When military life is over, there can be so many changes going on. The service member will have to find a new job, and they might move somewhere else. A spouse who has been staying home with the kids the last few years might go out and get a job.
There are a lot of unknowns with the ETS process and moving on to another career. How much will your budget need to change? How much more money do you need to make to keep up your current standard of living?
Note: All figures and amounts used in this article are averages and might not reflect the reality of every situation. They are being used to show an example of the difference in costs associated with raising a family both in the military and outside of it.
What You Will Have to Pay For After Leaving the Military
Joe Smith joined the Army when he was 20 years old, he and his wife got married at 22, and they have three children, Abby, 7, Maddie, 6, and Tyler, 3. Now at age 30, Joe has decided to ETS and move on from his Army career and find a civilian job. After 10 years in the Infantry, Joe will be looking for a job in Lexington, KY, about four hours from their last duty station of Fort Campbell, KY. His wife, Sara, is going to be working as a receptionist at a local tile company, which is owned by her cousin.
Sara will be bringing in about $2,000 a month after taxes. They are trying to figure out how much Joe would have to make to live a similar life in Lexington, to be closer to their family.
When Joe was active duty, he brought home about $5,000 a month including BAH and BAS when he was not deployed. In order to bring in the same amount between the two of them, he would have to bring home at least $3,000 a month in any job he found, but will that $5,000 go as far?
Where you live is going to be one of the most significant changes when you get out of the military. If you live on post or base, you will have to move off, even if you plan to stay in the area. You will no longer receive BAH and will have to account for that. BAH can be a big part of your paycheck and losing that money is something you need to be prepared for. BAH can be as low as about $600 and up to even $3,000 in some high cost living areas.
Joe and Sara were receiving $1380 a month in BAH near Fort Campbell. Their rent was $1150 a month on a cute three bedroom about 15 minutes from post. They were able to find a comparable rental in Lexington for $1250 a month.
After being on TRICARE, you will have to pay more for medical insurance with most other benefit plans. Even if you join the National Guard or Reserves, you will need to get used to a monthly fee of about $221. If you are used to being on TRICARE Prime and paying very little for your medical care, you need to prepare for more medical costs after you ETS or after any transitional insurance you receive from the military ends.
The National Conference of State Legislatures states that the average cost of annual employer-sponsored health insurance premiums was $16,351 in 2013, with workers paying an average of $4,565 of the cost. This is about $380 out of pocket each month for a family. As the Smith family was on TRICARE Prime, they would not be used to paying anything a month for health care, and this would have to be added to their budget.
“Tax-free” Combat Pay
A soldier making $60,000 a year during a deployment is going to pay less in taxes than someone making $60,000 in a civilian job. Being that when you are deployed your combat pay is not taxed, this could be a big difference. When you are looking for a job, you have to keep this in mind. You could find a civilian job that pays the same as what you made in the military, but if you do not account for extra taxes, you could get frustrated with your new pay.
When Joe deployed in 2015 as an E-5, he was bringing in about $57,000 a year, which was tax-free for 9 months of that year. Only about $12,000 of their income for the year was taxed. If he and his wife were able to bring in $57,000 a year post Army, all of that would be taxable income.
Once your Commissary benefit ends, you will lose savings by shopping there. For some, this could be more of a hardship depending on how much you depended on shopping at the Commissary as well as how much you saved by doing so. Your food budget might have to go up, and that is something you will need to think about when planning for your life after the military.
According to the Official USDA Food Plans for January 2018, the average monthly cost of a moderate-spending food budget was $885.20 for a family of four, higher with older children. The Smiths were spending about $600 a month by shopping mostly at the Commissary at Fort Campbell. As they move to Lexington, they will have to spend more to be able to keep up as they no longer have access to the Commissary.
The military will pay for you to move but that doesn’t mean you won’t have moving expenses. Anything from having to eat out more than usual to having to replace items in your new home. In addition to that, the military could move you and then you may find that you do have to move again within a few months.
You might not know where you want to be long-term when it comes time to ETS. Moving again will be on your dime, and that is something you also have to budget for. The Smiths are hoping to have the Army move them back to their home of record, into a rental house without a lot of trouble. They are aware of extra costs that might come up and have some savings for that.
Time to Find a New Job
Finding a job while you are still in the military is a good idea. However, even if you do, that job might not always pan out the way you think the job will. Sometimes finding a job after ETSing can take time and you might not find one before you get out. Having good savings will help you as you try to navigate your new career.
Joe isn’t sure what he is going to do for a job, but with six months until his ETS date he has put in quite a few applications. Luckily they have been able to save about $5,000 to have on hand if he is unable to find a job in time before they make their move.
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If your spouse is going to return to work, you will need to think about childcare costs. If you have been using on post or base care, you might have to pay more when with another childcare provider.
The National average weekly rates for childcare in 2016 for a daycare was about $211, a nanny would be over twice that amount. The Smiths know that they would have to find childcare for the children for after school, so they are hoping to stay under about $500 a month for that, but that is an expense they did not have before. If they had an infant, they would need to plan on paying at least $500 for only one kid. They also will need to plan for summer care which can be a lot more expensive than after school care.
If you are used to a very short commute while in the military, you might need to budget for a longer one once you get out. If you came home for lunch every day and won’t be able to do so with your new job, that is something else to think about.
Joe didn’t usually come home for lunch as the Smiths lived about 15 minutes from post at Fort Campbell, and they are hoping for a similar commute once they move to Lexington. If Joe has to commute a longer distance, that will add up in additional costs for gas as well as wear and tear on their cars.
While in the military, you wear a uniform and receive a yearly uniform allowance. You could end up with a civilian job where you no longer have a uniform and won’t be getting an allowance for clothes anymore. While this isn’t usually a big expense, it is something to put into your “new after the military” budget.
Putting even $50 a month aside for work clothing is a good idea. Sara will need to invest in some nicer clothes to wear to work, and Joe is planning to do the same depending on what type of job he can find.
As Joe and Sara sit down to compare their current Army budget with a potential civilian one, they realize that they will have to make a bit more money in the civilian world if they wanted to keep up their standard of living. As they look at the numbers, they see that what cost them about $1,900 during Army life would be about $3,350 in civilian life and this is something they need to keep in mind as Joe tries to decide what he will do after his Army career is over.
If you have not left active duty yet, now is the time to prepare for your life post-ETS. There will be many changes, and your budget will need to be redone. Keep these factors in mind when planning for the future.