2023 TAP CURRICULUMFINANCIALPLANNING FOR
TRANSITION

Table of Contents
Financial Planning for Transition ....................................................................... 2
Financial Goals .............................................................................................. 3
Income ......................................................................................................... 6
Expenses .................................................................................................... 23
Debt and Credit ........................................................................................... 42
Assets ........................................................................................................ 56
Action Plan .................................................................................................. 69
Transition Assistance Participant Assessment................................................... 81
Appendix .................................................................................................... 82
Spending Plan ............................................................................................. 86

Financial Planning for Transition
DISCLAIMER
The information provided herein does not constitute a formal endorsement of any
company, its products, or services by the Department of Defense (DoD).
Specifically, the appearance of external hyperlinks does not constitute endorsementby the DoD of the linked websites, or the information, products, or services
contained therein. The DoD does not exercise any editorial control over the
information you may find at these locations. While this module provides
informational resource material to assist military personnel and their families in
identifying or exploring valuable resources and options, the resources provided are
not exhaustive. All websites and URLs in this guide were active at the date of
publication. However, web content is subject to change without notice. Users of thisguide are advised to confirm information is current.

MODULE COMPETENCY
Identify changes and plan for the impact that transitioning from the Service will
have on personal finances.
This Financial Planning for Transition module builds on what you have learned
from previous financial readiness courses that you attended throughout yourmilitary life cycle. Knowledge from previous courses and the content covered inthis course will enable you to complete the Career Readiness Standard (CRS)
associated with this module, a post-transition spending plan.
During this course, you will learn how to develop a spending plan (also known as
a budget) or update the one you previously developed to gain an understandingof how transition will affect your financial situation through discussion of income,debt, expenses, and assets. Within each of these topics are subtopics toencourage awareness of changes, which will affect your financial situation duringtransition. After each section, you are encouraged to add the pertinent
information to the spending plan to create a complete financial picture for now
and for the future. At the end of this course, you should understand howtransition can affect your finances, what to expect financially as you transition,and know the income required to maintain your current lifestyle.
Download the DoD Financial Planning for Transition Participant Guide (fillablePDF) along with a DoD Financial Spending Plan (excel) at TAP Events at
https://TAPevents.mil/resources to use during this course.

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Financial Goals
COMPETENCYFormulate short-term, medium-term, and long-term financial goals based on yourneeds during and post-transition.

LEARNING OBJECTIVE••

Define short-, medium-, and long-term financial goals
Determine your short-, medium-, and long-term financial goal(s) for during andafter transition

FINANCIAL GOALS
A financial goal is an objective based in the financial arena. An important part of afinancial goal is the length of time in which you expect to achieve this goal. There
are three basic timelines:•••

Short-term: 1 month to 1 year
Medium-term: 1 to 5 years
Long-term: 5 or more years

When setting goals, it is important to be SMART:•SPECIFIC: State the goal in terms that are clear, stating a desire to be rich isundefined and vague.

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MEASURABLE: Have a clear definition of success, then state the goal in clear
terms, so you will know when you have reached your goal and are able tocelebrate (e.g., to have credit card debt below $500).
ACHIEVABLE: Be sure you can attain the goal, but set one that shows an
improvement over your current situation; having a million dollars in the bankafter one week is not attainable by most standards and situations.
REALISTIC: Is the goal realistic, based on your situation? It may be achievableto save $1,000 a month when you make $2,000 a month, but is it realistic
based on your life situation.
TIME-BOUND: Goals need to have a specific time limit in which to achieve thegoal; add days, weeks, months, years.

•

•

•

•

Examples of financial goal statements:
Decrease credit card debt by $5,000 in the year prior to transition by making an
additional monthly payment of $500.
Build a transition savings account of up to $5,000 the year before transition by
putting $420 per month into a designated savings account.
Pay off student loan debt in 5 years by increasing payment amount by $200
each month.
Save for a house down payment within 24 months by automatically transferring
10% of each paycheck into a separate account.
Add $350 into a savings account each month to accumulate at least 3 months ofmonthly expenses prior to the date of separation.

•
•
•
•
•

Activity: Financial Goals for Transition
Directions: Write your three SMART financial goals for transition in thebox below: one short, one medium, and one long-term goal.
(For reference, a spending plan is provided in the Appendix)

1.
2.
3.
NOTES:

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SPENDING PLAN
In previous financial courses, you should have developed a spending plan. Now,
it is time to dust it off and re-examine to help prepare for your transitions topost-military life. If you have not previously created a spending plan, now is thetime. Either way, this will help you understand:•

Where you are now?

•

Where do you want to be?

•

Can you get there from here?

The goals you established during initial counseling can have a financial impact
during transition.
Employment:

Education

Entrepreneurship

It may take a few
months to find a jobthat will cover yourliving expenses andeven after obtaining
the job, there may still
be a 2-4- week lag
between starting andreceiving the firstpaycheck. There may
be a similar lag inreceiving a retirement
check.

Even if using Veterans
Affairs’ (VA) education
benefits to help pay fortuition, housing, andbooks, you may stillneed additional funds
to cover expenses likeinsurance,transportation, or
housing.
In addition, housing is
not paid until after thestart of the semesterand only for those days
for which you are inschool. During breaks(spring, fall, winter)and summer (if not inclass), you will notreceive the housing
allowance.

When starting yourown business, it could
take some time torealize a profit.

Remember, your spending plan is a tool to help you understand your current
financial situation and to build a financial plan to meet your transition goals.
Take time to review your current financial situation, identify tools that can help you
understand the financial changes associated with transition, and how transition willaffect your financial situation.

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IncomeCOMPETENCY
Evaluate current military salary to determine salary requirements after transition.

LEARNING OBJECTIVES•••

Determine current military income and compensation.
Compare current military income and compensation to civilian equivalent topredict future salary compensation requirements.
Determine the difference in tax liability between current militarycompensation and projected civilian salary.

INCOME
Review of the common terms used when discussing income:•Gross Income: Wages (pay and allowances) before any deductions (e.g.,taxes, Social Security, insurance premiums, retirement plan contributions,
etc.)

•

Net Income: Wages after any federal/state deductions (e.g., taxes,
Social Security, retirement plan contributions, savings allotments,
insurance premiums, and other deductions, etc.)

For example, the Leave and Earning Statement (LES) or Payslip (for USCG)
shows an income of $2,000 per month (i.e., gross income), but the amountdeposited into your bank account is only $1,500 per month (i.e., net income).

Total pay +allowances =Gross Income

Gross Income –tax/insurance/
retirement deductions =Net Income

Net income is theamount of money you
take home from eachpaycheck

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TOTAL COMPENSATION
Gross and Net income refer to your total salary, which includes BAH and BAS, there
are other benefits which need to be considered.
While in the military, you received your salary, and additional benefits. Thesebenefits would include Tricare (health insurance), dental insurance, SGLI, FGLI,
death benefits, commissary, gym, base childcare facilities, etc. Some of theserequire a small payment (SGLI, family dental or FGLI), while others are completely
free (commissary, gym).
The civilian sector also provides benefits in addition to your salary. This could
include scheduled bonuses, commissions, paid time off, profit sharing, insurance,
tuition assistance, childcare assistance, retirement plans, etc.
Total Compensation is the total of your salary and all benefits.
When accounting for these within the salary equivalent, whether in the military orcivilian sector, it is difficult to assign a cost or benefit amount, but it is important tounderstand these lower cost or free benefits will affect your finances posttransition.

LEAVE AND EARNINGS STATEMENT (LES) OR PAYSLIP
Just as before, when developing your spending plan, you used the informationfrom your LES. Now when updating your spending plan prior to transition, theinformation on the LES or Payslip are even more important to understand yourcurrent salary and compensation. For this section, the most important section isthe entitlements for LES and earnings for Payslip.
Entitlements:
This includes the amounts of money you receive in your paycheck, such as basepay, Basic Allowance for Subsistence (BAS), Basic Allowance for Housing (BAH),
Dive Pay, Fly Pay, Cost of Living Allowance (COLA)—what is important toremember is that only SOME of these entitlements are taxable.

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Leave and Earnings Statement

Financial Planning for Transition – 2023 - Page 8

Coast Guard Payslip

As you review your LES/Payslip, realize that income is any source that provides aregular supply of money, such as employment, investments, pension, etc.
Consider the following:-

Does your spouse have an income?
Do you have a second job?
Are you receiving income from investments or rental property?
Do you receive child support or alimony?

To have an accurate picture of your finances during transition, all sources ofincome need to be included in the spending plan.

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SPENDING PLAN UPDATE - INCOME
Now is the time to review the income section of the spending
plan. Follow the directions provided by your facilitator and fill in
the appropriate areas of the spending plan.
Include:• Income from LES or Payslip to include all entitlements• Spouse income if applicable• Income from additional sources (e.g., investments, childsupport, second job, etc.)

CIVILIAN SALARY EQUIVALENT
Now that you know your current income, we can determine the approximate civilian
equivalent based on your current salary in the military.
One way to determine your approximate civilian equivalent is to use the Regular
Military Compensation (RMC) calculator.
Note: Be aware this calculator does NOT include special pays.
http://militarypay.defense.gov/Calculators/RMC-Calculator/

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SCENARIOS: Two scenarios are included as examples for use of some of thewebsites.
Scenario 1- E-4- Separating after 4 years- Single- Washington, DC; 20002

Scenario 2- 0-5- Retiring after 20 years- Married with family- San Antonio, TX; 78150

SCENARIO 1: RMC CALCULATOR
Annual basic pay is $33,440 adding in BAH and BAS brings full compensation to$60,638.

This Service member will need an approximate salary of $64,967 to meet theircurrent financial obligations and maintain their current lifestyle in Washington, D.C.

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SCENARIO 2: RMC CALCULATORThis Service member lives in San Antonio, TX; base pay is approximately $120,970
bringing total compensation with BAH and BAS is approximately $150,469.

This Service member will need an approximate salary of $158,790 to meet theircurrent financial obligations and maintain their current lifestyle in San Antonio TX.

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Website Activity: Determine the Civilian Salary Equivalent

1. Use the RMC Calculator below to determine the approximate civilian salaryequivalent based on your current location:
http://militarypay.defense.gov/Calculators/RMC-Calculator/
2. Provide the information requested on the RMC Calculator• Rate/rank (when transition occurs)• Years of Service• Tax filing status (single, married filing jointly, married filing separately,head of household)• Family size (type 1, if it is only you)
• Living OCONUS or Not Receiving BAH• ZIP code of where you are currently living or where you plan torelocate
3. Click CALCULATE RMC
4. Write the amount in the box below or in the spending plan
5. Repeat using a second location
6. If applicable, determine amount of special pay (COLA, flight, language) andwrite in the box provided
7. Provide additional notes as needed

CIVILIAN SALARY EQUIVALENT

Current Location (zip code)
Civilian Salary Equivalent
Possible Second Location (zip code)
Civilian Salary Equivalent (Second
Location)
Amount of Special Pay
NOTES:

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Adding the basic pay, housing allowance, and basic allowance for subsistence
calculates the civilian equivalent. The calculator then figures, based on theinformation you provided, the taxes owed if all three were taxed (tax advantage).
All four combined, base pay, BAH, BAS, and tax advantage, determine the final
civilian equivalent.
Note on special pay: The RMC does not include special pay (COLA, flight,
language, etc.). If you receive special pay, it is necessary to add the total amountof special pay to the civilian equivalent amount to provide a more accurate
representation of your civilian equivalent salary need.

RETIREE PAY GAP
For those entering military retirement and will be receiving retirement pay, there isan additional calculation which is needed. As retiree, you will receive retirementpay; this amount will partially meet the civilian salary equivalent. However, there
will most likely be a gap between the retirement pay and civilian salary equivalent.
To determine the pay gap or the actual amount needed to earn in retirement tomeet the civilian salary equivalent, use militarypay.defense.gov.

Retiree Pay
Gap

Civilian Salary Equivalent

Disability Pay (not guaranteed)
Retirement Pay

Retirement pay calculations are further complicated by the possibility you may
receive Disability Pay. As this is not guaranteed and the amount is not known until
the disability rating is determined by the VA, it recommended to view this pay as abonus and not guaranteed. It is added for knowledge.

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Website Activity: Estimate pre-tax retirement pay

1. Use http://militarypay.defense.gov/Calculators/High-3-Calculator/
2. Follow the directions on the website
a. Active or Reserveb. Personal information (must first add year to Pay Entry before month)c. Retirement informationd. Career progression
e. Roll over the first full High-3 Pension bar to see the yearly amount

Civilian Salary Equivalent
Retirement Pay
Pay Gap(Civilian Salary Equivalent – Retirement Pay)NOTES:The Pay Gap is the actual amount you will need to earn to keep your current
lifestyle using retirement pay as a paycheck.
Now that there is a clear understanding of the salary needed post-transition, let’slook at the changes in taxes which occur due to transition.

TAXES AFTER TRANSITION
Service member often cite taxes as one of the most surprising changes encounteredafter transition. To understand how your taxes may be affected, it is necessary toutilize various websites.
Smart Asset, Nerd Wallet, Turbo Tax, and IRS are examples of websites that may
be helpful.
While these websites provide valuable information, they are for research purposes
only and do not provide tax advice or a tax bill.

