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Know Before You Go
Transitioning Out

- As of January 2020 -

Whether you and your family served 4 years or 20+, thank you for raising your hand and serving our country!  According to the Veterans Affairs office, about 200,000 service members transition back into civilian life every year.  Transitioning out of the military can be full of stress and unknowns.  We reached out to recently separated and retired community members to ask them what they wish they knew before and during their transition out.  We hope this helps you as you prepare for the next chapter of your life! 

If have more questions, please feel free to reach out to our team!  


Our Top 6 Topics


1. Transition Assistance Program (TAP)

The Breakdown:

  • "The Transition Assistance Program (TAP) provides information and training to ensure Service members leaving Active Duty are prepared for their next step in life whether pursuing additional education, finding a job in the public or private sector, or starting their own business." (TAP Homepage)

  • The Veterans Opportunity to Work and Hire Heroes Act of 2011 (VOW Act) requires service members separating from the military to attend the Transition Assistance Program (TAP).  

  • In 2013, the U.S. Department of Defense launched a TAP virtual curriculum through their Joint Knowledge Online (JKO) learning management system.  

  • Effective 1 Oct 2019, all Service members transitioning from the military must complete a Congressionally Mandated Initial Self-Assessment or Initial Counseling (IC) within two years of retiring, within 18 months of separating, and not less than 365-days prior of official retirement or separation date

  • Military spouses are highly encouraged to attend TAP with their transitioning Service member.


Here are the Service Specific TAP Pages

What Members Wish to Stress: Take It as Many Times as You Need To!

You're allowed to take the TAP class as many times as you want. Take it early on, 6 months out, to get resume tips, job finding leads, and more.  Take it again when you're about a month or two out as a refresher.  There is a lot of info that you'll want that refresher later on


2. Finances

The Breakdown:

  1. Officer Retirement in Grade

    • For an Active Duty Officer to retire in a grade of O-4 or lower, they must have served at least 6 months in that grade​​

    • For an Active Duty Officer to retire in a grade of O-5 or higher, they must have served at least 3 years in that grade​​

  2. Last Paycheck

    • Can be on hold for up to 20 days past your normal pay date (as the service audits your account)​

  3. Taxes​

    • Several sates waive state-income taxes for active duty military.  After retirement, you need to be aware if your current or new state of residency taxes retired military income.  You may have to manually calculate how much you owe to said state for the amount of time you left active duty or changed residency.

      • Example: An AD member declared Alaska residency while in service (no state income taxes). Upon retirement on August 31st, they settled in Maryland and changed residency (state taxes retired income).  That member will have to pay Maryland state income tax for September-December of that year.

  4. Insurance​

    • Premium for Dental & Vision Insurance through benefeds ​is required to come out of your retirement check

  5. Retirement Program

    • Active Duty can retire after serving 20 years of service​

    • National Guard & Reserve members can retire after completing a minimum of 20 "qualifying" years of service (creditable retirement years) become eligible for retired pay at age 60.  A qualifying year is a year in which the member earns at least 50 retirement points

    • Final Pay

      • For members entered before Sep 8, 1980

      • To calculate: Multiply the basic monthly pay for your retired grade at the time of retirement by the years of creditable active federal service at the rate of 2.5% for each whole year of service

      • You get 50% for 20 years of service up to a maximum of 75%

        • 20yrs x $5,000 x .025 = $2.500​

    • High 36

      • For members entered September 8, 1980 and July 31, 1986

      • To calculate: Number of years you serve X Average of your highest 36 months of basic pay X 2.5% (20yrs x $5,000 x .025 = $2,500/month)

      • 20 years x 2.5% =  50% of base pay | 30+ years = 75% 

    • Blended (BRS)

      • Effective for a all new members after January 1, 2018.​

        • Was effective for past members to "Opt In" from Jan 1, 2018 - Dec 31, 2018​​

      • The Why: 83% of people who join the military don't stay long enough to retire. Without the blended program, those members leave with 0 government sponsored financial benefits​

