A former soldier who works as a financial advisor recommends military spouses be an active part of military transition planning.
Spouse employment has consistently been identified as one of the top concerns for transitioning military families, according to the Blue Star Families 2020 survey. Doug Prahl, who served in the Army National Guard, said it is critical spouses understand what benefits apply to them and participate during the process of preparing for civilian life.
An Edward Jones financial advisor since 1998, Prahl knows what it is like to serve and the importance of planning ahead. He joined the Minnesota Army National Guard during his junior year of high school to pay for college. Commissioned after graduating from St. John’s University in Collegeville, Minnesota, he then served for another 11 years, which included a 13-month deployment to Kosovo.
He explained his philosophy for reaching a goal is simple and just “having a written plan with an accountability coach leads to an 80% success rate in accomplishing that goal.”
As a result, in addition to the comprehensive transition classes offered by each of the services, Prahl also encourages military couples to develop a financial strategy by taking courses available through organizations such as Army Community Service or the USO. These groups offer free seminars for both service members and spouses and include finance and transition information such as Veterans Affairs (VA) home loans and DOD’s SkillBridge [internship] program.
Furthermore, Prahl suggests the following steps, recommending families tackle one issue at a time. Whether starting with the topic the couple feels is the most pressing for their situation or the easiest to accomplish, he advises they start addressing the following actions within a year of separating from service.
Top 10 military transition planning tips for finances
- Survivor Benefit Plan
- For the cost of 6.5% of the entire pension the spouse will receive 55% of the pension if the service member passes away.
- Be wary of declining.
- Life insurance policies
- Determine type and amount of insurance necessary. Veterans Group Life Insurance (VGLI) is an option but consider other types that may be more affordable or appropriate such as group or individual term insurance.
- Estate planning
- Update will, durable power of attorney, health care directive, and trust documents to reflect new state of residence.
- Thrift Savings Plan (TSP)
- Review options:
- Stay with TSP.
- Roll into an Individual Retirement Account (IRA).
- Roll into a new retirement plan (401K).
- Cash out lump sum (consider taxes and penalties).
- Review options:
- Medical care
- Research if TRICARE (Humana Military is the contractor in East Region and Health Net in the West Region) providers are available if transitioning to a new location.
- Sign up with Veterans Affairs health care system within five years of separating from the service.
- There may be enrollment limits due to income and disability after five years.
- State of residency laws
- When determining state of residency, review how each state taxes military pensions, Social Security, and other investments.
- Beneficiaries
- Ensure beneficiary designations are up to date on investment and life insurance plans.
- Review and update annually.
- Service member health
- Within one year of leaving the military, start cataloging health concerns and bring to the attention of the health care provider during medical out processing.
- Cash
- Save six to nine months of cash for moving expenses, new residence, and career changes.
- VA loans
- Get certificate of eligibility up to a year out.
- Benefits include:
- 0% down payment.
- Funding fee waved for those with service-connected disability.
- No cost limit to home other than what bank decides family can afford.
