Are you getting out of the military soon? Think carefully about your last move. Regulations change and each service has different rules, but per the Defense Finance and Accounting Service (DFAS), military service members separating or retiring from active duty are entitled to reimbursement of relocation expenses. You can save significant money if you have the military pay for the move to your desired location.
Factors for Relocation
Remember the saying “Location, Location, Location!” A move is expensive and you want to get it right the first time. It can be challenging and very costly to make a secondary move on your own dime. During your military transitions, carefully study your future location. There are some very important factors to consider when selecting your separation or retirement location. Let’s review some of the biggies:
- Job Environment – This is probably the most critical element when selecting your separation destination or retirement location. There are a great many things to consider, many of which you may have already looked at. Have you studied the unemployment rate? Have you looked at the volume of defense contracts? How many civil servant or government related jobs exist in the local area? Many times, federal jobs require military skills. Are there veteran-owned businesses in the area? If you are looking at civil service, have you studied the locality pay for your desired region?
- Physical Environment – There are many factors to consider. Have you looked at the climate as it relates to your health, hobbies and personal activities? Do you need or desire to be near a military base so you can use the commissary, exchange and other facilities? Do you still seek the excitement of living overseas? Are you looking for a rural or urban life experience? Are you looking for a military friendly community? Do you have a desire to live in a conservative region? Do you need VA healthcare or others services from a VA Hospital? Have you considered the quality of the schools/educational system? What about colleges and universities for yourself, spouse and kids? Finally, do you have the need to live near extended family for their benefit?
- Affordability – Let’s face it, we all need to be able to stretch a dollar. Some areas of the country have double the cost of living. Have you considered the cost of a home? Have you looked at state and local taxes? How about transportation costs? Is your military retirement pay going to be taxed?
A couple of quick examples are in order. After leaving the service, a friend took a high-paid defense contractor position. He received a $42K uplift in wages over his military pay and $5k signing bonus. But with a family, he needed medical insurance and his new company’s plan was expensive, with high deductibles. Accustomed to paying neither, he was now paying both city and state tax; while simultaneously being forced into a higher federal tax bracket. Housing was more expensive; his commute was 50 minutes longer each day and he had to pay to park. Bottom line, despite a very nice salary bump, my friend ended up in a challenging financial situation.
When a Pay Cut Pays Off
A Marines Corps friend took a huge cut in pay for his transitional job. Turns out he was crazy like a fox. His job was close to home, saving 40 miles travel each day, reducing tolls, fuel, and maintenance cost; while recovering 75 minutes from his commute. His dental coverage for his son’s braces was almost exhausted. With the new job, he received a new dental plan, paying the remaining orthodontic bill. Within two years he was making more money than in the service and with his 401k match, his total compensation was higher.
It is expensive to not consider all the factors when deciding your desired separation or retirement location. Higher pay with a costlier commute or relocation may tip the scales against an otherwise ideal position.
Wishing you a lucrative transition.