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SALARY DIFFERENCE: MILITARY VS CIVILIAN INCOME
The RMC provided an amount for the civilian equivalent salary, which is higher thanyour current salary. This is due to many military entitlements or allowances, which
are not taxable while you are in the military.
BAH, BAS, and special pays are examples of non-taxable income. In the civilian
sector, all your salary and some of your benefits could be taxable. Therefore, thecivilian equivalent calculation adds the BAH and BAS into your base pay anddetermines the taxes based on this amount. The salary equivalent is higher due toadditional taxes paid on these previously non-taxable items.
The graphic below visually explains the difference between the taxes paid for a
military salary of $63,000 and a civilian of the same amount.

For this example, federal tax includes federal income tax and FICA; it does notinclude state or local taxes. The amounts were determined using SmartAsset(https://smartasset.com/taxes/income-taxes).
To sum it up, you will need to make MORE in the civilian sector than you
did in the military to maintain your current lifestyle.

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TAX CONSIDERATIONS AFTER TRANSITION
The following are additional changes that you need to prepare for post-transition:•

Taxable Income: As previously discussed, not all military pay is taxable.
When working in the civilian sector, ALL your civilian salary is taxable at thefederal level and possibly at the state levels depending on the state tax laws.
In addition, some areas will add county and city taxes based on your income.
Also, you may also need to account for income tax payments on benefits, likestock options if included in your compensation package.

•Federal Taxes: Federal taxes are progressive, meaning as your income
increases so does the percentage of taxes you owe. Current tax brackets,
also known as Marginal tax rates, range from 10% to 37%. This becomes
important when the BAH is now considered income and the increase income
may increase your tax rate.

•

State Income Tax: You may not have been paying state income tax while inthe military depending on the state you listed as your home of record (suchas Florida or Texas). As a civilian, you may start paying state income tax
depending on your location and change in military status. Location also
matters for income taxes, as some states do not have state income tax whileothers do not tax retiree pay.

•

County and City Tax: Some counties, as well as cities, collect taxes to fundlocal government services on top of federal and state. Examples of this typeof tax are the sales tax on goods and services and personal property tax for
car or home. As military, you may have been exempt for some of these or
as a retiree, the state may waive these in certain circumstances.

•

No Automatic Extensions: You will no longer receive an automatic
extension on the April 15 tax filing deadline unless you specifically request it
directly from the IRS.

•

Property Taxes: You may have been exempt from certain property taxes or
received a discounted rate for vehicle registration while you were serving.
Tax breaks, exemptions, and discounts offered to Veterans vary from state tostate.

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A note on non-taxable items: In the civilian sector, there are a few income
streams which are not taxable. This would such items as disability pay or housing
funds received from the GI Bill.
To understand the tax for a location and salary amount, use the following website:
https://smartasset.com/taxes/income-taxes

Let’s review the new tax liability using the previous scenarios.
Scenario 1- E-4- Separating after 4 years- Single- Washington, DC; 20002

Scenario 2- 0-5- Retiring after 20 years- Married with family- San Antonio, TX; 78150

SCENARIO 1: TAXES AFTER SEPARATING
Estimated civilian equivalent — $64,967

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ESTIMATION OF POST-SEPARATION TAXES
Website Activity: Estimate your taxes after transition
Directions: Determine amounts for Federal, State, and Local taxes
using: https://smartasset.com/taxes/income-taxes
1. Enter your Civilian Salary Equivalent (with special pay, if applicable) as thehousehold income
2. Enter a location
3. Indicate filing status
4. Choose a secondary Location and repeat the calculations
5. Write the information in the space provided below
6. Provide additional notes as needed

TAXES FOR CIVILIAN SALARY EQUIVALENT – when separating
Civilian Salary Equivalent
1st Location (city, state, zip)
1st Location - Taxes based on civilian salaryequivalent
2nd Location (city, state, zip)
2nd Location - Taxes based on civilian salaryequivalent
NOTES:

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SCENARIO 2: TAXES WHEN RETIRING
When retiring, there are other considerations, such as how tax friendly a state is for
retirement pay. Some states do not tax retirement pay, others offer a sliding scale,
while others fully tax, but provide alternate benefits.
Using the salary information from the scenario 2, estimate the taxes for a retiree inTexas can be determined.
Annual Social Security - $0
Annual Retirement Account Income (Retirement Pay) - $55,000
Annual Wages (Pay Gap) - $103,790

Resources for State Retirement Tax Information:• https://smartasset.com/retirement/retirement-taxes• https://www.military.com/money/personal-finance/state-taxinformation.html

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RETIREMENT TAX CALCULATIONS
Website Activity: Determine your taxes with retirement pay.

1. GO TO: https://smartasset.com/retirement/retirement-taxes
2. Choose the state where you wish to retire
3. Complete the following information:- Annual Social Security Income = $0 (if not drawing Social Security)- Annual Retirement Account Income = military retirement (DO NOT put in
Pension)- Annual Wages = pay gap or amount you expect to earn upon retirement(estimate using your civilian salary equivalent)- Location = zip code
- Year of Birth- Filing Status
4. Choose a secondary location
5. Write the information in the space provided
6. Provide additional notes as needed
TAXES FOR RETIREMENT
Retirement Pay
Pay Gap
1st Location for Retirement (city, state, zip)
1st Location Tax AmountState Tax Benefits
2nd Location for Retirement (city, state, zip)
2nd Location Tax AmountState Tax Benefits
NOTES:

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As you continue through your transition process, have a better sense of what
annual income you will earn and where you plan to live, return, and use thisinformation and activities to improve your knowledge and accurately plan foryour finances after transition.

WRAP UP QUESTIONS•••What is the difference between Gross and Net income?
Why is the civilian equivalent salary higher than the military pay?
What may change about the tax liability? Federal? State? Changes to Local?

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Expenses
COMPETENCY
Evaluate current expenses and compare to expenses that will change and affectyour standard of living after transition.

LEARNING OBJECTIVES••••Create or update list of current expenses
Compare cost of living at current and 2nd location
Describe the basics of health insurance
Specify the basics of life insurance

LIVING EXPENSES
Expenses are the daily, weekly, and monthly items you pay to live – groceries,
utilities, clothing, childcare, entertainment, etc. This includes ALL items where
cash, debit, credit, or any other method of payment used to make a purchase or
pay a bill.

Some expenses, such as internet, cable, phone, and insurance are easy to know
because they tend not to change from month to month. There are also variable
expenses that change depending upon the time of year; electricity may be more
expensive during the summer when you use the air conditioner. Another option
is a bill that is only once a year, twice a year, or quarterly.
Living expenses generally account for most of your income, while a portion isintended for leisure, also known as disposable income.
Included in the leisure category is items such as eating out, going to the movies,
making in-app purchases, stopping by the coffee shop, or using the vending
machine.

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Take a minute to consider how you spend your money.
••••

Do you stop for coffee every morning?
Do you use vending machine for something to drink or eat?
How often do you eat out for lunch or dinner?
How many streaming or gaming accounts do you have?

Use this knowledge to complete the next activity.

SPENDING PLAN ACTIVITY
Before you transition, it is important to know where your money is going, andhow it is being spent, to be aware of your spending habits. Take a moment tocreate or update the expenses section of the spending plan.
Follow the directions provided by your facilitator and fill in the appropriate areas ofthe spending plan. Note: Rent/Mortgage is under debt.
••••

Estimate utilities
Estimate grocery expenses
Personal grooming
Other expenses

TRACKING EXPENSES
Monthly expenses are generally known and easily identified, but it is the daily
spending that can cause money issues. Even if you have a good idea of where
you are spending your money, it is wise to track your expenses sometime prior
to transition. This will provide detailed knowledge of where you are spending
and, more importantly, know where you can make adjustments, if needed.
Consider tracking your expenses for a few weeks or a month to determine where
your money is spent.
There are many ways to track your expenses; use what works best for you.
•

Use a free app to track spending; many can be found in the app store on
your mobile device or tablet

Financial Planning for Transition – 2023 - Page 24•••Keep a small notebook with you to record every purchase (cash/credit/
debit)
Keep receipts from every purchase and total them up at the end of theweek
Create your own log using computer software such as Excel or Word

How you track is not as important as the tracking itself. No matter how you
choose to track your expenses, be sure to include ALL purchases.

CHANGES TO EXPENSES AFTER TRANSITIONAs you transition, many things will change including your current expenses. How
will transition affect your expenses?
•••

Will your expenses decrease?
Will your expenses increase?
Will there be new types of expenses?

Depending on where you live, expenses for groceries, gas, utilities, and housing
may decrease – especially if you are moving to an area with a lower cost of living or
moving in with family, friends, or roommates. However, the opposite can also betrue that these same expenses may increase if you are living in the barracks andnow must find a place to live or are moving to an area with a higher cost of living.
Take the time to think through what a new or unexpected expense may be; these
expenses can easily turn into debt. Keep in mind your income may decline for ashort period of time. It is important to consider the cost of living if you are seeking
to relocate after transition.

EXPENSE OF RELOCATION
After transition, you may still have one move provided by the military. Visit yourtransportation office to ensure you are aware of all requirements pertaining to yourfinal move, such as deadlines or how to request an extension. Even if the military
pays for your final move, there are still expenses associated with relocation thatneed to be considered.

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CHANGES TO COST OF LIVING
If you are seeking to relocate after transition, it is important to understand thefinancial impact this may have on your salary needs and expectations if you
expect to retain your current lifestyle. Some factors to consider include:••••

Housing (rent or mortgage)
Utilities
Taxes (including tax benefits for Veterans)
Food, childcare, commuting costs, clothing, entertainment, school or college
costs, climate, insurance, home or car repair

To understand the extent of the differences in cost of living and the impact this will
have on your salary requirements, there are a few different websites to use:
•
•
•
•
•

http://www.bestplaces.net/cost-of-living
https://www.bankrate.com/calculators/savings/moving-cost-of-livingcalculator.aspx
https://money.cnn.com/calculator/pf/cost-of-living/index.html
https://www.payscale.com/cost-of-living-calculator
https://www.expatistan.com/cost-of-living

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SCENARIO 1: COST OF LIVING COMPARISON
Scenario 1- E-4- Separating after 4 years- Single

Washington, DC; 20002- Salary CE: $64,967- Taxes: $17,738
Moving to Raleigh, NC

Salary requirements in Washington, D.C. compared to Raleigh, NC, in order tomaintain current lifestyle.
According to BankRate.com:

Many expenses would go down, along with salary requirements, which is what
would be expected when moving out of Washington, D.C.

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SCENARIO 2: COST OF LIVING COMPARISON
Scenario 2- 0-5- Retiring after 20 years- Married with family

San Antonio, TX; 78150- Salary CE: $158,790- Taxes: $28,568
Moving to Nashville, TN

Salary requirements in San Antonio, TX, compared to Nashville TN, in order tomaintain current life style.
According to BankRate.com:

Income requirements in Nashville are slightly higher than San Antonio due to thehigher cost of living in Nashville.
These are not the only considerations to be made when viewing cost-of-living
information. Information provided by different cost-of-living calculators may vary.
Take time to research the area before determining if a particular location will fit
your personal and financial needs after transition.

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Website Activity: Determine the COST OF LIVING for a new location
after transition
1.

2.
3.
4.
5.
6.
7.

Use the BankRate.com website(http://www.bankrate.com/calculators/savings/moving-cost-of-livingcalculator.aspx) or a different cost-of-living calculator to find the locationbased salary equivalent
Write your new location in the box provided
Determine your new salary based on location using civilian salaryequivalent
Write the amount in the box below
Determine a secondary location and repeat the calculations
Review housing adjustment. Is it higher or lower than your current housing
price?
Provide additional notes as needed

COST OF LIVING
1st Location (city, state)
Salary adjustment for location
Housing difference for location
2nd Location (city, state)
Salary adjustment for location
Housing difference for location
NOTES:

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HEALTH CARE AFTER TRANSITION
Healthcare and health insurance could be considered two of the best benefits
provided by the military. While in the Service, you most likely used TRICARE for
your healthcare needs. While using TRICARE, you may have become
accustomed to having your health/medical benefits completely covered, withlittle to no out-of-pocket expenses. There was no need to worry about the costof medicines, co-pays or if the doctor is in your network.
However, decisions about healthcare and health insurance are very importantand should be considered carefully. Even with insurance, you will still havemedical expenses. Be prepared, know your options, and make informed
decisions.
When preparing to transition your health care, be sure you have received acomplete copy of your medical records prior to transition, as well as those ofyour spouse and/or children. These records will be necessary for continuity ofcare to a new medical provider or when applying for disability. The VA will
provide further information on obtaining your medical records during the VA
Benefits and Services brief.

IMMEDIATELY AFTER TRANSITION
Health insurance is different for those separating from military and retirees. If
retiring, you have 90 days to sign up for TRICARE Prime, TRICARE Select,
TRICARE for Life and other available TRICARE options from your date ofretirement or there may be penalties or additional delays. If you plan to use a
Military Treatment Facility (MTF) after retirement for health care needs, it isimportant to note that not all MTFs have availability to receive Retired Service
members and eligible family members. Check directly with TRICARE to find out
what services are available in the area you plan to live.
Depending on your type of separation and if you meet eligibility requirements,
you may qualify for transition healthcare insurance. Transition AssistanceManagement Program (TAMP) offers the same coverage available under TRICARE
but is only available for 180 days after your date of separation.
For those who do not qualify for TAMP, TRICARE offers Continued Health Care
Benefit Program (CHCBP), which can offer coverage for up to 18 months upon
separation from Service. There is an up-front quarterly premium, co-pays, anddeductible associated with CHCBP. You must purchase the CHCBP within 60 daysof loss of TRICARE eligibility.

