Military Drawdown – How to Prepare for Involuntary Separation

The military has gone through several periods of force reductions through the years as they adapt to the new realities of budget constraints, the drawdown of troops stationed in overseas locations, and the changing face of present-day warfare. None of the branches escaped the cuts, though some were hit harder than others. For example, the…
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The military has gone through several periods of force reductions through the years as they adapt to the new realities of budget constraints, the drawdown of troops stationed in overseas locations, and the changing face of present-day warfare. None of the branches escaped the cuts, though some were hit harder than others. For example, the Army lost 50,000 active duty troops over a 5-year period. The majority of the troops were scheduled to leave the service through retirement and normal attrition, but there were thousands who were subjected to voluntary and involuntary separations.

Troop reductions aren’t a big event if you were already planning on retiring or separating from the service. But they can be a major curve ball if you were planning on making the military a career or weren’t sure what your long-term plans were.

This news can be stressful and make you ask a few important questions: Are you prepared to leave the service? What if you are involuntarily separated?

Unfortunately, there are no guarantees, and the military can cut your seemingly “safe” job at a moment’s notice. You should also be aware that once these plans go into place, they can happen quickly. The last thing you want to happen is to receive a force reduction notice when you were planning on making the military your career.

Prepare for a Troop Reduction – Just in Case

Here are some things you and your family can do to prepare for the Army troop reductions:

Get up to date information. Don’t fall asleep at the wheel – you need to do everything in your power to educate yourself about the impending troop cuts. Will they be in your career field? What about your rank? If you are in an overstaffed career field, consider cross-training or applying for special duty assignments to make you more attractive if your profile appears in front of a force reduction board.

Communicate. Communication is the most important aspect of personal finances, especially when you share financial responsibilities with a spouse. Keep your spouse up to date with what is going on with your career, the force reduction efforts, and how it might impact your position with the military. These may be tough conversations, but they are much easier to have in the advanced stages of the force reduction process than they are after you have been selected for involuntary separation.

Examine your options inside and outside of the service. The USAF went through a force reduction process while I was in the service. It didn’t affect my career field or pay-grade, but I knew quite a few Airmen who were given the option to either cross-train or separate from the service. You will need to look at your civilian career opportunities and compare them to opportunities currently available to you. Take some time to consider your skills, your civilian job prospects, and the state of the economy before making the leap.

Consider the Guard or Reserves. You might also consider switching over to the National Guard or Reserves. You may also be able to transfer into the Guard/Reserves from a sister service. Most Guard and Reserve branches will welcome members from sister services with a minimum of additional training (usually just the tech school for the job to which you are applying).

Brush up on your skills. Now is the best time to start padding your resume. Make sure your training is up to date and take advantage of any military training or educational opportunities which come your way. You may also consider working online or night classes into your schedule, or working toward professional certifications which you may be able to use on the outside. Tuition Assistance may help pay for some or all of these courses.

Helpful Resources:

Understand How an Involuntary or Voluntary Separation will Impact You

The military uses several tools for reducing their numbers, including voluntary and involuntary separations, and sometimes early retirement offers through a program called the Temporary Early Retirement Authority (TERA). There are pros and cons to early retirement through TERA. The benefit is you are a full-retiree, with your military retirement pay, health care benefits, and all other benefits associated with being a retired military member. The downside is retiring early results in a reduced pension multiplier, resulting in a lower paycheck than you otherwise would have earned at full retirement. That said, it’s much better than getting shown the door with only an involuntary separation payment.

Voluntary and involuntary separations may earn the member a one-time cash payment based on their rank and years of service. You can learn more in our involuntary separation pay guide. One item of note: voluntary and involuntary separation pay is intended to be a one-time cash bonus since the member was not eligible to remain in the military long enough to earn military retirement pay. You will have to repay the separation pay if you later rejoin the military and remain in the service long enough to reach retirement (active duty, or in the Guard / Reserves). You will also have to repay the separation pay if you are awarded a VA disability rating and subsequent compensation. (Sorry, both of these are baked into the law).

Prepare for Unemployment – Just in Case

I was unemployed for 6 months after I separated from the USAF. It was difficult, but I had one advantage over many people in the unemployment line: I was prepared for it, at least financially. Transitioning from the military was an emotional challenge, and is something many people don’t talk about.

Knowing that you are going to lose your job gives you an advantage and gives you time to prepare. Before you get out of the service, contact the state employment bureau where you plan on living after you separate from the military. In most cases, non-retired military members are eligible for unemployment benefits. There are some exceptions, so be prepared for this – you should know your eligibility and how to file for unemployment benefits before you leave the service. You don’t want to wait as it could delay your benefits.

Consider the financial impact. Separating from the military is a big deal – you have a steady paycheck with perhaps the best benefit system in the US. Don’t underestimate the impact of losing your health insurance and other benefits. The next most important area to focus on is to reduce your fixed expenses. This could be from getting out of debt, cutting expenses like cable or other subscriptions, refinancing a mortgage or other loan, or selling a car or other item which has remaining payments. Reducing your fixed expenses gives you more financial flexibility when you no longer have a job.

Consider the emotional impact. One of the most difficult experiences I faced when I separated from the USAF was going from a role of responsibility to the unemployment line. It’s tough going from a respected shift leader who makes important decisions on a daily basis, to someone who is standing in line behind dozens of other people who are looking for work. It took me 6 months to find a job, and it was a difficult period.

Know your benefits. Before you separate, make sure you know which benefits you are eligible for. This could include things such as the GI Bill and VA Loan, or it could include things such as a pension, TRICARE, disability benefits, and more. Take good notes in your Transition Assistance Program (TAP) and set up a meeting with the VA if you have medical issues you feel need to be addressed. It is always better to get as much done as possible before leaving active duty military service.

Do you have other tips for troops facing a drawdown?

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About Ryan Guina

Ryan Guina is The Military Wallet's founder. He is a writer, small business owner, and entrepreneur. He served over six years on active duty in the USAF and is a current member of the Illinois Air National Guard.

Ryan started The Military Wallet in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about personal finance and investing at Cash Money Life.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free Personal Capital account here.

Featured In: Ryan's writing has been featured in the following publications: Forbes, Military.com, US News & World Report, Yahoo Finance, Reserve & National Guard Magazine (print and online editions), Military Influencer Magazine, Cash Money Life, The Military Guide, USAA, Go Banking Rates, and many other publications.

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