Jan 26 2016
You have been employed by the same employer with a steady paycheck for a long time. That’s about to change. As a transitioning Service member, you are about to embark on a journey called your second career. It involves the instability of multiple employers and the possibility of unemployment. Planning will enhance your chance for success.
Life insurance. SGLI goes away. If the bread winner dies, how will the family maintain their financial lifestyle? What are your expenses now and in the future? Will the family live on investments and savings? Spouse career income? Other family members? Downsizing? Life insurance.
Retirement accounts. How many accounts will you have? You will probably be changing employers over the years. Have a retirement account to act as your ‘base camp’ to consolidate accounts as employers change. Your TSP can serve this purpose as can IRAs and future employer 401ks.
Transition account. Have you got accessible money to tide you over should you find yourself unemployed for a period? Better have money for 3 to 6 months of expenses.
Survivor Benefit Plan (SBP). Another way to ensure your family carries on if you are gone. It’s the only way to ensure the retired pay you earned over all those years continues after your death.
College. Have you transferred Post 9-11 GI Bill benefits to the spouse or kids? Is other funding in place?
Disability insurance. What if you don’t die but you can’t work due to illness or disability? How will your family get by without your source of income?
Taxes. You are leaving a very nice tax favorable situation. Only your base pay was taxed. And you probably claimed living in a low tax state. Now every dime you make will be taxed and you may pay state income tax. Have a tax plan. Retirement accounts offer your best tax advantages—especially employer 401ks and TSPs.
Real retirement someday. What is your plan to stop working someday? You know, that 40-year period of unemployment called retirement. How much will your retirement cost and what will be your sources of income? Do you have a plan to ensure your expenses in retirement will be minimized? Fewer expenses; less required income. More money for fun.
MOAA can help. Your MOAA Life or Premium membership entitles you to a financial planning consultation with one of our staff experts. E-mail email@example.com to get the process started.