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A helpful website to determine the TRICARE plan you may be eligible for ishttps://tricare.mil/Plans/PlanFinder.
For more information, to determine eligibility, or to apply for TAMP, CHCBP, or
TRICARE for Life, go to www.tricare.mil. VA Benefits and Services brief will
provide additional information.
For members of the National Guard and Reserve, the eligibility requirements aredifferent. Visit www.tricare.mil for more detailed eligibility information.

NON-TRICARE HEALTHCARE OPTIONS
For those who are not eligible for TAMP or choose not to use CHCBP, thealternate option is to use insurance from an employer or purchase healthinsurance off the marketplace through an insurance company such as Blue Cross
Blue Shield, United Healthcare, Cigna, Aetna. This is not a whole list of healthinsurance providers but only a small portion of which you can choose.
This next section will provide the basics of health insurance, terminology, andoptions available to you.

HEALTHCARE PLANS AND CONSIDERATIONSWhen choosing a plan, it is good to know the basics.
••••

Individual vs. Group Insurance
Basic healthcare terminology
Plan and network types – PPO, HMO, EPO, POS, and catastrophic
Estimating healthcare costs

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INDIVIDUAL OR GROUP INSURANCE
Healthcare is generally provided in two ways: individual and group healthinsurance. For individual coverage, there may be greater options available, but at ahigher cost premium. Group health insurance may provide fewer choices at a
discount.

••

Greater number of options
Higher cost••

Limited options
Less expensive

Group insurance is generally the option used by employers. This type of insurance
is a financially feasible way for the company to provide health insurance for each
employee, possibly paying for some or all the premium. Your future employer can
provide details on each of the coverage plans they offer and can answer any
questions you might have.
Individual plans are between you and the insurance company. These plans may
be more expensive, and there may be a questionnaire or physical exam involved
before you receive coverage. The results of the questionnaire or exam may be
used to determine cost. However, there may be more choices to individualize aplan.
A growing trend is for companies to provide a healthcare stipend by adding a set
amount to the paycheck each pay period. The intent is for the employee to use
this stipend to purchase his or her own health insurance. You may also have thechoice of paying premiums through your employer from your pre-tax income.
Ask about your options.

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HEALTHCARE TERMS
To better understand healthcare, it is important to understand the terminology.
Here are a few of the most common terms:
Premium

Amount you pay for health insurance, usually every month(per paycheck, quarterly or yearly payments are also
possible)

Deductible

Amount you are responsible for paying before yourinsurance starts cost sharingo EX: if you have a $1500 deductible, you pay all costs
up to the $1,500

Co-Insurance

The percentage of medical costs that you are required to
pay after reaching your minimum deductibleo EX: After reaching your deductible, if a visit to thedoctor is $100 and your co-insurance is 20%, you
owe $20

Co-Payment

A flat fee service providers charge based on the health plano EX: a $20-$40 co-pay every time you visit yourprimary care physician

In-Network
Cost

Cost to see a doctor who is in your network and has anagreement with the insurance company

Out-of-Network
Cost

Cost to see a doctor or receive services from a provider
who is not in your healthcare plan; cost is usually greaterthan in-network and can be up to the full cost of theserviceOut-of-Pocket
Cost

Deductibles, co-payments, and co-insurance not coveredby the insurance provider; does not include premiums

Out of Pocket
Maximum/Limit

Most you will pay for covered services in one year; after
this amount is reached, insurance covers 100%; does
not include premiums

Flexible
Spending
Account (FSA)

Pre-tax account paid into by policy holder which can beused to pay for certain out-of-pocket health care costs

Health Savings
Account (HSA)

Pre-tax savings account for those with high deductible
plans to pay for deductibles, co-payments, co-insurance,and some other expenses

Financial Planning for Transition – 2023 - Page 33

TYPES OF PLANS
Whether you enroll in a group or individual plan, there are generally only a few
types of plans. Below are the most common types:
Preferred Provider
Organizations (PPO)

Health Maintenance
Organization (HMO)

Health plan where you pay less if you use providers
in the plan’s network. You can use doctors, hospitals,
and providers outside of the network without areferral for an additional cost.
Health plan that usually limits coverage to carefrom doctors who work for or contract with the
HMO. Out-of-network care is generally notcovered except in an emergency. An HMO may
require you to live or work in its service area to beeligible for coverage.

Exclusive Provider
Organization (EPO)

A managed care plan, similar to an HMO, whereservices are covered only if you use doctors,
specialists, or hospitals in the plan’s network(except in an emergency).

Point of Service(POS)

Health plans where you pay less if you use doctors,
hospitals, and other health care providers thatbelong to the plan’s network. POS plans require
you to get a referral from your primary care doctor
to see a specialist.

Catastrophic Plan

To be eligible for the catastrophic plan, theindividual must be under 30 years of age. This
plan has lower premiums and allows the greatest
amount of flexibility on the choice of provider.
However, the deductible for the catastrophic planis very high; before choosing this type of planconsider the amount you have in savings due tothe high deductible.

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CONSIDERATIONS WHEN REVIEWING HEALTH CARE PLANS
If you can choose a healthcare plan from your post-transition employment or
through another option, consider the following questions when choosing yourplan.
•

Estimate your yearly medical needs.
o How often do you visit the doctor? Is there a medical condition
requiring regular visits, young children needing well-baby checks,
pregnancy, and new baby?
o For reoccurring or existing medical conditions, consider the numberof doctor office visits, procedures, and/or hospitalizations in the past
year to determine total possible out-of-pocket expense as well as
the number of covered beneficiaries.

•

Decide which plan type best meets your needs.
o Consider all types of plans— PPO, HMO, EPO, POS, catastrophic —and determine which will fit you and your family’s needs.

•

Size up the cost.
o Compare the total cost, not just the monthly payment or deductible– also consider the cost of hospitalization and prescriptions, andbalance this with your overall health and expected medical needs.

•

Don’t get lured by freebies.
o Do your research to be sure that what is being touted as free isn’t
something that is already covered by the plan.

•

Check the quality of the plan.
o The National Committee for Quality Assurance ranks healthcare
plans across the country based on their clinical performance,
member satisfaction, and surveys.

•

Consider a healthcare savings or flexible spending account.
o Save money by setting aside pre-tax money into a healthcaresavings account (HSA) or a flexible spending account (FSA). These
accounts can be used to pay for prescriptions, contacts, and other
out-of-pocket medical expenses, but generally not the premium.
o Review your yearly medical needs when considering this option.

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•Check out the prescription coverage.
o Not all plans include prescription coverage, and not all drugs arecovered. If you have medications you take on a regular basis, besure your prescription is included in the coverage or check with yourphysician or pharmacist for options that are covered.

•

Ask about dental and eye coverage.
o Not all plans include coverage for dental or eye exams; be sure toask, especially if you or a member of your family wears glasses andwill need yearly eye exams•

Family coverage vs Individual coverage.
o Some plans charge premiums based per persons covered versus afamily (multiple person coverage) plan. Premiums can add up
quickly. Be sure to understand who and what is covered and at
what cost.
o Special consideration/additional research might be needed if you
have a young adult in college or an adult dependent with special
needs.

If you don’t know or aren’t sure, ASK! Healthcare is complicated. Call themember services department of the health plan you are considering or the
Human Resources (HR) department at your future employer.

ESTIMATING HEALTHCARE COSTS
When estimating the cost of healthcare, assume that you will be paying theentire premium and associated costs, like deductibles, for you and your family.
If you obtain employment where your employer pays a portion of your insurance,
your healthcare costs will be less than estimated.
There are many different websites available to assist in comparing plans andestimating the cost of healthcare insurance.
One example is the Healthcare Marketplace. This website will estimate the outof-pocket expense of different plans with varying levels of coverage. While thiswill not provide the exact cost, it will provide a good estimation of the cost of
individual health insurance.
Go to https://www.healthcare.gov/see-plans/; answer a few questions to fordifferent health insurance plans and costs.

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Many different companies and organizations offer similar healthcare costcalculators. Research using two to three different sites when estimating the costof healthcare.
Website Activity: Estimate the cost of health insurance

1. Go to a healthcare website – such as https://www.healthcare.gov/see-plans/
2. Add your zip code; follow directions to add your specific information
3. Review plans – there is no obligation to purchase/enroll
4. Add your research to the box below
ESTIMATED COST OF HEALTHCARE
Website Used
Plan Name
CompanyMonthly Premium
Annual Premium
Deductible
Co-pays
Co-insurance
NOTES:

Remember, the estimates shown on the healthcare cost calculators are forpurchasing healthcare on your own and not as part of a group through an
employer. A plan provided by an employer is likely to cost less, but may havefewer plan choices.

Financial Planning for Transition – 2023 - Page 37

VETERAN SPECIFIC SITE ON HEALTHCARE MARKETPLACE
Visit www.healthcare.gov/Veterans, for information and help in understanding
your transition and healthcare options. As a transitioning Service member, youwill not be required to wait until the open enrollment period to obtain healthinsurance through the Healthcare Marketplace. Leaving the military qualifies as alife event and entitles you to a Special Enrollment Period.
For more information, visit the following websites:• https://marketplace.cms.gov• https://www.healthcare.gov• www.tricare.mil• http://www.tricare.mil/reserve/
NOTE: Plan coverage details and costs will vary; be sure to ask questions and get
thorough answers so you can make an informed decision about your healthcare
benefits.
Be aware that healthcare laws may change. You are responsible for knowing andunderstanding how these changes affect you as a civilian.

LIFE INSURANCE
HOW MUCH LIFE INSURANCE DO YOU ACTUALLY NEED?
The purpose of life insurance is to replace the loss of income upon the death of
the insured and to be able to pay debts, funeral expenses, education costs, etc.
How much is necessary? That fully depends on your current life situation. A
family with young children will have different life insurance needs than a couple
nearing retirement.
When considering life insurance, the first step is to evaluate your life insurance
needs. This is to ensure you have enough coverage, the right type of coverage,
and the correct beneficiaries.
To ensure you have enough coverage, use a simple acronym, LIFE, to calculate
your life insurance needs.
••••

Liabilities – mortgage, debt, etc.
Income – annual salary X years to replace that income
Final Expenses – burial, estate, etc.
Education – college for survivors

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From that total, subtract your current saving, existing college funds, and current
life insurance policies.
The difference provides the amount of life insurance coverage needed. In
addition to this simple calculation, there are many online calculators to help you
determine your insurance needs. The VA provides one such calculator:
https://insurance.va.gov/NeedsCalculator
Next is to determine the right type of coverage.

TYPES OF LIFE INSURANCE
While in the Service, the Servicemembers’ Group Life Insurance (SGLI) provided
you no cost life insurance. There was also an option to cover your family with
Family Servicemembers’ Group Life Insurance (FSGLI). After transition, SGLI
coverage continues for 120 days (or up to two years of free coverage if disabled
and unable to work by applying for the SGLI Disability Extension). After thattime, SGLI is no longer an option, but there are other options available:•

Veterans Group Life Insurance (VGLI)—allows Service members one
year plus 120 days, from the date of separation, to convert their SGLI
coverage to term life insurance
http://www.benefits.va.gov/insurance/vgli.asp.
o Once enrolled in VGLI, coverage remains if the premiums are paido Rates are determined using a sliding scale based on age••

Coverage from an insurance company
Coverage from your employer•

Term Life Insurance: provides coverage at a fixed rate of payments for alimited period of time or term.
o Generally, coverage expiries after the limited period of time.
o Renewing the policy may result in a higher rate or have added
conditions.
o Often the least expensive way to purchase substantial death
benefits.

•

Permanent Insurance: covers you until your death, while the payments
are made, and provides a cash value.
o Under the Permanent Life Insurance umbrella, there are four types:
 (1) Whole Life (2) Variable Life (3) Universal Life and (4)Variable Universal Life.
Financial Planning for Transition – 2023 - Page 39

o
o
o
o

Payments are made until the coverage matures, generally aroundage 100 of the insured.
Payments are generally less expensive the earlier the insurance ispurchased and as long as the payments continued to be made.
Frequently more expensive than term life insurance and maturity
values may be different from term policies.
Ensures a guaranteed financial support.

Determining whether term or whole life insurance is better for you and yourfamily is a decision you need to make and should be based on research you haveconducted.
Finally, ensure you have identified a designated beneficiary. This is the only way
to ensure the life insurance is paid to whomever you choose. A beneficiary
designee will supersede any designations made in your will.
Final thoughts on Life Insurance:
•
•

•
•

Finding the best life insurance company takes time as there are hundreds
competing for your business.
Shop around and get life insurance quotes from a few different companies.
However, realize that you will be required to provide them basic
information including your contact information to obtain a quote. This maylead to phone calls or emails from the company.
By comparing quotes, you can discover the differences in cost and incoverage, as well as how much premiums will increase as you age.
Depending on how long you wait to find life insurance coverage, and thelife insurance company you choose, you may be required to take aphysical. The results of the physical can affect the cost of the premium.

If you intend to purchase life insurance, it is recommended that you do so within
240 days after date of discharge. Within this window of time, proof of good
health may not be required for converting from SGLI to VGLI. Companies may
offer life insurance with similar policies but with different time frames andrequirements.
Do the research and be an informed consumer before inquiring or purchasing life
insurance. For any questions, the Personal Financial Manager on your installation
can provide additional information and guidance.

Financial Planning for Transition – 2023 - Page 40

DISABILITY INSURANCEOne other type of insurance to consider is disability insurance. When an Activeduty Service member becomes ill or injured, he or she continues to receive pay
and benefits. This type of coverage is not automatic in the civilian sector.
Generally, an employee must elect to have disability insurance to receive someor all their pay while in recovery. Many employers offer some type of disability
insurance as part of the compensation package, or it can be purchased
separately.

