When Should You Exit the Military?

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When should you exit the military?

Some people enter the military planning to serve their country for 20 or 30 years. Others join without a clue what the future looks like but just want to leave their hometown and see the world. One way or another, you will eventually have to exit the military…but when?

No matter what your plan looked like when you joined the military, “shit happens.” People who planned to retire from the military become disenchanted or get medically retired, and people who planned on serving one 4-year term discover that the military is their calling and serve for 20-plus years. 

There is nothing wrong with any of the above plans, or lack thereof, and exit timelines. Ultimately, the decision to reenlist or exit the military is one that you will have to make several times throughout your career. Some of these decisions will be a no-brainer, and others will be a constant back and forth with yourself all the way until the day you have to make a decision.

Personally, I joined the military because I didn’t know what I wanted to study at college, I didn’t have money for college, and I wanted to leave Arkansas. Originally, I planned to serve four years and then reevaluate whether to stay in or exit the military and go to college. 

As the time for reenlisting grew closer, I knew for sure that I would be reenlisting. The first four years I served in the military were full of travel, adventure, and an incredible sense of purpose. You could not have convinced me to exit the military for any reason. 

By the time I reenlisted a second time, I was nearing the end of recruiting duty and couldn’t wait to get back to the “fleet” (normal operational forces). While I was on recruiting duty, combat deployments slowed to a stop. By the time I returned to the fleet, units were conducting a lot less deployment-related training and a lot more administrative training, or maintenance. Couple this with a few promotions, and I was not much more than a good-looking desk-jockey. 

Needless to say, the third time I had to decide whether or not to reenlist was not easy. I wrestled with the decision for months and even filled a full page writing out pros/cons to help make the decision. Ultimately, I decided to reenlist, hoping that it would be more like the first enlistment I had served. Unfortunately, that was not the case. 

Within a year of reenlisting that third time, I had started www.frommilitarytomillionaire.com and was once again torn between exiting the military or “gutting it out” until retirement. This decision was tough because I would be exiting the military after 13 years of service and only have 7 years to go, which means I was so close but yet so far away from retiring. 

Luckily, I was able to have multiple conversations with The Military Guide, Doug Nordman. Doug helped me realize that exiting active duty but finishing my last 7 years of service in the Reserves might be my best option. I had never seriously looked into joining the Reserves before and had no idea what opportunities it presented.

The point of this long story is that you have a lot of options. Here are a few of my thoughts to help make this decision easier for you as you come to each major crossroads. That being said, everybody’s situation is different, and you need to ensure you are making the best decision for you, your family, and your sanity!

After Your First Term

You shouldn’t overcomplicate this reenlistment. If you enjoy what you’re doing in the military, reenlisting might be the right choice. If, on the other hand, you dread going to work every day…get out!

It really is that simple. You aren’t pot-committed after four years. Get out of the military and pursue another career, go to college (for free), and ensure you are happy in life. The military isn’t for everyone, so don’t try and force it. 

This is why it is important to get your finances in check during your first enlistment. The last thing you want is to feel like you are “stuck” in the military because of the pay/benefits. You’ll be just fine in the civilian world—use your benefits and enjoy yourself!

Retirement

It is no secret that the military has one of the few remaining pension plans that are worth pursuing. Once you get past the 10-year mark in the military, it is very tempting to “gut it out” until retirement. Enlisted members can generally continue serving until their thirty-year mark, and officers can continue until around 40 years of service, with a few exceptions for those who make it to the highest leadership position(s) in their branch of service. The overwhelming majority of service members retire as close to the 20-year mark as possible.

They serve for two decades of their adult life and then receive 40-50% of their base pay (depending on which retirement plan they fall under) every month for the remainder of their lives. In addition, they will receive medical benefits, base access as a retiree, and several other benefits that make retiring from the military attractive to say the least.

I won’t dig into this too much. Suffice it to say that if you are close to retirement and have the opportunity, this is definitely a solid option that can provide you with over $30,000/year for the duration of your life!

Other Options Between Four Years and Retirement 

When people think of exiting the military, they often think of only two options: getting out after their first term or retiring. That is well and good, but there are a lot of us, myself included, who realize somewhere after year 4 but before year 20 that active-duty life is no longer a good idea. 

