Your separation date from the military is a time that you should look forward to because you’ve earned it. It’s the end of a significant chapter in your life and a period of proud service to our country. Unfortunately, for far too many of us, it’s also a looming date on the wall that represents Day 1 of our unemployment.

The financial situation you create for yourself during your military service can either be your greatest ally during your transition or your kryptonite. It is the determining factor in whether you can take your time and find a career that is the best fit for you and your family, allow you to retire for real and ride off into the sunset, or it can put you in a situation where you’ll have to find immediate employment. The latter typically leads to a cycle of taking a job out of desperation, followed by dissatisfaction, quitting, unemployment, and more job seeking.

Waiting until the last minute is a strategy that doesn’t work with financial planning. The earlier you start, the better situated you and your family will be when you are ready to take of the uniform for the last time. Here are some thoughts and suggestions for getting on the right track while you still have time.

First, a bit of reality….

Let’s assume you retire at 20 years of service (using the High-3, not the new Blended Retirement System). Although your pension will be 50 percent of your base pay (2.5 percent for every year of service), this is far less than half of your total active duty pay and benefits. Tax-free BAH and other special pay and incentives can make up a significant amount of your paycheck, but all this disappears when you are off the rolls. Same goes for state tax implications. If you’ve been a legal resident of a state with no income tax during your service and you decide to settle down in a state that taxes military retirement, that’s an additional hit on your wallet. Add all this up and your “50 percent” pension will be closer to 33 percent of what you were used to getting.

Another reality: most of us live up to our income level. Take an honest look at how much money is left from your paycheck every month after your bills are paid. If you barely have a dime left from a full military paycheck after paying a mortgage, a couple of car loans, credit card bills, or tuition for a kid or two in college, then imagine what a 2/3 slash in your income is going to do to your standard of living. Things will be even worse if you are living beyond your means and running up debt every month.

A popular Chinese proverb says “the best time to plant a tree is 20 years ago. The second-best time is now.” Start early by putting part of each paycheck in the TSP, an IRA, or other form of investment (set up an allotment or auto-draft). Put some money away for emergencies and to help you get by a few months after you separate in case your job hunt takes you longer than expected (recommend saving 3 months’ worth of pay minimum). These should be funds you can easily liquidate, not money you have tied up in tax sheltered investments or real estate.

Work a budget for you and your family that prioritizes spending what is left after saving vs. saving what is left after spending. Live beneath your means and don’t try to keep up with your friends and neighbors that are blowing their money on ridiculous things. Try to stay out of debt and avoid any large purchases as you get closer to your separation date.

During your contingency planning, make sure your family is covered with private life insurance in case the unthinkable happens. SGLI covers you until 120 days after you separate, but it is in your best interest to plan for this well in advance of filing a VA disability claim. A high disability rating can make private insurance rates skyrocket or make you uninsurable. Get private life insurance while it is still cheap.

Don’t count on a disability check from the VA when you are factoring in everything for planning. This could vary from zero to several thousand dollars depending on your rating, but you won’t know your rating determination until weeks or months after you are off the rolls.

If you don’t feel comfortable doing these things on your own, seek out a professional financial advisor to help with this as well as navigating tax planning, setting up a will/trust and other ways to protect your assets. Make sure you involve your spouse and family in your planning process — this is a team sport.

Expert Level: Have a side hustle or two. Multiple income streams not only provide you additional layers of financial security and a higher standard of living, but you might be able to convert one of those into your next career. To quote Warren Buffett: “If you don’t find a way to make money while you sleep, you will work until you die.”

The last thing you need during transition is to have more anchors weighing you down when you already have the stress of dealing with a full plate of tasks like out processing, moving, finding your next career, and still performing your duties at work. Don’t let financial worries be one of them.

Kirk Windmueller is a retired Green Beret and Army veteran with over 22 years of service. He is a senior manager at Avantus Federal and a volunteer for Project Transition USA, a non-profit organization that teaches veterans how to use LinkedIn to network and find their next career. He lives in Fayetteville, NC, with his wife and three kids.

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