WRAP UP QUESTIONS••••

Why would tracking your expenses for a period of time prior to transition
benefit you?
What is a co-pay?
What is a deductible?
What insurance expenses will you add after leaving the military?

Financial Planning for Transition – 2023 - Page 41

Debt and Credit
COMPETENCY
Evaluate current total debt and the effect this may have on transition.

LEARNING OBJECTIVES•••

Determine debt-to-income ratio
Analyze the impact of credit score on transition
Identify ways to decrease debt prior to transition

WHAT IS YOUR CURRENT DEBT?
To calculate your debt, you will need to determine to whom you owe money andthe minimum payment due each month.
Items that fall into the debt category generally include:
•
•
•
•
•
•
•
•
•
•
•

Credit cards (e.g., bank, department store, gas, etc.)
Car loans
Personal loans
Consolidation loans
Student loans
Advanced payments/Pay day Loans
Overpayments
Indebtedness to military aid organizations, family, and friends
Home mortgage or Rent
Child support payments
Alimony payments

Financial Planning for Transition – 2023 - Page 42

SPENDING PLAN UPDATE - DEBT
Now is the time to review the debt section of the spending plan.
Follow the directions provided by your facilitator and fill in theappropriate areas.
Include:
Mortgage or Rent*

Car PaymentsCredit Cards – bank, department, Military Star Card
Loans – personal, student, car, home
*Mortgage or rent while in the military is sometimes categorized as an expense due
to housing allowance being provided to cover your mortgage or rent. However,after transition, financial institutions categorize mortgage or rent as a debt. As thiscourse is about finances post transition, mortgage and rent are within debt.

DEBT-TO-INCOME RATIOAs you transition, it is good to know the amount of debt you have in relation to
your income. This is your debt-to-income ratio (DTI). This ratio is one way tomeasure how financially solvent you are. Lenders will determine your DTI and
use this, along with other factors, to decide your ability to repay. Before you
consider taking on additional debt, it is important to consider your current DTI.
Remember, it’s a snapshot of your current situation, so it needs to berecalculated regularly as your income and/or debt change.

Financial Planning for Transition – 2023 - Page 43

HOW TO CALCULATE YOUR DEBT-TO-INCOME
RATIO
 Step 1: Add up all your required MINIMUM monthly
debt payments. This may include:• Rent/mortgage• Monthly minimum credit card payments• Loans: student, personal, auto, etc.
• Child support or alimony
 Step 2: Divide the amount from step one by yourgross monthly income (pre-tax income).
 Step 3: The result is your DTI.

Scenario 1: Calculated total monthly MINIMUM debt payments (including rent,
car loan, credit card payments) as $2,050; gross monthly income (pre-taxes) is$5,495.
The DTI calculation is:• 2050 ÷ 5495 = 0.37
• 0.37 x 100 = 37%
DTI ratio is 37%.

Activity: Determine Debt-to-Income Ratio
1. Determine the total amount of your monthly debt payments andwrite them in the box below (remember to include yourrent/mortgage).
2. Write your gross monthly income from the spending plan in thebox below.
3. Divide payments by income and multiply by 100.
4. The result is your DTI. Write it in the box provided.
5. Provide additional notes as needed.

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DEBT-TO-INCOME RATIO
Total recurring monthly debt payments
Gross Monthly Income
DTI
NOTES:

DEBT-TO-INCOME RATIO – WHAT DOES THIS MEAN?
Now that you have determined your DTI Ratio, the next step is to understandwhat that ratio means.
The previous example determined a 37% debt to income ratio. Using thefollowing guidelines, you can determine how this percentage ranks compared to a“safe” level of debt:•••

Less than 33%: Acceptable – debt is manageable.
34% - 49%: Work to lower your DTI – it would be better to be below 33%.
Over 50%: Seek financial assistance immediately. With over half yourincome going to debt, any life event requiring additional funds could cause
serious financial hardships.

Generally, a DTI of 41-43% is typically the top end for approval for a mortgage.
This DTI limit is also true of VA loans.
Consumer Finance provides an explanation as to why this is important, locatedwithin this link: https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-toincome-ratio-why-is-the-43-debt-to-income-ratio-important-en-1791/

Financial Planning for Transition – 2023 - Page 45

There are times when a DTI within the middle range of 34% to 49% is still
considered acceptable; for example, if the number is in that range due to amortgage payment. If you are seeking to purchase using a loan, a lower DTI cansometimes result in a lender offering you a lower Annual Percentage Rate
(APR/interest rate).
It is highly encouraged for you to seek assistance with developing a debt
management plan prior to transition, especially if your DTI is 34% or higher.
Having your debt in control as you enter transition will allow for more financial
flexibility during the transition period.

SPENDING PLAN UPDATE – DEBT-TO-INCOME RATIO (DTI)
Now is the time to update the DEBT-TO-INCOME RATIO sectionof the spending plan. Follow the directions provided by yourfacilitator and fill in the appropriate areas.

MANAGING YOUR CREDIT FOR TRANSITION
Just as it is necessary to understand your debt prior to transition, it is just as
important to understand and manage your credit.
This section will be a review of information provided during previous financial
literacy courses on your credit report and score. Then move forward to include
information to ensure you are aware of how a credit score and report can affectyour transition—positively and negatively.

CREDIT SCORES are widely available to consumers from sources such as banks
and credit card companies. Credit scores generally range from 300 to 850; theNational average for a FICO score is 695 - 700, with most in between 660 and 720.
Remember, higher credit scores may result in better credit terms such as lower
annual percentage rates (APR).

Financial Planning for Transition – 2023 - Page 46

CREDIT SCORING FACTORSThe biggest credit scoring company with over 90% of the market—Fair, Isaac andCorporation (FICO). Most creditors and credit bureaus either use FICO scores or
have a system based on the FICO system. More information is available on-line at
http://myfico.com.
According to FICO, the factors considered in determining FICO scores are:•

Payment history (about 35% of the score)o Previous credit accounts paid on time.

•Amounts owed on credit accounts (about 30% of the score)o Amount of credit used and how much debt is owed.

•

Length of credit history (about 15% of the score)o How long your credit accounts have been established?
o How long it has been since you used certain accounts?

•

New credit (about 10% of the score)o How many new accounts have been recently opened (i.e., number of
new requests for credit)?

•

Credit mix (about 10% of the score)o FICO scores will consider the mix of credit cards, retail accounts,
installment loans, finance company accounts, and mortgage loans.

Understanding what the creditors are evaluating helps you understand what
adjustments you can make to improve your score.

Financial Planning for Transition – 2023 - Page 47

Do not let the “number of new requests for credit” factor stop you from shopping
around for the best loan, especially on large purchases such as a car or home.
Multiple credit checks for the same type of loan should not affect your credit scoreas the most used scoring models will count them as a single inquiry if they occur
within a short period of time (14-45 days).

HOW DOES THE CREDIT REPORT AND SCORE AFFECT YOUR TRANSITION?
During transition, your credit report may
be viewed for various reasons.
•

Employers:o To evaluate you for hiring,promotions, and other
employment purposes

Why Should
I Care?
• Influences on hiring,home loans, insurance,
applying for government
assistance• Higher score = favorable
ability to be hired, to beapproved to rent, to be
granted a loan, or to be
insured•Creditors:o When you apply for a homeloan or credit•

Government agencies:o When being considered forassistance, such as
unemploymento When trying to obtain asecurity clearance•

Insurance companies:
o When applying for health, life, and auto insurance, companies may
look at your credit report to determine your ability to pay a premium•

Landlords:
o When deciding whether to rent you a place to live

Prior to transition check your credit report so you know what it contains, and thatthe information is correct and accurate. It is important to note that potential
employers or insurance companies are required to notify you if a credit report
review is part of background screening. If you are denied credit, a job, or
insurance based on your credit report, you have the right to request a copy of thereport FREE from that employer/company.

Financial Planning for Transition – 2023 - Page 48

ANALYZE YOUR CREDIT REPORT AND SCORE BEFORE TRANSITION
To check your credit report, request a report from each of the three crediting
agencies, Equifax, Experian, and TransUnion, which is located atwww.annualcreditreport.com.

Closely review the reports, and if married, review them with your spouse. Checkthe following items:

01

Review all Personal Information

Review all personal information is accurate. Closely check your name, first, last,and middle to include spelling. Check to ensure the address is correct, andspelled correctly, as well as previous addresses. Finally check to see if thecurrent employer is correct.

02

All open accounts are yours

Review every open account. Is this one you or someone in your family opened?
Also look at closed accounts. Should there be an account open that you did notopen, take the necessary steps to close it.

03

Inquiries from credit you applied forYour credit report will also list all credit you have applied for such as a car,home, or other credit such as a credit card. Review these applications for credit
to ensure you are the one who applied.

04

Account history listed for your accounts

Look at the account history for each account. Ensure payments were captured
and reflected accurately. On time payment one of the largest determining
factors for a credit score.

Financial Planning for Transition – 2023 - Page 49

05

Negative information

Review any negative information listed. Is it accurate? Is this you? Some
negative information will be removed after a determined period of time; othernegative information will remain indefinitely.

06

All debts discharged in bankruptcy are listed that way

Should you have any bankruptcy, ensure all debts that were cancelled due tobankruptcy are listed accurately.
Most major creditors subscribe to one or more credit bureaus. Therefore, it isimportant to request and analyze a report from each credit bureau. It is yourresponsibility to review information on your credit report and to request corrections.
Use www.AnnualCreditReport.com to print your credit reports.
If you have already used the free credit report from one or all three agencies, aninstallation personal financial manager or counselor (PFM or PFC) may be able toassist you with obtaining a current report.

CORRECTING CREDIT REPORT
If you find incorrect or inaccurate information on your credit report, immediately
start the process to have it corrected. It is best to contact both the credit-reporting
agency and the creditor that provided the information. The fastest and easiest way
to resolve an inaccuracy on your credit report is through the online credit report
dispute process. Listed below are the dispute websites for the three credit agencies:
TransUnion: https://www.transunion.com/credit-disputes/dispute-your-credit
Experian: https://www.experian.com/disputes/main.html
Equifax: https://www.equifax.com/personal/credit-report-services/credit-dispute/
If the inaccurate information is more complicated, the Federal Trade Commission(FTC) has detailed instructions and sample letters for both the credit company andthe information provider at www.consumer.ftc.gov. You can also visit your local
installation PFM to assist you in understanding your options.

Financial Planning for Transition – 2023 - Page 50

Additionally, you can submit a complaint to the Consumer Financial Protection
Bureau (CFPB), and they can assist you in resolving the errors. Use the following
website https://www.consumerfinance.gov/complaint/.

CLEAN UP INACCURATE PUBLIC RECORD INFORMATION
The most damaging information on your credit record is sometimes sourced frompublic records, such as arrests, judgments, foreclosures, tax takings, and liens. The
best way to remove the inaccurate information from your file is to do so at thesource. This requires contacting the government agency supplying this information
to the credit bureau, and then ensuring the corrected information is updated in thecredit bureau’s files.

EXPLAIN DAMAGING ITEMS
It can be helpful to send a statement to the credit bureau explaining damaging
items. Credit bureaus are required to accept these statements if they relate to why
information in the report is inaccurate.
Another approach, often more effective, is to explain the delinquency to the lenderfrom whom you are applying for credit, rather than to the credit bureau. Federal
law requires that creditors at least consider your explanation.

NEGATIVE INFORMATION
When negative information on your report is accurate, only the passage of time canassure its removal.

Financial Planning for Transition – 2023 - Page 51

WAYS TO IMPROVE YOUR CREDIT SCORE
The best way to improve your credit score (and keep your credit healthy) is to pay
your bills on time.
Below are ways to keep your credit healthy:

Although your life during transition may be hectic and in flux, it is critical that you
remember to pay your bills. The following are suggestions on ways to track yourbills:•••••Create a spreadsheet in the months leading up to transition to ensure all bills
are being paid on time
Utilize online bill pay
Set up auto pay for bills through the biller’s website or your bank
Set up an email account to use specifically for bills
Forward your mail to a family member whom you trust to pay a bill for you

Financial Planning for Transition – 2023 - Page 52

CAUTION WITH CREDIT REPAIR AGENCIES AND DEBT RELIEF
COMPANIES
Credit Repair Agencies:o These companies promise to fix your credit record for a fee. They usuallycall themselves credit repair, credit service, credit clinic, or similar names.
These agencies usually cannot deliver what they promise.
Debt Relief Companies (aka settlement or bankruptcy):o Debt settlement programs often involve a company negotiating with yourcreditors to allow you to pay a "settlement" to resolve your debt. Typically,
this settlement is a lump sum that is less than the full amount you owe.
Settling a debt for less than the full amount owed can affect your credit andsecurity clearances. Debt settlement programs work to get monies owed;
they do not necessarily work in YOUR best interest.
o If you MUST use a debt settlement program, look for a non-profit agency or
options at your bank/credit union.
For more information on debt relief, view the articles below:
https://www.consumer.ftc.gov/articles/0145-settling-credit-card-debt
https://www.consumer.ftc.gov/articles/0084-debt-relief-or-bankruptcy

Threats to damage your credit rating from Debt Collection Agencies: Debt
collectors may threaten to report negative information to a credit bureau, but thethreat is meant only to pressure you to pay. Creditors automatically report thatyour account was sent to a collection agency.
Practices that are abusive, unfair, or deceptive from collection agencies may beillegal under the federal Fair Debt Collection Practices Act (FDCPA). You may haveother legal ways of challenging the debt collection agency’s conduct. Contact theConsumer Financial Protection Bureau and file a complaint at Consumer Financial
Protection Bureau (consumerfinance.gov).
Know your rights when it comes to debt collection agencies. For information
visit: https://files.consumerfinance.gov/f/CFPB-Servicemembers-Know-Your-RightsHandout-Debt-Collection.pdf.
The installation financial counselor is a free resource available to Service members,
their families, and retirees. After transition, you can also seek financial assistanceat the American Job Centers (AJCs). Many AJCs have certified financial counselors

Financial Planning for Transition – 2023 - Page 53

to assist with financial issues and telephonic financial counseling is also available atall sites.
You can generally do a better job cleaning up your credit record on your own, at nocost. While you are still in service, take advantage of the free credit monitoring
available to you: https://www.equifax.com/personal/military-credit-monitoring/

FAIR CREDIT REPORTING ACTTo ensure fairness when it comes to credit reports, the federal Fair Credit Reporting
Act (FCRA) was created to promote the accuracy, fairness, and privacy of
information in the files of consumer reporting agencies. There are many types ofconsumer reporting agencies, including credit bureaus and specialty agencies (suchas agencies that sell information about check writing histories, medical records, andrental history records). You must be told if information in your file has been usedagainst you.
•
•
•
•
•
•
•
•
•

You have the right to know what is in your file.
You have the right to dispute incomplete or inaccurate information.
Consumer reporting agencies must correct or delete inaccurate,incomplete, or unverifiable information.
Consumer reporting agencies may not report outdated negative information.
Access to your file is limited.
You must give your consent for reports to be provided to employers.
You may limit the “prescreened” offers of credit and insurance you receive
based on information in your credit report.
You may seek damages from violators.
Identity theft victims and active-duty military personnel have additionalrights.

