For service members transitioning out of the military, the COVID-19 pandemic has created a new normal. An uncertain economy means newly-minted veterans should prepare to exit the military with their DD214 in one hand and a financial plan in the other.
“Everyone going through any kind of transition, whether you’re military or not, is experiencing conditions that didn’t exist pre-pandemic,” states American Armed Forces Mutual Aid Association (AAFMAA) Chief Operating Officer and Secretary Jerry Quinn, a lieutenant colonel in the Army Reserve, who has more than 25 years of financial services industry experience. “It’s all the more important for the military member to plan and be deliberate in their transition process.”
Focusing on the future is an important first step, especially for military members who often wait until the last minute to begin transition planning.
“As service members, we learn this incredible devotion to our job and our duty,” Quinn notes. “There’s this concept of even though you’re getting out, they can’t live without me at work.”
Quinn maintains service members need to “advocate for themselves” with superiors so they can take advantage of transition initiatives such as the DOD’s Transition Assistance Program, American Corporate Partners’ mentoring program or the U.S. Military Apprenticeship Program.
Squaring away your finances is the next order of business. AAFMAA, a not-for-profit financial solutions provider to military families and veterans for more than 140 years, is one place to turn for advice. AAFMAA’s financial services lineup includes wealth management, life insurance, mortgages, survivor assistance and VA disability claims coordination.
But Quinn points out the journey to financial security can begin with a budget and a transition/emergency fund large enough to bridge the gap between your last military paycheck and first civilian one.
“Find yourself a good budgeting tool and begin to make good budgeting a habit,” says Quinn, who recommends Military Family Advisory Network’s MilCents and Milspouse Money Mission budgeting tools.
Having adequate cash on hand is important because transitioning service members are entering a recession-like civilian job market. While Post-9/11 veteran unemployment hit a low of 3.5% in 2019, the pandemic has more than doubled that rate to 7.5% in September. Veterans also need to earn more as civilians to offset the loss of tax-free military subsistence and housing allowances.
“If your $900 rent is covered by BAH, you need to now earn $1,200 a month to pay for that [as a civilian],” Quinn notes.
Quinn adds that finding a fulfilling post-military career remains an ongoing challenge for transitioning military, with 80% of veterans staying less than two years at their first civilian job. While the pandemic has given rise to more opportunities for remote work, finding the right fit still can be elusive.
“That is why planning is so important,” he said. “You want to find the career that interests you, not just a job that’s going to make ends meet.”
Transitioning service members also should consider replacing their military-sponsored SGLI life insurance, especially if they are married with children.
“The sooner you get your family’s protection lined up, the lower your overall cost is going to be because you’re getting insurance at a younger age and when you’re the healthiest,” Quinn explains. “It gives you comfort that you’re prepared for whatever life may hold.”
Quinn also believes homeownership can be an important wealth-building tool. While not every transitioning service member is a home-buying candidate, record low mortgage rates can make homeownership less expensive than renting in many regions.
“AAFMAA believes homeownership is a key pillar of your family’s wealth and should be pursued, whether it’s now or later,” said Quinn, noting his company is a specialist in the VA home loan mortgage process.
Go to https://www.aafmaa.com/ to learn more about AAFMAA’s services for transitioning service members.