There are a number of reasons for this, and they are all acceptable. Maybe your relationship status has changed and you want to spend more time with your family and/or kids. Perhaps your body feels like it is falling apart or maybe you started a business or had a windfall of cash and no longer need the pension. Whatever the reason, you need to understand that you have options!

The intent of this section is to get your creative juices flowing, not to serve as a technical manual for how to execute these options. For that, I recommend talking with your career planner, as the intricacies behind each option change with manpower requirements every fiscal year.  

End of Active Service

One seemingly obvious answer is to simply “EAS,” as we call it in the Marine Corps. EAS (the acronym for End of Active Service) refers to simply exiting the military completely at the end of your current contract. 

When you EAS, there are only a few benefits you take with you: the GI Bill (assuming you left under honorable conditions), Veteran Affairs healthcare benefits, any disability pay you are compensated with, the VA home loan, burial benefits, etc. While this doesn’t compare with the benefits you receive when you retire from the military, it is more than sufficient. You will also be able to take the balance of your Thrift Savings Plan with you, including the matching contribution from the DOD. 

Deciding to exit the military in this manner is somewhat nerve-wracking because you are walking away from such an incredible benefits package, a great salary, a good career, and potentially your identity or sense of purpose! 

Taking all of the above into consideration, if you no longer enjoy your job or have some other incredible opportunity to pursue, don’t let fear keep you from pursuing the civilian sector. Just ensure you have a plan and are exiting the military for the right reasons. 

If you EAS after 8 years of service, it will probably be a difficult transition because it has been such a big part of your life for so much time. But you will be okay. Many servicemen and women have gone before you, and you will succeed!

Reserves

A great option to consider, and ultimately the path I am leaning towards pursuing myself, is transitioning into the reserve component of service. I know, I know, we active duty often poke fun at reservists and even have some nicknames that are better left out of print…but it is a great opportunity! 

Let’s use my personal situation as an example. After twelve years of active duty service in the Marine Corps, I find myself faced with the decision to reenlist or pursue some other opportunities, like building the Military Millionaire community. This is not an easy decision because a) I love being a Marine, b) this is all I’ve known for my entire adult life, c) there is a certain level of security in a military career, d) there is a lot of pressure from peers and leadership to “gut it out to 20,” etc. 

The reality is that the Reserves can be a great option if you are further along in your career but no longer believe active duty is the best service component for your situation. 

As I write this article, I have not achieved complete financial freedom. My passive income averages around $3,500/month, but my current expenses are hovering closer to $5,000/month. In order for me to achieve financial freedom, I will need to increase my passive income by at least $1,500/month in the next year. When I exit active duty, I plan to move to the Midwest, where the cost of living is more affordable so that gap will be much smaller. The point of telling you this isn’t for you to judge my plan or for me to brag about my current passive income levels. It is to show you that I have decided to exit the military but do not have everything figured out. My passive income hasn’t replaced my income (yet), it doesn’t cover my expenses (yet), and it isn’t earning guru-level 7-figures yet either.

The thought of exiting active duty is scary.

I would be lying if I told you it was an easy decision, but I know it is the right decision for me at this time. I thought about giving my reasons in this article, but I decided against it because you will ultimately need to decide whether or not to reenlist for your own reasons. You don’t need me to muddy the waters with my reasons.

Benefits to the Reserves

If you have decided that remaining on active duty until retirement isn’t in the cards, the Reserves can be a much better plan than simply exiting the military. The Reserves offer a lot of benefits that many people don’t understand, and I believe it to be a great way to transition out of the military. 

1. No Contract

The best thing about this option is that you can do it without signing another contract. Yes, you heard that correctly: it is possible to transition into the Reserves, and then if you really don’t like it or decide you should get out of the military completely, you can simply change your mind and exit the Reserves. Once you’re completely out of the Reserves, it is much harder to come back in the military, so I always recommend this method of stepping off active duty, without cutting ties completely, whenever possible.

2. Reactivation

There is a distinct possibility that you will miss the military once you get out. No matter how much you think that isn’t true now, I’m here to tell you it is. 

As a recruiter, we used to get people in our office all the time asking about the process to get back into the Marine Corps. I would be willing to bet we had more walk-ins who were prior-service than we did eligible high school students. That doesn’t even account for the number of people who decided to join a different branch of service after having exited the Marines.