For more information, including information about additional rights, go tohttps://www.ftc.gov/about-ftc.

ASSESSING YOUR FINANCIAL READINESSBoth the debt-to-income ratio and credit scores are indicators of financial wellbeing. However, when analyzing both scores, it is important to note that no single
score accurately reflects your current financial situation and that your situation
changes over time.

Financial Planning for Transition – 2023 - Page 54

Everyone has different expectations when it comes to finances. Some feel they cannever have enough in savings, while others are good with a small amount. Others
want their IRA and 401(k) to be extremely robust, while others are perfectly finewith a more modest amount. Some will drive a car that is older because they do
not want the car payment, while others buy or lease a new car every few years. A
financial situation is very personal and involves your personal financial choices.
Look at your entire financial situation and gain a good understanding as you entertransition. Are there any numbers you would like to change? Start making thosechanges now. However, it is important to remember that change may be slow.
During and after your transition, revisit this activity to ensure your financial
situation has remained steady.

WRAP UP QUESTIONS•••

How important is the DTI for obtaining more credit? What other factors areused in the decision-making process?
What is the FCRA? Will this have an impact on your transition?
What are the two most important factors which affect your credit score? A

Financial Planning for Transition – 2023 - Page 55

Assets
COMPETENCY
Evaluate your assets and understand options available during and after transition.

LEARNING OBJECTIVES
•
•
•
•
•

Define assets and calculate value of personal assets.
Calculate net worth as it pertains to assets and evaluating current financial
situation.
Illustrate the difference between a defined-benefit plan and a definedcontribution plan.
Analyze options available for the Thrift Savings Plan (TSP) whentransitioning.
Recognize the reasons a savings account is essential during transition.

ASSETSAn asset is anything of value that you own that can be converted into cash.
Examples include savings, real estate, personal property, and investments such as
IRAs, mutual funds, etc. Even a retirement pension can be considered an asset, as
can an annuity, such as a Survivor Benefit Plan (SBP). During transition, it isimportant to know your assets and their current value.

SAVINGS, INVESTMENTS, AND RETIREMENT PLANS
Three types of assets are savings, investments, and retirement plans. Duringtransition, you will need to make financial decisions concerning your existingsavings and retirement accounts. After transition, it becomes important tounderstand the nuances of each type of retirement plan so that when you are
confronted with a decision as a new employee, you will have the basic underlying
knowledge to be able to ask specific questions and make informed decisions.

SAVINGS AND INVESTMENTS
Savings and investments are an important part of the financial picture and can easethe financial burden that might occur during transition to civilian life. Savings will
help to retain your financial stability should you have a gap in employment duringtransition. It can also be used in a financial emergency, such as when the car
breaks down or if the roof leaks. Savings (savings, emergency savings, and goal

Financial Planning for Transition – 2023 - Page 56

savings) are generally used for short term, while investments are for longer-termsavings and when planning for retirement.
Consider setting goals for each of these areas:•

Savings - equivalent two-weeks’ expenses or $1,000, whichever is greater•

Emergency Savings - minimum three-to-six months of living expenses,
rent/mortgage, and debt•

Goal – funds specified for items you want•

Investments - Mutual Funds, Stocks, TSP, 401(k), or other investments

Savings should not be an afterthought, reserved for after the bills have been paid,
groceries are in the refrigerator, and rent is covered. Instead, savings should beconsidered a part of a spending plan, just like any other recurring expenses.
Regular, consistent contributions (even if a small amount) go a long way towardbuilding your savings and investment portfolio.

RETIREMENT PLANS
No matter what your age or life situation, it is never too early or too late to begin
thinking and planning for retirement. To assist with this, employers may offersome type of retirement plan to help you save, such as a 401(k) or other similarplan. Many of these plans provide tax advantages, including a deferred tax liability
or lowering your taxable income. Some employers offer matching funds up to acertain percentage. Employer provided retirement plans, mutual funds, investment
funds, and IRAs are popular options that may be used to grow and fund retirement.
To begin, it is important to understand the two basic categories of retirement plans,
which may be provided by an employer: defined-benefit and defined-contribution.
Defined-Benefit Plan: A defined-benefit plan is the traditional company pension
plan. If you are under the legacy retirement system, this is your current retirement
pension plan. The legacy retirement system is a “defined-benefit” plan because theultimate retirement benefit is definite and determinable as a dollar amount or as apercentage of wages. To determine these amounts, defined-benefit plans usuallybase the benefit calculation on a combination of the employee’s salary and years of
employment. Characteristics of a defined-benefit plan include:••

Funded mostly, if not entirely, by the employer
Employer assumes all responsibility for the payment of the benefit and all
the risk on funds invested to pay out that benefit
Financial Planning for Transition – 2023 - Page 57

For specific information on this plan, visit Military Compensation:
ACTIVE-DUTY: http://militarypay.defense.gov/Pay/Retirement/
RESERVES: http://militarypay.defense.gov/Pay/Retirement/Reserve.aspx
Defined-Contribution Plan: A defined-contribution plan is a qualified retirement
plan in which the contribution is defined but the ultimate benefit to be paid is not.
These plans take many forms and include 401(k), 403(b), Roth 401(k), TSP,
Savings Incentive Match Plan for Employees (SIMPLE) IRA, Simplified Employee
Pension (SEP) IRA, Employee Stock Ownership (ESOP), and profit sharing.
Characteristics of a defined-contribution plan include:
•
•
•
•
•

•

Considered portable, as all contributions made by the employee andemployer remain property of the employee (after vesting)Contributions come from the employee
A portion may or may not be matched by the employer
Each participant has an individual account
The benefit at retirement depends on the amount contributed, the funds
selected, the investment performance of that account through the years, andany applicable management fees
Investment risk rests solely with the employee because of the opportunity tochoose from several investment options

MILITARY RETIREMENT PLANS
From the military, there are two retirement plans currently in use by the Military,
the Legacy and Blended Retirement System (BRS). Which one you are eligible for isdetermined by your initial date of entry. If you are unsure of which plan you fallunder, check your LES.
Legacy:• Serve 20 or more qualifying years to earn a lifetime monthly payment• Available for those with an initial entry date before January 1, 2018
• Defined-benefit plan – calculated at 2.5% times years of services times thehighest 36 months of basic pay.
• TSP account is available for Service member contribution, but with nogovernment matching contribution• Additional Information: https://militarypay.defense.gov/Pay/Retirement/

Financial Planning for Transition – 2023 - Page 58

BRS:• Combines elements of the legacy retirement system with benefits similar to
those offered in many private-sector 401(k) plans• Defined-benefit plan – calculated at 2% times years of services times
the highest 36 months• Defined-contribution – Service member contributes and government
matches funds up to 5%
Additional information:
https://militarypay.defense.gov/Portals/3/Documents/BlendedRetirementDocument
s/A%20Guide%20to%20the%20Uniformed%20Services%20BRS%20December%202017.pdf?ver=2017-12-18-140805-343

TSP AND BRS
Since BRS is a combination of a defined-benefit, or pension, plan and a definedcontribution plan, TSP is an important part of your retirement planning, regardlessof how long you serve in the military.
As a defined contribution plan, both you and the government contribute to your
TSP.
•
•

Service member contributions to TSP taken directly from pay
Government matches up to 5% of basic pay contributions

Enrollment in BRS is automatic for those who joined the service after January 1,
2018; accordingly, creation of a TSP account is also automatic. For members whojoined after Oct 1, 2020, automatic deductions of 5% of your basic pay is deposited
into your TSP. This 5% each month continued throughout your time in the military
unless you did one of two things. Either you increased the percentage deductedeach month to be deposited or you stop the deduction each January. *Note:automatic re-enrollment at 5% occurs each January unless you stop the deduction.
In addition to any contributions you made, the government matches up to 5% ofyour contribution, deposited into your TSP account.
It is important that you access your TSP account prior to transition to prepare forthe options available for your TSP post-transition.
Access your account at TSP.gov
A video explaining TSP and BRS is available; “The TSP: What’s It All About?” Thevideo can be found at https://www.youtube.com/watch?v=YUbyMJTwCk4. (Note:
This video is especially for spouses of Service members covered by BRS. However,
the information is relevant to all who are in BRS for retirement and have a TSP
account.)
Financial Planning for Transition – 2023 - Page 59

RETIREMENT PLANS FROM EMPLOYERS
Many employers offer a 401(k) or other similar plans intended to help you save forretirement. Some employers may even match up to a certain percentage. Most
personal retirement planning will occur via a 401(k) or similar account as pensions
become rarer as a benefit. More often, employers may offer matching contributions
into your company retirement plan to assist you with funding your retirement.
Many companies require what is known as a vesting period. A vesting period is thewaiting period required before an employee can keep funds contributed into theiraccount by the employer. For example, any money you contribute to yourretirement fund from your paycheck is 100% yours. The company’s matchingfunds may vest (or change ownership from the employer to you) over a period oftime. Vesting can occur in many forms, such as incremental vesting. For example,
at year one you will be vested at 25%, year two at 50%, year three at 75%, until
full vesting of 100% at 4 years. Some employers have a cliff vesting schedule that
includes full vesting after a specified period of employment. This means, if you
leave the company for any reason prior to the full vesting period, you forfeit thematching company funds. The Blended Retirement System requires a period of 2
years before the Service 1% contribution is considered vested and wholly owned by
the Service member.

Financial Planning for Transition – 2023 - Page 60

THRIFT SAVINGS PLAN (TSP)
Regardless of whether you are in the legacy retirement system or BRS,
participation in the TSP is a benefit of Service and enables you to help build
retirement wealth. When you retire or separate from the military, you havemultiple options for your TSP account.
•••

Stay: Provided you have at least $200 in your TSP account, you can continue
to participate in the TSP by leaving your current money in TSP.
Roll over: Rollover your funds from the TSP to an IRA or another eligible
employer retirement plan orDistribution: Remove your funds as cash from TSP and not rollover intoanother similar account, though withdrawal or distribution could trigger
negative tax consequences.

While you are currently serving, you can contribute up to the Elective Deferral
Limit, Catch-up limit, and Annual Addition Limit. For more information go to:https://www.tsp.gov/making-contributions/contribution-limits/.

POTENTIAL BENEFITS OF STAYING IN TSP••••

Low administrative expenses
Ability to rollover to a Traditional IRA, Roth IRA, or eligible employer plan
Option to change your investment mix with reallocations and fundtransfers
Defer federal income taxes on any tax-deferred amounts remaining in the
TSP

After you separate or retire, you will still have access to your TSP and the ability toreview your TSP balance and prior contributions, and to rebalance your investment
mix. In addition, you will be able to rollover contributions from an eligible employer
plan to your TSP. While you can rollover, you are not able to contribute directly
into TSP from your non-military paycheck, even as a federal employee. Federal
employees have a separate TSP account, separate from the military TSP account.
Make any adjustment or changes through the TSP Mobile App and TSP website,
www.tsp.gov.

Financial Planning for Transition – 2023 - Page 61

ROLLOVER OPTIONS••

If you become a federal civilian employee, you have the option of
combining your two TSP accounts by rolling over the military TSP accountwith your federal civilian TSP account. Be sure to find out the options.
Transfer some of your TSP account into an IRA or eligible employer plan,
allows you to remain with TSP.

Rolling over funds is an option for those who do not want to stay in TSP and do notwant the IRS early withdrawal penalty of a distribution. Done correctly, funds
rolled over directly to an IRA or eligible employer plan with no immediate tax orearly withdrawal penalties. Another option is to rollover your contributions from
eligible employer plans into your TSP account. To avoid an unintended taxable
event and IRS early withdrawal penalty, contact the financial institution you want tomove over to and have them start and process the paperwork for the rollover ortransfer. You can create unintended tax obligations and incur penalties by
withdrawing it and moving it yourself.

