A Blog by the Institute for Veterans and Military Families (IVMF) Research Team:
Deborah A. Bradbard, Ph.D., Senior Research Associate
Rosalinda Vasquez Maury, M.S., Director of Applied Research and Analytics
Nicholas Armstrong, Ph.D., Senior Director of Research and Policy
Service members who are financially unprepared for transition, at best, limit their ability to respond to new opportunities, and, at worse, risk their (and possibly their family’s) long-term economic well-being from employment gaps or unforeseen emergencies. On the other hand, those who are financially ready for their transition will have greater flexibility to make critical choices—related to employment, advanced training, education, relocation, and more—that will have lasting effects on their lives, for better or for worse.
Still, most service members and veterans face atypical financial circumstances—both assets and liabilities—that affect their financial outlook differently than the average person making a career change.
The goal for any service member is to maximize their range of options in transition by taking advantage of their unique assets (education benefits, intangible leadership skills, etc.) and limiting potential liabilities (limited professional network, advanced education or training) through sound financial preparation.
Why is financial readiness important for veterans? Financial readiness accomplishes two important goals central to a successful military transition: providing a veteran financial flexibility to navigate a more preferred pathway to the career that maximizes lifetime earnings versus the alternative of taking the first job available; and helping the veteran maximize wealth, manage setbacks, and avoid financial hardships.
The extent to which one is financially ready at the point of transition can determine the degree of choice one has to realize the personal and professional opportunities that exist beyond the military, including education, employment, entrepreneurship, volunteerism, additional public service, travel and more. In fact, a recent study that surveyed more than 8,500 veterans found that 49 percent said they joined the military to pursue new experiences, adventures or travel. The same survey also found that 40 percent of veterans had experienced financial challenges during their transition.
Saving money is one strategy to plan for transition. Planning for education and training is another. Educational opportunities provide veterans and service members with tangible training, a common point of reference for civilian employers, and a bridge from their military experience to the civilian workforce. Education can assist in the readjustment to civilian life by enabling exposure to resources and opportunities missed because of their military service. In sum, transitioning service members are entering the workforce armed with robust educational benefits that enable hiring, advancing or retaining veteran talent.
There are a number of things that veterans can do to ensure they are financially ready for their military transition. Consider these recommendations:
Financial Checklist for Veterans and Service Members
- Consider pursuing the goal of financial flexibility as soon as possible, ideally at the outset of one’s military service.
- Consider saving beyond emergency savings to allow greater flexibility during transition.
- Weigh the return on investment (ROI) for educational choices. Use online tools and resources.
- Leverage educational opportunities while on active duty. Plan for a lengthier and perhaps more expensive transition from military service, considering the likelihood of being able to complete degree requirements or credit transfers (e.g., in the event of relocation) in order to maximize the GI Bill benefit.
- Understand the benefits available to you after transition, as well as the cost, time, and individual responsibilities required to properly access and receive them.
- Leverage free or low-cost training programs to receive industry recognized certifications and familiarize yourself with resources.
- Familiarize yourself with Veteran Service Organizations (VSO) and Military Service Organizations (MSO) organizations that provide information, access to resources and free or low cost programming.
- For married service members, consider the implications of your spouse’s employment status; consider leveraging educational benefits such as the Post-9/11 GI Bill, MyCAA, or scholarship or credentialing opportunities for spouses.
- Talk to other veterans about the financial barriers they encountered during transition and strategies they used to overcome.
- When considering employment options, think about long-term financial prospects versus short-term income gains.
- Prepare for a time period where income is reduced due to unemployment, underemployment, part-time employment or contract work.
- When making career choices, pursue opportunities that maximize lifetime earnings over near term earnings.
- Align educational opportunities, geographic location, and meaningful employment to maximize financial and workforce readiness at transition.