      • To calculate the pension: Number of years you serve X Average of your highest 36 months of pay X 2.0% (20yrs x $5,000 x .02 = $2,200/month)

        • 20 years x 2.0% = 40% of base pay | 30 years = 60%​

        • BRS pension is also available right after military retirement

      • TSP Matching Contributions: 

        • After 60 days of service

          • Member automatically enrolled to contribute 3% of their basic pay to the TSP each month (You can change or stop this at any time)

          • Member automatically receive 1% government contribution of basic pay to member's TSP account

        • After 2 years of service:

          • The government will match the member's contributions up to an additional 4% on top of the automatic 1% (100% match of first 3% & 50% match up to 5%)

            • You contribute 3% + 1% auto + 3% matching = 7% Total​

              • With a $2,000/month basic pay = $60+$20+$60 =$140/month​ ($80 match)

            • You contribute 5% + 1 % auto + 4% matching = 10% Total

              • With a $2,000/month basic pay = $100+$20+​$80 = $200/month ($100 match)

        • *Note* Even if you elect a Roth TSP for your contributions, all government contributions are always Traditional (Tax-Deferred) TSP funds

        • Matching ends after 26 years of service

        • Age 60 = When you can start withdrawing from your TSP without 10% penalty

      • Continuation Pay Bonus(Taxed)

        • A taxed financial bonus incentive available after about 12 years of active service​

        • Requires a 4 year active duty service commitment 

        • Each service offers a different rate, but the average has been 2.5x (multiplier) of your monthly basic pay at 12 years

          • An active component E-6 at 12 years of service (YOS) ​($3,874/m) 'get' a $9,685 bonus pre-tax, just under $7.3k assuming a 25% tax

          • An active component O-4 at 12 YOS ($7,831/m) would 'get' a $19,577 bonus pre-tax, just under $15k assuming a 25% tax

      • Lump Sum Option (Taxed)

        • Instead of the standard monthly retirement payments, you can take a lump-sum payment of either 25% or 50% of your gross estimated retired pay and discount further payments

        • With a 25% lump-sum payment, your monthly retirement pay will be 75% of the normal full retirement pay.

        • With a 50% lump-sum, it will be 50% of the normal retirement pay

        • *Note*lump-sum payment is discounted by an amount that changes every year (6.75% for 2020) So, if your total retirement packet is $100,000 (25% lump sum option) you would only receive $93,250​

        • Overall, you will lose out on a considerable amount of your pension with the lump sum option - but it does exist if you need a large amount of cash fast

        • At age 67 your retirement pay goes back up to the full amount.


What Members Wish to Stress:

  • Be aware of your new civilian state income taxes after getting out!

  • Be aware of jumping up a tax bracket if you take the lump sum!


3. Medical

The Breakdown:

  1. Standard Separation (From the TRICARE Site)

    • To qualify for the 180 days of premium-free health care through the Transitional Assistance Management Program (TAMP) you must be eligible.  TAMP eligibility is determined by the Services and documented in the Defense Enrollment Eligibility Reporting System (DEERS).  TAMP eligibility can be viewed online via MilConnect.

      • Involuntarily separating from active duty under honorable conditions including:

        • Members who receive a voluntary separation incentive (VSI), or

        • Members who receive voluntary separation pay (VSP) and aren't entitled to retired or retainer pay upon separation.

      • A National Guard or Reserve member separating from a period of more than 30 consecutive days of active duty served for a preplanned mission or in support of a contingency operation.

      • Separating from active duty following involuntary retention (stop-loss) in support of a contingency operation

      • Separating from active duty following a voluntary agreement to stay on active duty for less than one year in support of a contingency operation

      • Receiving a sole survivorship discharge

      • Separating from regular active duty service and agree to become a member of the Selected Reserve of a Reserve Component. The Service member must become a Selected Reservist the day immediately following release from regular active duty service to qualify.