DISTRIBUTION OPTIONS••Take a full or partial distribution AND
Choose one of the distribution options:o Single paymento Monthly, quarterly, or annual paymentso Life annuityo Combination of above options

TSP recently updated their distribution options. For more on these options, visit:https://www.tsp.gov/living-in-retirement/withdrawal-options/.
Retirement funds are intended for retirement. However, withdraw is an option. If
you have determined you will withdraw your TSP balance, make sure you are awareof the implications beforehand. There are IRS rules that govern taxes and penalties
for withdrawing retirement funds before certain ages and criteria are met.
Warning! Some types of TSP distribution payments are subject to federal income
taxes, fees, and potential IRS withdrawal penalties, which can amount to over 30%of the distribution; different tax rules apply to the different distribution options, aswell as to the type of money (traditional, Roth, a combination of both, or taxexempt) that is included in your payment. In addition, you may also be subject tostate taxes.

Financial Planning for Transition – 2023 - Page 62

OTHER TSP CONSIDERATIONS PRIOR TO TRANSITION•

Beneficiaries – Before you transition, be sure to check that your TSP
beneficiaries are updated and are aware of the TSP death benefits, accountnumber and how to access.

•Loans – outstanding loan, you’ll be able to continue making loan payments
by check, money order, or direct debit. You will not be able to apply for a
new loan after you leave the Serviceo https://www.tsp.gov/new-tsp-features/summary-of-changes/#Loans
Update address – update your address in “My Account” on TSP website and
TSP mobile app.
o www.tsp.gov•

For Guard and Reserve members – be sure to visit the TSP website listed below for
information on USERRA and TSP as you change status:
Career changes | Thrift Savings Plan (tsp.gov)
For more information on TSP options, withdrawal deadlines, taxes, and other details
concerning the TSP, call the TSP ThriftLine at 1-TSP-YOU-FRST (1-877-968-3778)
or visit www.tsp.gov.

For information specifically on distribution options: Withdrawals (tsp.gov)
TIP: Seek a tax advisor or financial planner if you have questions about taxes andthe TSP. The installation personal financial counselor or personal financial manager
can provide you with basic information on the tax implications.

CONTACTING TSP
ThriftLine Service Center:•••

1-877-968-3778 (United States, toll-free)
1-404-233-4400 (Outside the United States, not toll free)
7 a.m. – 9 p.m. EST, Monday through Friday

Download the official TSP Mobile App for on-the-go access to your TSP account 24/7
secure access to a virtual assistant AVA on tsp.gov and in the TSP Mobile App.

Financial Planning for Transition – 2023 - Page 63

TSP RESOURCES
TSP Publications:•••TSP Distributions Booklet
TSP Tax Booklet
USERRA Fact SheetTSP YouTube Channel: TSP4Gov
TSP Online Learning: https://www.tsp.gov/online-learning/

SURVIVOR BENEFIT PLAN - SBP
The Survivor Benefit Plan (SBP) is an elected benefit, which provides designated,
eligible dependents of military retirees’ monthly payments for the lifetime of thebeneficiary. This benefit is an option available only by election and is generally
enacted at the time of retirement. Since the monthly payment continues after thedeath of the retiree, there is a monthly payment in the form of a deduction takenfrom the Veteran’s pre-tax retirement pay.
When electing SBP, the amount of coverage is chosen by the military Service
member retiring, however, there is a minimum level of coverage. If you aremarried and choosing to decline SBP or choose less than full SBP coverage, it isrequired for your spouse to show concurrence with this decision. For those who are
not married, there are other eligible beneficiaries such as children, former spouse,or a natural interest person.
Once enrolled, you do have the ability to cancel or terminate your SBP election
beginning on the 25th month and ending on the 36th month - or the third year - ofyour retirement. During this time, you can only cancel, not enroll. As withdeclining at retirement, spousal concurrence is required.
For more detailed information, consult the websites listed below or make an
appointment with your PFM on the installation.
Defense Finance and Accounting Services (DFAS) – SBP:
https://www.dfas.mil/retiredmilitary/provide/sbp.html
DFAS – Spouse Coverage: https://militarypay.defense.gov/Benefits/SurvivorBenefit-Program/Costs-and-Benefits/Spouse-Coverage/
DFAS - Eligible Beneficiaries:
https://www.dfas.mil/retiredmilitary/provide/sbp/coverage.html

Financial Planning for Transition – 2023 - Page 64

Financial Readiness SBP: What is the Survivor Benefit Plan?
https://finred.usalearning.gov/planning/SurvivorBenefitPlan
Military Compensation SBP Overview:https://militarypay.defense.gov/Benefits/Survivor-Benefit-Program/Overview/

HOME AS AN ASSET OR LIABILITY
A home can be your largest asset or your biggest
liability during transition. Deciding where to live
and if relocation will be necessary can be one of
the biggest decisions made during transition.
If you are renting and plan to stay in the area, it
may be a good time to buy. Your ability to show
income to qualify for a loan to purchase a house
may be easier while you are still in the Service. On the other hand, if you do notknow what your income will be or do not have employment lined up for after
separation or retirement, it may be dangerous financially to have this housepayment obligation unless you have adequate savings.
If you own a home and find yourself relocating, renting out your current home andrenting in the new location may be an option. Once you can show a year of rental
income on your tax return it will be easier to investigate buying a home in your new
location if that is desired.
There are online calculators that you can use to help make an informed decision
about your housing plan and whether to rent or buy.
•
•
•
•
•

https://www.consumerfinance.gov/owning-a-home/https://finred.usalearning.gov/Benefits/HouseHunting
https://finred.usalearning.gov/ToolsAndAddRes/Calculators/Housing
http://www.knowyouroptions.com/
http://myhome.freddiemac.com/resources/calculators.html

For information on buying a home, attend the Home Buyers course available on
most installations. Ask the personal financial counselor/manager for more
information if the course is not available.

Financial Planning for Transition – 2023 - Page 65

NET WORTH AND ASSETS
Having discussed different types of assets, you have the knowledge to determine
which types of assets you need to include when calculating your net worth.
One of the challenges in calculating the value of your assets is assigning accurate
values to each item. To avoid inflating your net worth (i.e., having an unrealistic
view of your wealth), it is important to make conservative estimates when placing
value on certain assets.
As you prepare to make a list of your assets and the value of each, here are somecategories of assets to consider:
•
•
•
•
•
•
•

Your home: there are various websites which help determine the current
value of your home
Vehicles
Checking and savings accounts
Investments, TSP, IRA, mutual funds
Annuities, life insurance policies
Personal property: high-value jewelry, electronics, artwork, rare coins,collectibles
Retirement pension: To determine value, use the current amount (atretirement) of the pension you will be receiving to add to your net worth. If
you will not complete 20 years of Service, this number will be $0.

Your net worth is the amount that your assets exceed your liabilities. In simple
terms, net worth is the difference between what you own and what you owe. If
your assets exceed your liabilities, you have a positive net worth. Conversely, if
your liabilities are greater than your assets, you have a negative net worth.
Calculating your net worth annually is a great way to track financial progress over
the years.

Activity: Determine Net Worth
1. Determine the value of all your assets that could have a cash value
2. Determine the total of your liabilities (debt owed)
3. Subtract liability from asset to find your Net WorthFinancial Planning for Transition – 2023 - Page 66

NET WORTH
Assets*Liabilities
Net Worth
NOTES:*Be conservative in your estimates of worth.
You have arrived at a number. Now what? Your net worth can tell you manythings. If the figure is negative, it means you owe more than you own. If thenumber is positive, you own more than you owe. A negative net worth does notnecessarily indicate that you are financially irresponsible; it just means that - rightnow - you have more debt than assets.
While your net worth will fluctuate, it is the overall trend that is important. Ideally,
your net worth continues to grow as you age if you pay down debt, build equity inyour home, and acquire more assets. At some point, it is normal for your net worth
to fall, e.g., when you tap into your investments for your retirement income.
Financial situations and goals are unique; it is difficult to establish a generic "ideal"
net worth that applies to everyone. If you have not calculated your net worth
before, it is best to create an honest evaluation of where you stand today andcreate a reasonable goal to see it increase over time.

HOW DO YOU IMPROVE YOUR NET WORTH?
If you want to see your net worth increase, you must either increase your assets ordecrease your liabilities (debts). The most effective way to increase net worth is to
reduce your debt. As your liabilities decrease, your net worth rises.

ESTATE PLANNING
No matter your net worth, it is important to have a plan for your estate to makesure all your assets are transferred as you wish. An estate plan isn’t just a will, but
a few more documents which together fully present your wishes and preference,
not only in the event of your death, but should you become incapacitated in someway.
Financial Planning for Transition – 2023 - Page 67

Common documents included in an estate plan:--

Will or Trust: ensures all property is distributed according to your wishes
Beneficiary Designations: someone who will receive certain items upon
your death, common for 401(k) or TSP; also include a contingent beneficiary
should the initial beneficiary
Durable Power of Attorney: someone you assign to act on your behalf
when you cannot do so prior to your death; ends upon death
Healthcare Power of Attorney: assigns another individual to makehealthcare decisions on your behalf, should you become incapacitated
Guardianship Designations: to ensure any children under the age of 18
are given into the care of your preferred guardian
Letter of Intent: a document to define what you want done with aparticular asset, may also contain funeral details

It is important to have made arrangements for your estate, yourself (should you
become incapacitated), and any minor children, otherwise these decisions will bemade by the state.

WRAP UP QUESTIONS
•
•
•
•
•

What are assets?
What are liabilities?
What is your net worth?
What is the difference between the defined-contribution and defined-benefit
retirement plan?
Why should you have a plan for your estate?

Financial Planning for Transition – 2023 - Page 68

Action Plan
COMPETENCY
Understand the entirety of the financial situation and create a financial planleveraging resources available during and after transition.

LEARNING OBJECTIVES••••Create a plan containing next steps in the financial journey to prepare fortransition
Identify ways to manage credit and debt
Identify reliable financial resources after transition
Interpret information to discover possible scams

FINANCIAL ACTION PLAN
There are some basic steps to take when working through and creating yourfinancial action plan. This presentation and the work you have done today will
provide most of the information you need to create your action plan for financial
success during your transition.

1. Analyze current financial situation

During this course, you completed the following: reviewed your current income,determined your civilian equivalent salary, created a list of your expenses anddebts, determined your assets, and figured your debt-to-income ratio. Transfer
the information from the previous exercises into the boxes below or review thesummary page on the spending plan:

Financial Planning for Transition – 2023 - Page 69

CURRENT FINANCIAL SITUATION
Total Current Income

Civilian Equivalent SalaryMonthly Expenses

Total Debt

Debt-to-Income Ratio

Total Assets

Net Worth
NOTES:Take a minute to reflect on your current financial situation.

Financial Planning for Transition – 2023 - Page 70

2. Re-examine your financial goals

At the beginning of this course, you determined your financial goals fortransition. They may have included paying down debt, saving money for a down
payment on a house or car, or even saving for a vacation. Take a minute andreview the goals you wrote at the beginning of this class. Are those goals stillvalid? Are they reasonable with your current financial situation? Should thesebe changed to reflect a more prudent goal? Using your knowledge of yourfinancial situation, take a minute to determine if your previous goals are stillvalid. If your previous financial goals are still valid, excellent, but if you need torevise your goals, write your new financial goals for transition below or update
the goals in the spending plan:
FINANCIAL GOALS
Short-Term Goal:

Medium-Term Goal:

Long-Term Goal:
NOTES:

Financial Planning for Transition – 2023 - Page 71

3. Determine ways to work toward your goals

To achieve your goals, adjustment may need to be made on how you spend yourmoney or changes in your spending plan. Below are three ways adjustments canbe made:•••Increase income
Decrease expenses
Decrease debt

If your financial situation is acceptable, why should you review ways to decrease
your expenses or decrease indebtedness?
As you transition, there is a good chance your finances will fluctuate.
Understanding how to decrease your expenses when this happens can increasefinancial stability and success. In addition, building your savings while you havea consistent paycheck can open you to more options and make your transition
easier, should the unexpected occur. While lower debt is ideal for transition,
increasing your savings can help you continue to make your payments on timeand protect your credit. If everything goes as expected during transition, you
can pay down debts or add to your savings with the extra money you saved.
During transition planning, extra income may be beneficial to ensure debts arepaid and more debt is not accrued.
While decreasing living expenses may produce the quickest results, it may not be
the best choice for your family. However, a well-managed spending plan which
accounts for the needs of the family situation can decrease financial stress.
The following table contains a few suggestions on ways to increase income,decrease expenses, and decrease indebtedness.

