Leaving the Military Financial Checklist: 12-Month Timeline (2026)

Not financial advice. Educational only. Your finance office and official sources have the final word on your pay and benefits. Talk to a personal financial manager, Military OneSource, or a qualified professional about your own situation.

Getting out has a hard date. The money side is a lot easier if you start a year out instead of a month out. This is the timeline I'd hand a shipmate or battle buddy, in any branch.

What matters when you're leaving

Your paycheck changes shape. BAH and BAS stop when you're off active duty. Budget on a civilian paycheck, not your LES.
Final pay has moving parts. Leave, separation pay (if you qualify), and your last check land around the same time.
Health coverage has a hard stop. TRICARE doesn't run past your last day unless you qualify for transition coverage.
The VA disability claim has a window. File in it and benefits can start sooner.
Coast Guard is different on paper. Coast Guard retired pay and CRSC payments are handled by the Coast Guard Pay & Personnel Center (PPC), not DFAS. PPC is in Topeka, Kansas, and its customer service line is (866) 772-8724. Callouts below.

12 months out: build the cushion

Who it's for: everyone getting out.

Start a separation fund. It needs to cover the gap between your last military paycheck and your first civilian one, plus moving costs and health premiums. Navy Federal's transition checklist suggests 3 to 6 months of expenses, including surprises like work clothes or certification programs.

Run a "civilian budget" now. Take expected civilian take-home pay, subtract housing, insurance, and a health premium. Live on that while you're still in and bank the difference. My military to civilian salary guide walks through the math.

Downside: people underestimate health insurance and state income tax. Price both for where you're actually moving.

9 to 6 months out: TAP, records, and education

Get into your Transition Assistance Program (TAP) workshops early. First Command's separation checklist lists TAP alongside confirming your date and getting your DD214.
GI Bill: if you plan to use the Post-9/11 GI Bill, VA bases the monthly housing allowance (MHA) on the BAH rate for an E-5 with dependents at the ZIP code where you attend most classes, prorated by your eligibility tier and how much school you take. Online-only students get half the national average (up to $1,198 a month for Aug. 1, 2026 to July 31, 2027). No MHA if you're on active duty, attend half time or less, or during school breaks.

6 months out: health and the VA claim

TRICARE. When you separate (not retire), TRICARE generally ends at 11:59 p.m. on your last duty day. Some members get 180 days of premium-free coverage through TAMP; your service decides eligibility. After that you may be able to buy CHCBP. Per TRICARE, 2026 CHCBP premiums are $2,103 per quarter for an individual plan and $5,339 per quarter for a family plan (2027: $2,280 and $5,741). Schedule your Separation History and Physical Exam (SHPE) 90 to 180 days before your end date.

VA disability compensation. If you have a service-connected condition, VA's Benefits Delivery at Discharge (BDD) program lets you file 180 to 90 days before you leave. VA's page includes Guard, Reserve, and Coast Guard members on full-time active duty. You need a known separation date and must be available for exams within 45 days of filing. For scale, VA's rates effective December 1, 2025 pay $180.42 a month at a 10% rating and $356.66 at 20%; higher ratings depend on your dependents, so check VA's rate tables.

A disability rating can also waive the VA home loan funding fee. See my VA loan guide.

Downside: miss the 90-day mark and BDD is off the table. You can still file, just not through BDD.

3 months out: terminal leave vs selling back leave

Per DoD Military Compensation, you can use leave before you go, sell it back, or take terminal leave. You can sell back up to 60 days across a career, and only when separating under honorable conditions.

Terminal leave keeps you on active duty pay, and TRICARE says you keep Prime during terminal leave.
Selling back leave gets you a lump sum. IRS Publication 15 sets federal withholding on supplemental wages at 22%. That's withholding, not your final tax bill.

Coast Guard callout: take leave and final pay questions to PPC Customer Service at (866) 772-8724, not DFAS.

Military separation pay (if it applies)

Involuntary separation pay (ISP) is a lump sum for eligible members with at least 6 but fewer than 20 years of active service who are involuntarily separated, per DoD Military Compensation. You need an honorable or general (under honorable conditions) characterization and must agree to serve 3 years in the Ready Reserve.

Full ISP = 10% × (years of active service × 12 × monthly basic pay).
Half ISP = 50% of full.

Big catch: if you later get VA disability compensation, DoD says it's reduced until the full ISP is paid back.

Final pay after separation

Final pay can include base pay, allowances through your separation date, and sold leave. One Army finance brief says some members get 80% first and the rest after an audit. That's one office's process, not a universal rule.

Keep your bank account and direct deposit unchanged until final pay posts. Download your LES, orders, and DD214.

SGLI to VGLI

Per VA, SGLI gives you 120 days of free coverage from the date you leave the military (up to 2 years if you're totally disabled). You can convert to Veterans' Group Life Insurance (VGLI) within 1 year and 120 days of discharge, for up to the amount of SGLI you had. Apply within 240 days and you don't need to prove good health. After that, you'll need to show evidence of good health.

TSP after separation

Your own contributions and earnings are always yours. Under BRS, the 1% automatic contribution stays only if you finished two years of service; TSP removes it from non-vested separated members' accounts. Per TSP, if your balance is $200 or more you can leave it in the TSP after you get out. You can't contribute anymore, but you can change your investments and move eligible money in. Pay off any TSP loan within 90 days of separation. When you do withdraw, the options are a partial distribution (at least $1,000), a total distribution, an annuity purchase, or installments. Traditional money is taxable when withdrawn, and withdrawals of earnings before age 59½ may face a 10% early withdrawal penalty unless an exception applies (TSP's tax rules booklet). More in my TSP basics.

Taxes the year you get out

MilTax is free tax software and consultations for service members and families, including Coast Guard, and for retired and honorably discharged service members (Military OneSource names Coast Guard veterans) within 365 days of separation. Eligibility is checked through DEERS.

Retiring instead? Two more items

Retired pay: DoD members' retired pay accounts are set up by DFAS Cleveland from the DD 2656. Coast Guard retired pay accounts are set up and maintained by PPC Retiree and Annuitant Services, and PPC says to submit the DD 2656 at least 90 days before retirement.
CRSC: Coast Guard retirees send the DD Form 2860 to the Coast Guard Personnel Service Center (PSC-PSD-MED), per VA and the Coast Guard. Coast Guard news says PPC in Topeka handles payments.
Survivor Benefit Plan: decide with your spouse before you retire (First Command checklist).

How I'd choose

If you're weighing terminal leave against selling leave, run both through your finance office (PPC for Coast Guard) before you pick.
If you don't have a job yet, the cash cushion matters more than anything else.
If you have a service-connected condition, put the BDD window on your calendar today.
If you're getting ISP and might file a VA claim, understand the recoupment before you spend it.
If you're Coast Guard, use PPC, not DFAS, for retired pay and CRSC payment questions.

Military to civilian salary guide and the leaving-the-military checklist
Budgeting apps for military families, compared
BAH lookup (coming soon; use the official DTMO lookup until then)
More in the Transition hub