    • During TAMP, sponsors and family members are eligible to use one of the following health plan options in addition to military hospitals and clinics:

      • TRICARE Prime (where locally available, enrollment required)

      • TRICARE Select 

      • US Family Health Plan (if you live in a designated location; enrollment required)

      • TRICARE Prime Overseas (enrollment required)

      • TRICARE Select Overseas 

    • Continued Health Care Benefit Program (CHCBP) is a premium-based health plan managed by Humana Military. CHCBP offers health coverage for 18 to 36 months after TRICARE or TAMP coverage ends. The coverage is like TRICARE Select with similar benefits, providers, and program rules. If you qualify, you can purchase CHCBP coverage within 60 days of losing TRICARE or TAMP coverage, whichever is later

  2. Standard Retirement 

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  3. Medical Separation/Retirement

    • Governed by: DoD Directive 1332.18 | DoD Instruction 1332.38 | DoD Instruction 1332.39

    • A member can voluntarily present themselves at a Medical Treatment Facility (MTF) for medical care or a commander can refer the member to the MTF​ for a mandatory medical examination when they believe the member is unable to perform their required duties

    • The initial MTF examination would recommend a Medical Evaluation Board (MEB), which if determines a serious medical condition making the member unfit for military service, refers the member to the Physical Evaluation Board (PEB).  The PEB provides the formal 'fit-for-duty' or disability (0-100%) determination and recommends one of the following choices:

      • Return member to duty with or without medical re-training/job limitations

      • Place on Temporary Disabled/Retired List (TDRL)

        • Disability is not 'stable'

        • Member is unfit for duty and entitled to permanent disability (see medically retire section below) but must undergo a periodic medical re-examination within 18 months and another follow on PEB eval.​

        • TDRL maximum tenure = 5 years.

          • Member can be retained for full 5 years with periodic examinations or a final determination is made​

      • Separate member (Assuming less than 20 years)

        • Without Benefits​

          • Member has less than 8 years of active service and the disability existed prior to service and was not worsened by military duties

        • With Severance Pay (2 months basic pay for each year of service, no more than 24 months)

          • Member has more than 8 years of active service (Applies to pre-existing/hereditary condition) - or - 

          • Less than 30% service connected disability 

      • Medically retire member

        • Member is unfit for duty with at least 30% service connected disability ​

        • Compensation is the higher of the following: 

          • Disability% x Retired pay base​ (High-36 or BRS)

          • 2.5 x YOS x Retired pay base

  4. Insurance​

    • Premium for Dental & Vision Insurance through benefeds ​


What Members Wish to Stress: Be Honest with Your Pains Early!

Set up a medical appointment at least a year out for a doctor to check out anything bothering you that you've been gutting through.  Things like that need to be on your medical record PRIOR to your final physical.  Have follow up appointment for those same issues as well. This is important to prove 'degradation' of your injuries while on active duty.  Schedule your separation physical early.


4. Terminal Leave/PTDY

The Breakdown:

  • You can bank up to 60 days of leave to use as terminal leave

  • You can sell back the leave, but at _% rate (Not worth it)

  • You still accrue your 2.5 days a month of leave while on terminal 

  • Retirees are entitled 20 days of PTDY for transition time (30 for OCONUS)


What Members Wish to Stress: Yes, You are Allowed to Work While On Terminal!

Retired members can 'double dip' working as a contractor while on terminal leave


5. Final PCS

The Breakdown:

  • Uncle Sam wil pay for 1 separation/retirement 'PCS' type of moving expense trip to the location of your choice

  • Overseas


What Members Wish to Stress: You have 12 months to decide!

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6. Skillbridge Program

The Breakdown:

The DoD SkillBridge program allows you to use the last 180 days of active service (with pay & medical benefits) to gain industry training, apprenticeships, or internships directly with certified industry partners


What Members Wish to Stress: You Can Set Up a Connection with a Company Not On the List if They are Willing to Sponsor You!

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Also, a few podcasts that we enjoy are:

Veteran on the Move: Empowering Veterans Through Entrepreneurship


Borne the Battle: Sponsored by the Dept of Veteran Affairs


Mentors for Military


DROP and Give Me 20

*Written in coordination with Michael, Marine Corps Veteran*

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