Financial Planning for Transition – 2023 - Page 72

Ways to increase income:Ways to decrease
expenses:• Spouse gets job• Active-duty person getspart-time job• Seek out temporary or
seasonal work
• Review and change tax
filing status andexemptions• Enroll in federal or state
programs• Sell items you no longer
use• Use internet to research
the best prices for more
expensive purchases• Apply for unemployment
entitlement• Down grade or eliminate
the cable package• Bundle packages forcable, Internet, and cellphone
• Re-shop for auto, home,and life insurance• Eliminate your land line;
use cell phone• Review current cell phoneplan to determine if any
extras can be removed• Check
books/eBooks/movies out
from library• Use public transportationor carpool• Turn off lights &appliances when notusing. Check with yourutility company for moretips
• Ask for veteran andmilitary discounts• Find friends who can tradeservices (e.g.,babysitting, pet sitting,etc.)• Cook at home and packyour lunch; plan menus
around foods on sale
• Use coupon/discounts for
shopping, dining out, andrecreational activities• Shop at thrift stores• Ask utility companies
about a budget plan for
consistent utility bills• Cancel underutilized
subscriptions such as
streaming andgaming services

Ways to decrease debt:• Stop using credit cards• Pay off debts by paying
the debts with the highest
interest first• Pay lowest balance firstand roll payment into nextdebt
• Pay down debt using a
power pay plan. Take
advantage of websitesthat explain various
methods of power paying,such as PowerPay.org(Power Pay | USU)
• Pay more than theminimum payment• If you get a raise, use theadditional money to pay
down a debt
• Shop for the lowest
interest rates, refinancewhen possible• Consider consolidation
loans• Contact credit cardcompanies and negotiate
a lower interest rate
• Seek help if you are inserious debt
• Ask if accrued interestand late fees can bewaived by your creditors if
you enroll in a non-profit
debt management
programAsk yourself which of the above changes can be made starting today. Smallchanges in your day-to-day life can result in big changes for your financial
situation.

Financial Planning for Transition – 2023 - Page 73

4. Create or Update your post-transition spending plan (Career
Readiness Standard for this module)
You have now researched all the information required to complete your spending
plan. Consider the following:
•
•
•
•
•
•

Civilian equivalent salary
Location after separation/retirement
Sources of income (spousal income, retirement, investment income,alimony, child support)
Transition expenses/debts
Debt-to-income ratio
Net worthUpdate the Action Plan section of the spending plan.

IMPORTANCE OF PREPARING FOR TRANSITION
TRANSITION RESOURCES
Take advantage of free services available on the installation while you are still in
the Service. The Personal Financial Management Program staff (i.e., PFM, CFS and
PFC) are available.
Military OneSource continues to be available to you one year after your transition.
It is a 24/7 connection to an accredited financial counselor. You can also get
support evaluating savings programs, learn how to talk to creditors and get help
weighing your financial options through this resource.
Legal services are free while you are in the military, so take advantage of theseresources to create/update your wills, power of attorneys, etc., before you leave
active duty. You can save hundreds of dollars by not having to pay the costs ofthese services in the civilian sector. These items will save you and your family a lotof work and money to protect your assets and your family.
After you retire or separate, there are certain programs, which provide protections,or advantages, which will no longer apply. Understand the implications of losing
the following protections:•

Servicemembers Civil Relief Act (SCRA): While on active duty, you wereentitled to protection under this law for areas of financial management,
rental agreements, security deposits, evictions, installment contracts, credit

Financial Planning for Transition – 2023 - Page 74

card interest rates, mortgages, civil judicial proceedings, income tax
payments, and more. Once you are no longer on active duty, certain
protections may no longer apply.
•

Military Lending Act (MLA): Ensures Service members aren’t charged morethan 36% Military Annual Percentage Rate, does not allow mandatory
waivers of consumer protection laws, or mandatory allotments from Service
member’s paycheck. A creditor cannot charge a penalty for prepayment ofloans in certain circumstances.

•

Internal Revenue Service (IRS): While on active duty, there are special tax
breaks and incentives for which you were entitled. After transition, thesebenefits may no longer apply. One of the most important is the automatic
deadline extensions for filing your taxes. In addition, the uniform
deduction, reservist travel deduction, and the moving expenses deduction
may no longer be applicable.

FRAUDS AND SCAMSAs you transition, you become more enticing to those trying to commit fraud or
scams. Frauds and scams change over time to become more effective in separating
you from your money, but you can learn to protect yourself by identifying the redflags that signal a scam.
•
•
•
•
•
•

Sounds too good to be true
Pressures you to act “right away”
Guarantees success
Promises unusually high returns
Requires upfront investment – even for a “free prize”
Requesting overpayment for an item and have you send thedifference

Protect yourself by being alert to the fact that scams and scammers exist.
Understand that even though someone claims to be part of a Veteran Service
Organization or a Military Service Organization, still conduct due diligence. Take
the time to thoroughly research and vet any product, idea, or organization.
Especially if it sounds too good to be true!
The Consumer Financial Protection Bureau (CFPB) has provided more informationon Spotting Frauds and Scams (https://www.consumerfinance.gov/consumertools/fraud/
Financial Planning for Transition – 2023 - Page 75

ACCESSING AND APPLYING FOR RETIREMENT PAY
As you prepare for retirement, visit the DFAS website(www.dfas.mil/retiredmilitary.html) for information on retirement pay.
For information on the steps to applying for retirement pay, go tohttps://www.dfas.mil/retiredmilitary/apply/how-to-apply.html.

ACCESSING PAY INFORMATION AFTER TRANSITIONAs you prepare to leave Service, it is important to update your personal information
in myPay and payroll accounts or in Direct Access for the Coast Guard. This willallow you to easily access your pay and tax information without your Common
Access Card (CAC).
To ensure access, 30 days prior to transition, log on to myPay using your personal
device. Follow the steps listed below to review your personal information for
accuracy for AFTER transition. If any information is incorrect, it can cause delays inaccess to your W2 or retirement payments.

1. Update your email address••••

Select “Email Address” on the main screen
Under “Personal Email Address,” enter and then re-enter your personal email
address
Select the “Primary” bubble to the right of your newly entered email address
Select “Accept/Submit” to save the change

2. Update your mailing address
Active-duty Army and Navy members contact your respective Personnel or Finance
Office to update your correspondence (mailing) address.
All others• Select “Correspondence Address” on the main menu
• Enter and Save your new correspondence address• Click “Save”
NOTE: Address changes will take 3-7 days to become effective.

Financial Planning for Transition – 2023 - Page 76

3. Update your “Security Questions for Password Resets”•

Select “Security Questions for Password Resets.” Keep in mind that youreight questions and answers will be used should you ever need a new myPay
Password.

4. Review your “Personal Settings Page” for accuracy and outdated

information•

Select “Personal Settings Page.” Remember, you will not have your CAC
after you separate so establish or update your passwords NOW because thisis how you will access your account after you leave Service.

5. Save/Print a copy of all your W2s and LES statements within 13 monthsof separation.
•

Retirees will receive all future tax statements in your account.

6. Review and update your direct deposit information.
•

The account you enter will be used to send any outstanding pay due to you
at separation.

MYPAY FACTS AFTER TRANSITION•

If you are separating from active-duty or the Reserves, you will maintain
access to your myPay account for 13 months.

•

If you are retiring from active duty, you will have continued access with the
Login ID and Password you established on active-duty Service; however,your active component pay statements will only be available for 13 months.
Once your retired pay account is established, the options to manage your pay
and your retiree account statements will become available•

If you are a retiring reservist, you will not have continued, uninterrupted
myPay access. You will be mailed a new myPay password once you reachretirement age and your retired pay account is established

For assistance with myPay contact:
DFAS: http://www.dfas.mil/militaryseparations.html
myPay: https://mypay.dfas.mil/mypay.aspx
Customer Service: 1-888-DFAS411 or 1-888-332-7411
Financial Planning for Transition – 2023 - Page 77

Travel Voucher Status: 1-888-332-7366 (option 1)
Online Customer Service askDFAS: https://www.dfas.mil/dfas/AskDFAS/
NOTE: Military Retirees that are in a non-pay status due to a VA Waiver or Combat
Pay can still access myPay, but will have limited options available.

DIRECT ACCESS FOR COAST GUARD
Direct Access after Transition:
•
•
•

•

Visit U.S. Coast Guard Pay & Personnel Center (PPCs) webpage or
https://www.dcms.uscg.mil/ppc/ras/Enter your 7-digit Employee ID (Emplid) in the User ID fieldIf you have never logged into Direct Access (DA), your default password will
be set up for you initially.
• The formula default password is: THeUSCG + last four digits of yourSSN + @ + four-digit birth year
• For example, if the last 4 of your SSN is 1234 and you were born in
1966, your default password will be THeUSCG1234@1966.
• The password is case sensitive, so be sure to capitalize whereappropriate when you enter it.
You will be prompted to change your password upon your initial login.

Trouble accessing your account:••Call PPC at 1-866-772-8724 to speak to a Customer Service Representative.
E-mail to ppc-dg-customercare@uscg.mil.

Financial Planning for Transition – 2023 - Page 78

Prior to Transition:•

Visit the Self-Service page review and update if necessary:• Mailing address• Phone number (should be a personal number)• Email address (to a personal email)• Delivery options• Password• Federal and State Tax

Financial Planning for Transition – 2023 - Page 79

PRE- AND POST-TRANSITION RESOURCES
If you need assistance creating a spending plan or financial strategy for transition,or if you are having financial difficulties, ASK FOR HELP. If you are retiring, you will
have access to financial assistance on the installation. However, if you areseparating, you will need to understand the resources available off the installation
for after your transition. In addition to the installation financial professionals, there
are other resources for assistance:••••

American Job Centers (AJC)
Non-profit, financial education organizations
Military OneSource
Resources by State

This does not constitute a formal DoD endorsement of any company, its
products, or services.

ACTION PLAN WRAP UP QUESTIONS•••Name one way to increase income, decrease expenses, and decrease
debt. Why is this important during/after transition?
Do you have an alternative plan if the current plan is not effective for a
successful transition?
Where can you seek financial assistance while still in the military? Afteryou transition?

SUMMARY
You now have additional tools and resources to facilitate your successful financialtransition to civilian life. As you get closer to your transition, you may find you
have more questions and concerns about your specific spending plan. Be sure to
make an appointment to see your installation personal financial counselor forassistance.
One of your Career Readiness Standards (CRS) is the completion of the posttransition spending plan. You have already begun the process of creating or
updating a spending plan, and you have a strong foundation of knowledge tocomplete this CRS requirement.

Financial Planning for Transition – 2023 - Page 80

TRANSITION ASSISTANCE PARTICIPANT ASSESSMENT
At the end of each module, you are encouraged to complete an online Participant
Assessment specific to that module. Follow the directions below or see the next
page for more details. The assessment is completely anonymous; demographic
information is not stored and must be reentered for every module.
••••

Access the Participant Assessment at https://www.dodsurveys.mil/tap
Select the box Financial Planning for Transition and complete theassessment by answering all the questions
Information is gathered and analyzed quarterly, and participant feedback isused to make improvements/updates
The Participant Assessment can be completed on your personal mobile device

Thank you for your feedback—your opinion matters to us!

Financial Planning for Transition – 2023 - Page 81

YOUR FEEDBACK IS IMPORTANT
TELL US WHAT YOU THINKThe Transition Assistance Participant Assessment (TAPA) is located at:https://www.dodsurveys.mil/tap
The TAPA is a critical evaluation tool used to gain feedback on TAP, facilities, facilitators,
curriculum, and materials. Feedback is reviewed quarterly and used to make improvements to
TAP. Participant feedback is essential to ensure a quality program.
Assessments are available for the following:
CORE CURRICULUM






Managing Your Transition
MOC Crosswalk
Financial Planning for Transition
VA Benefits and Services
Employment Fundamentals of Career Transition

Examples of curriculum updates madebased on Service member feedback
include:

Provided a list of website resources for each module.



Removed unnecessary or obsolete information.



Added information related to finding purpose,
healthcare, and life insurance after transition.

2-DAY TRACKS

Employment: DOL Employment Workshop
Education: DoD Managing Your Education
Vocational: DOL Career and Credential Exploration
Entrepreneurship: SBA Boots to Business

SCAN THE QR CODE BELOW WITH
THE CAMERA ON YOUR PERSONALDEVICE TO BEGIN THE ASSESSMENT

PLEASE NOTE: Each assessment should be completed at the

Added more hands-on activities and enhanced
content on American Job Center resources, social
media, and resume examples.

end of each module.
 Participation in the assessment is anonymous.
You will be asked to re-enter your backgroundinformation for each assessment (such ascomponent and time until separation).