A perk of transitioning to the Reserves as opposed to exiting the military completely is that it allows you the opportunity to work your way back onto active duty if you would like. 

For example, there always appears to be a shortage of Marine Corps recruiters. There is a program called Extended Active Duty (EAD) recruiting. This program allows reservists to go back on active duty as a recruiter, with the opportunity to become a career recruiter and be right back on active duty again. 

There are other ways to get back onto active duty. Some of them require painstakingly long processes, but it is possible. 

On one hand, this is a great benefit because it gives you a safety net in the event that you regret exiting the military. On the other hand, it gives you a safety net, which means that (subconsciously) failure is an option. 

I like the idea of “burning the ships” like Hernan Cortes did in 1519. In essence, if you go all-in on something and don’t give yourself the option of failure, your odds of success increase. You will find a way. But, if you’re going to do that, you need to be absolutely certain that you’re exiting the military with a solid plan in place.

3. You still get Your Pension

For somebody like me who has already served 12 years in the Marine Corps, the thought of losing out on a pension is somewhat nerve-racking. Luckily, if you finish out a 20-year career in the Reserves, you still receive that pension!

I won’t dig into all of the intricacies of how the pension works in the Reserves, but here is a 5,000-foot view.

  • You will receive your pension when you turn 60, minus any time spent in a qualifying combat zone. For example, I spent 8 months in Afghanistan, so I will begin receiving my pension when I am 59 years and 4 months of age. 
  • Your pension is determined based on the total amount of points you earned in the Reserves, multiplied by the amount of basic pay you would receive in the paygrade you retire at if you had served 30 years. (The formula is more complicated than this—check out this article for more information https://the-military-guide.com/reserve-retirement-calculator/ )
    • If you retired from the reserves as an E-8 with 20 years of service, your pay would be calculated as an E-8 who had served 30 years of service, multiplied by the total points you accumulated throughout your career.
    • Every day you served on active duty is worth 1 point, and then you can earn multiple points on drill weekends, pulling funeral detail, or completing military education.

Ultimately, the Reserves pension is calculated much differently than active duty retirement, but it is possible for you to earn a decent pension. When I ran the numbers, my Reserve pension was only going to be $500-$750/month lower than my active duty pension. The biggest difference is that on active duty you begin collecting your pension immediately, and as a reservist, you don’t begin to receive it until you reach 60 years of age.

4. Medical Benefits

Medical insurance is a large expense that many service members fail to budget for. If you join the Reserves, you will be eligible for Tricare Reserve Select for only $44.17/month for a single member or $228.27/month for a member and his or her family. 

There are additional copays that you will be on the hook for, but this is still much more affordable than most civilian medical plans. 

5. You get to do a lot of the fun stuff, and less of the bullshit.

From what I have been told, in the Reserves, you are able to do more of the fun stuff like ranges, training, and exercises, and less of the day-to-day BS. That is because of the limited time you have for training requires you to focus on the important stuff. 

Also, you can volunteer for exercises, deployments, or reserve billets around the world but won’t (usually) get voluntold as often for training exercises as you would on active duty.

Branch of Service Change

If none of the above reasons were compelling enough for you to join the Reserves, you can always join another branch of service…if you’re a traitor. 

I’m joking about that. It is quite common for people to exit the military and then decide to go into another branch of service. I know several people who have served in the Marine Corps and the Army, for example. 

Every branch of service has its own personality, and it is important for you to find the one that matches with you. 

This is Your Decision

I was going to mention some of the common reasons people choose to exit the military (or not), but I want this to be 100% your decision. Nobody can make this decision for you, so do your research, ask lots of questions, write out pros/cons, and think long and hard before exiting the military.

Ultimately, it is up to you. Make sure you’re happy with whatever decision you make and don’t let other people talk you into staying because “you’re so close!” Serving in the military is more than a job: it is a calling. If you no longer enjoy your career or no longer want to serve in the military…don’t. 

No matter what, remember that you will have to exit the military someday. Make sure you’re planning for it now!

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David Pere

David Pere

David is an active duty Marine, who devotes his free time to teaching personal finance and real estate investing for service members, and the working class!

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