the key areas which matter most during their transition phase.

Doing so will help them get ahead of their finances before re-entering civilian life. By touching on these critical areas, you’ll help empower them to succeed!

Establish Realistic Expectations

Time after time, Veterans say they faced a “rude awakening” after getting out of the military.They discover that civilian jobs are harder to get than expected and don’t pay as well as imagined. A bulletproof financial plan will put income sources front and center. A Veteran’s civilian job will then be to make that primary source of income a way to replace lost military wages.

But Vets must understand the reality of applying for civilian jobs. It can be a time-consuming process. It may even require several applications and interviews before landing that new career. Veterans frequently assume it’ll be far easier than it actually is, or that because of their military leadership or management experience, employers will be standing in line to offer them jobs. Unfortunately, that’s usually not the case.

By taking the time to outline specifics about which jobs one qualifies for, how much it pays, and how long it might take to get such a job, Veterans can establish realistic expectations. This way they are not caught off guard. It will also help them understand the process of getting that new income stream established as soon as possible.

Create a Roadmap for Success

Planning ahead for a new job is only one aspect of establishing financial security. Truthfully, transitioning Veterans require a comprehensive roadmap for financial success which includes housing, investments, and educational considerations.

Many military members reside in on-base housing and have never purchased a home. Reviewing the details of how to apply for a home loan and how to use the VA Home Loan benefit is a crucial step. 9 times out of 10, a home is the largest investment a person will ever make. Doing it right the first time can save buyers tens of thousands of dollars. This is not an area for “trial and error.”

Vets also often fail to understand much about their own retirement plan—the Thrift Savings Plan (TSP). Veterans who enter federal careers after separating from the military have options to keep investing in their TSP account. Otherwise, they can simply leave their funds alone until they reach retirement age or roll their account into an IRA or civilian employer’s 401(k) plan. Early withdrawal is an option but comes with heavy penalties.

In terms of planning ahead for further education, many Veterans save their Montgomery GI Bill or Post-9/11 GI Bill benefits, but then never use them. Such a waste! If acted up early enough, military members can transfer their Post-9/11 GI Bill benefits to eligible dependents for their use. Many members don’t realize that they can always change their mind later if they decide they want to use part or all of the benefit themselves in the future. But if they don’t elect to make the transfer before separating, they can’t request a transfer later.

Plan Ahead for Taxes

Apart from the above considerations, it is highly recommended for Veterans to understand the tax ramifications of civilian pay versus military pay. Portions of service member paychecks are not taxed and, depending on one’s rank and duty location, that can add up to a significant savings!

The problem is that military members get used to having tax-free Basic Allowance for Housing (BAH), Basic Allowance for Subsistence (BAS), and Cost of Living Allowance (COLA) if stationed abroad. But those tax breaks go out the window once they’re working as civilians, and sometimes that leads to sticker shock when they get their civilian pay stubs.

By understanding the tax ramifications of having all wages eligible for taxation versus only part of them, Veterans can understand what their “take home” pay will be. This will clearly help them forecast their budget and allow them to make a more informed decision regarding tax withholdings.

Final Thoughts

Transitioning out of the military is one of the most financially vulnerable positions Veterans will ever be in. Military-provided Transitional Assistance Programs help but they are rarely sufficient. This is where organizations dedicated to supporting Veterans can do their part to help smooth the transition process and ensure our Vets are taken care of!

For more great tips, download your free copy of “Guide to Growing Your Business with Veterans” and visit our website to learn about SAVI’s organizational and employer certificate programs.