Appendix
Website Guide
TAP Participant Guides and Spending Plan spreadsheet:https://TAPevents.mil/resources

INCOMERMC Calculator: http://militarypay.defense.gov/Calculators/RMC-Calculator/
Retirement Pay: http://militarypay.defense.gov/Calculators/Active-DutyRetirement/High-36-Calculator/
Taxes: https://smartasset.com/taxes/income-taxes
Retirement Taxes: https://smartasset.com/retirement/retirement-taxes
State Retirement Tax: https://www.military.com/money/personal-finance/statetax-information.html

EXPENSES
Cost of Living Calculators:• https://www.bankrate.com/calculators/savings/moving-cost-of-livingcalculator.aspx• http://www.bestplaces.net/cost-of-living• https://money.cnn.com/calculator/pf/cost-of-living/index.html• https://www.payscale.com/cost-of-living-calculator• https://www.expatistan.com/cost-of-living
Tricare Plan Finder: https://tricare.mil/Plans/PlanFinder
Tricare: www.tricare.mil
Tricare Reserve: http://www.tricare.mil/reserve/
Healthcare.gov: https://www.healthcare.gov
Healthcare for Transitioning Service Members: www.healthcare.gov/Veterans
Healthcare Market Place: https://marketplace.cms.gov
Life Insurance Calculator: https://insurance.va.gov/NeedsCalculator
SGLI/VGLI: http://www.benefits.va.gov/insurance/vgli.asp

DEBTS
Consumer Finance –DTI: https://www.consumerfinance.gov/ask-cfpb/what-is-debtto-income-ratio-why-is-the-43-debt-to-income-ratio-important-en-1791/
Annual Credit Report: https://www.annualcreditreport.com/cra/index.jsp
FICO: https://www.myfico.com/

Financial Planning for Transition – 2023 - Page 82

Federal Trade Commission - Credit:https://www.ftc.gov/business-guidance/creditfinance/credit-loans
FCRA: https://www.ftc.gov/about-ftc
TransUnion: https://www.transunion.com/credit-disputes/dispute-your-credit
Experian: https://www.experian.com/disputes/main.html
Equifax: https://www.equifax.com/personal/credit-report-services/credit-dispute/Federal Trade Commission: www.consumer.ftc.gov
Debt Relief Articles:• https://www.consumer.ftc.gov/articles/0145-settling-credit-card-debt• https://www.consumer.ftc.gov/articles/0084-debt-relief-or-bankruptcy
Consumer Financial Protection Bureau: www.consumerfinance.gov
Consumer Financial Protection Bureau – Know your rights:
https://www.consumerfinance.gov/f/CFPB-Servicemembers-Know-Your-RightsHandout-Debt-Collection.pdf
Military Credit Monitoring: https://equifax.com/personal/military-credit-monitoring/

ASSETS
Retirement Pay: http://militarypay.defense.gov/Pay/Retirement/
Reserve Retirement Pay:
http://militarypay.defense.gov/Pay/Retirement/Reserve.aspx
Legacy Retirement Information: https://militarypay.defense.gov/Pay/Retirement/
BRS Information:
https://militarypay.defense.gov/BlendedRetirement.aspx
TSP: https://www.tsp.gov/making-contributions/contribution-limits
TSP: www.tsp.gov
TSP Withdrawal Options: https://www.tsp.gov/living-in-retirement/withdrawaloptions
TSP Loans: https://www.tsp.gov/new-tsp-features/summary-of-changes/#LoansTSP Online learning: https://www.tsp.gov/online-learning/
SBP Information Websites:• Defense Finance and Accounting Services (DFAS) – SBP:
https://www.dfas.mil/retiredmilitary/provide/sbp.html• DFAS – Spouse Coverage:
https://militarypay.defense.gov/Benefits/Survivor-Benefit-Program/Costsand-Benefits/Spouse-Coverage/• DFAS - Eligible Beneficiaries:
https://www.dfas.mil/retiredmilitary/provide/sbp/coverage.html• Financial Readiness SBP: What is the Survivor Benefit Plan?
https://finred.usalearning.gov/planning/SurvivorBenefitPlan• Military Compensation SBP Overview:https://militarypay.defense.gov/Benefits/Survivor-BenefitProgram/Overview/

Financial Planning for Transition – 2023 - Page 83

Housing Calculators:• https://www.consumerfinance.gov/owning-a-home/• https://finred.usalearning.gov/ToolsAndAddRes/Calculators/Housing• https://finred.usalearning.gov/Benefits/HouseHunting• https://finred.usalearning.gov/ToolsAndAddRes/Calculators/Housing• http://www.knowyouroptions.com/• http://myhome.freddiemac.com/resources/calculators.html
Home Value Estimates: www.zillow.com or https://www.realtor.com/myhome
Car Value Estimates: https://www.nada.com/ or https://www.kbb.com/

ACTION PLAN
Power Pay: https://powerpay.org
CFPB: https://www.consumerfinance.gov/consumer-tools/fraud/
CFPB – How to spot fraud and scams:
https://www.sgbconline.com/assets/files/wu1HjCek/2016/12/21/
CFPB –Avoid fraud: https://www.consumer.ftc.gov/articles/0060-10-things-youcan-do-avoid-fraud
DFAS for Retirement: https://www.dfas.mil/retiredmilitary/
DFAS for Separation: http://www.dfas.mil/militaryseparations.html
MyPay: https://mypay.dfas.mil/mypay.aspx
DFAS Questions: https://www.dfas.mil/dfas/AskDFAS/
Coast Guard – Direct Access: https://www.dcms.uscg.mil/ppc/ras/
MILITARY PROTECTIONS AND CONSUMER AWARENESS RESOURCES
Service members Civil Relief Act (SCRA): https://scra.dmdc.osd.mil/
SCRA and Bankruptcy:
http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/SCRA.aspx
Consumer Financial Protection Bureau: http://www.consumerfinance.gov/
CFPB for Service members: http://www.consumerfinance.gov/servicemembers/
ASSISTANCE PROGRAMS
Navy-Marine Corps Relief Society: http://www.nmcrs.org/
Military One Source: http://www.militaryonesource.mil/
Air Force Aid Society: https://afas.org/
Coast Guard Support: https://www.cgsuprt.com/
Coast Guard Mutual Assistance: http://www.cgmahq.org/
Army Emergency Relief: https://www.armyemergencyrelief.org/

Financial Planning for Transition – 2023 - Page 84

MILITARY FINANCIAL EDUCATION AND COUNSELING RESOURCES
Military One Source: https://www.militaryonesource.mil/financial-legal/personalfinance
Office of Financial Readiness: https://finred.usalearning.gov/
FINANCIAL EDUCATION
FDIC- Money Smart – Financial Education Program:
http://www.fdic.gov/consumers/consumer/moneysmart/index.html
Consumer Protection Basics: http://www.consumer.gov/
Army Financial Readiness Program (FRP): Financial Frontline FinancialFrontline.org
MILITARY-CIVILIAN TRANSITION OFFICE (MCTO)
Transition Assistance Program Participant Assessment:
https://www.dodsurveys.mil/tap
Financial Planning for Transition Participant Guide (fillable PDF):
https://www.TAPevents.mil/Assets/ResourceContent/TAP/Financial_Planning_Transition.pdf
Follow us on LinkedIn: https://www.linkedin.com/showcase/military-civiliantransition-officeFinancial Planning for Transition—Online course: https://TAPevents.mil/courses

Financial Planning for Transition – 2023 - Page 85

Spending Plan
Name:
FINANCIAL GOALS
Short-Term Goals: less than 2 years

Medium-Term Goals: between 2-5 years

Long-Term Goals: over 5 years

Financial Planning for Transition – 2023 - Page 86

INCOME
CURRENT LOCATIONPOTENTIAL LOCATIONSERVICE MEMBER MONTHLY INCOME
CURRENTPROJECTED

City or Zip Code
ENTITLEMENTS
Monthly Base Pay
BAH (Housing)
BAS
OHA
COLA
Special Pay
Hazard Duty Pay
Flight Duty Pay
Foreign Language Pay
Family Separation Allowance
Other Take Home Pay
Military Retirement Pay
Rental Home Income
VA Benefits
Child Support/Alimony

GROSS MONTHLY INCOME$

DEDUCTIONSFITW (Federal Income Tax Withheld)
FICA (Social Security)
FICA (Medicare)State Income Tax
AFRH (Armed Forces Retirement Home)SGLI and T-SGLI
SGLI Family/Spouse
TSP
SDP
Partial Pay
Advance Payments
Montgomery GI Bill
Child Support/Alimony Paid-$

CURRENTPROJECTED

DEDUCTIONS

$

-

$

-

NET MONTHLY INCOME

$

-

$

-

Financial Planning for Transition – 2023 - Page 87

SPOUSE MONTHLY INCOME
CURRENTENTITLEMENTS
Monthly Pay
BAH (Housing)
BAS
OHA
COLA
Special Pay
Hazard Duty Pay
Flight Duty Pay
Foreign Language Pay
Family Separation Allowance
Military Retirement Pay
Rental Home Income
VA Benefits
Child Support/Alimony
Other Take Home Pay/Second Job

SPOUSE GROSS INCOME$

DEDUCTIONSFITW (Federal Income Tax Withheld)
FICA (Social Security)
FICA (Medicare)State Income Tax
AFRH (Armed Forces Retirement Home)SGLI and T-SGLI
SGLI Family/Spouse
TSP
SDP
Partial Pay
Advance Payments
Montgomery GI Bill
Child Support/Alimony Paid

PROJECTED-$

CURRENTPROJECTEDSPOUSE DEDUCTIONS

$

-

$

-

SPOUSE NET INCOME

$

-

$

-

-

$
$
$

-

$
$

MONTHLYGROSS INCOME
DEDUCTIONSNET INCOME
ANNUALGROSS INCOME
NET INCOME

TOTAL INCOME
$
$
$
$
$

CURRENTCURRENTPROJECTEDPROJECTED-

Financial Planning for Transition – 2023 - Page 88

MONTHLY EXPENSES
City or Zip CodeLIVING EXPENSES
HOUSING TOTAL$
Fees/HOA Fees/Pool Fees
Furniture/Decorations
Home Maintenance/Repairs
Taxes

UTILITIES TOTAL

Cable/Satellite
Cell Phone/Phone Cards/Landline
Internet
Electricity
Natural Gas/Propane
Garbage
Water/Sewage

TRANSPORTATION TOTAL

Gasoline
Parking
Taxes/Registration/Licensing
Taxi/Bus/Uber/Lyft/Train
Vehicle Maintenance/Repairs

FOOD TOTAL

Dining out
Groceries
Lunches
Vending Machines

INSURANCE TOTALHEALTHCARE

Auto Insurance
Dental Insurance
Health InsuranceLife Insurance
Renters/Home Insurance

DentalDoctor/Hospital/Urgent Care
Eye CarePrescriptions/Medications

CLOTHING TOTALCHILD CARE TOTAL

Laundry/Dry Cleaning
New Clothing Purchase

Allowance
Child Support
Day Care
Diapers/Wipes/Etc.

CURRENT LOCATIONPOTENTIAL LOCATION0CURRENT

0PROJECTED

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

REMARKS

Financial Planning for Transition – 2023 - Page 89

PET CARE TOTAL

$

-

$

-

PERSONAL TOTAL$
Beauty Shop/Barber Shop/Salon
Health Club/Organizational Dues
Nails/Massage/Personal Grooming
Personal Spending Fund
Personal Supplies
Tobacco/Alcohol

-

$

-

EDUCATION TOTAL

$

-

$

-

LEISURE/HOBBIES/ENTERTAINMENT TOTAL$
Athletic Events/Sporting Events
Books/Magazines
Computer Products
Concerts/Theater
DVDs & CDs
Movie/Music Downloads
Streaming Services
Toys/Games
Travel/Lodging

-

$

-

CONTRIBUTIONS TOTAL

$

-

$

-

$

-

$

-

MISCELLANEOUS TOTAL

$

-

$

-

GRAND TOTAL

$

-

$

-

Food/Supplies
Prescriptions/Medications
Veterinarian/Grooming/Boarding

GIFTS TOTAL

Books/Supplies
Educational Materials
Lessons/Tutor

Charities
Religious Donations

Holiday/Birthday/Anniversary

ATM Fees/Bank Fees
Deployment/TAD Expenses
Membership Fees

Financial Planning for Transition – 2023 - Page 90

DEBT
CURRENT LOCATIONPOTENTIAL LOCATION

00City or Zip Code
HOUSING CREDITORCURRENT MONTHLY PAYMENTCURRENT BALANCEPROJECTED MONTHLY PAYMENTREMARKS(MONTHS BEHIND, PAID BY
ALLOTMENT, ETC.)PROJECTED TOTAL COST

Rent/Primary Home Mortgage
Secondary Home Mortgage
Rental Property
Other (Vacation Home/Trailer/Time Share)
TOTAL $CREDITORPURPOSE-$CURRENT MONTHLY PAYMENTTOTAL $--$CURRENT BALANCE

$

-

$

PROJECTED MONTHLY PAYMENT

-

$

-

REMARKS(MONTHS BEHIND, PAID BY
ALLOTMENT, ETC.)PROJECTED TOTAL COST$-

DEBT TO INCOME RATIO CALCULATIONSCity or Zip Code

CURRENT LOCATIONPOTENTIAL LOCATION

00

REMARKS

Total Gross Monthly Income

$

-

$

-

Total Monthly Debt Payments

$

-

$

-

DEBT-TO-INCOME RATIO

0.00%

0.00%

TOTAL DEBT$$
(Debt-to-Income Ratio equals total monthly debt payments divided by gross income and multiplied by 100.)

Financial Planning for Transition – 2023 - Page 91

ASSETS, LIABILITIES, AND NET WORTH
CURRENT LOCATIONSAVINGSASSETS

City or Zip CodeCash on Hand
Checking Accounts
Savings Accounts
Emergency Savings
TSP
Certificates of Deposit (CDs)
Cash Value of Life Insurance
U.S. Savings Bonds
Money Market Accounts
Mutual Funds
Stocks/Bonds
College Funds
401(k)/403(b)IRA/Pensions

REAL ESTATE (MARKET VALUE)$0CURRENT-$-PERSONAL PROPERTY$
Vehicles/Motorcycles/Boats
Furniture
Jewelry-

TOTAL ASSETS-

Primary Home
Secondary Home
Rental Property

TOTAL DEBT$
LIABILITIESNET WORTH (ASSETS - LIABILITIES)$$CURRENTCURRENT--REMARKSREMARKSREMARKS

Financial Planning for Transition – 2023 - Page 92

SUMMARYMonthly

Gross Income
NET Income
Living Expenses
Debt Payments
MONTHLY SURPLUS OR DEFICIT
DEBT-TO-INCOME RATIOCity or Zip Code

CURRENT LOCATIONPOTENTIAL LOCATION

0

0

$
$
$
$
$

$
$
$
$
$
0.00%

0.00%

ACTION PLAN
INCREASE INCOME

DECREASE LIVING EXPENSES

DECREASE DEBT

Financial Planning for Transition – 2023 - Page 93