A soldier attends a job fair for veterans in New York. Brendan McDermid/Reuters

The country’s largest employer—the U.S. military—is switching to a new retirement and savings system, with big consequences for troops and their families.

“The primary challenge for me, like many veterans, was deciding what I wanted to do,” says Lance Sapera, a recruiter on the talent acquisition team at Intuit in San Francisco, of his transition out of the military in 2007. A retired Navy commander, Sapera spent time with people in different professions and at various companies to understand their corporate culture and find employers whose values aligned with his.

Each year, 200,000 veterans re-enter the civilian workforce. Thanks to retirements, retirements for medical reasons, ”voluntary early separations,” and involuntary discharges, there is a huge amount of turnover in the U.S. military. This churn has been compounded by the drawdown, the reduction in the number of active-duty soldiers from 570,000 in 2012 to a planned 450,000 in 2018.

As they make the transition to civilian careers, many veterans struggle. Those who leave after one enlistment may lack the skills or the network to find a job similar to their military role. Those who depart for medical reasons often don’t have enough time to prepare for a major change. Retiring service members who are used to leading can be reluctant to follow.

“Many service members join, do a great job for a few years, have some money put away, have their money for college, and then they don’t know what to do,” says Michael Meese, the chief operating officer of the American Armed Forces Mutual Aid Association (AAFMAA) and a retired brigadier general in the Army.

“They aren’t used to selling themselves. They don’t have the network that their peers who stayed in the same place do. They aren’t as assertive as their civilian counterparts at seeking out and pursuing jobs,” Meese says.

A recruiter from the Sacramento Police Department talks to job seekers at a military jobs fair in San Francisco in 2015. (Robert Galbraith/Reuters)

Some jobs in the military don’t even have civilian counterparts. Take an Army medic. A medic combines the skills of an EMT, a medical assistant, and a nurse. In civilian life, however, a former medic wouldn’t be able to do any of those jobs without additional training and licensure.

Besides the drawdown, the other shoe to drop will be the military’s new blended retirement system (BRS), which will go into effect on January 1, 2018. The monthly annuity will decrease from the previous level of 50 percent of pre-retirement pay to 40 percent. But if service members leave the military before the 20-year mark, they will be able to take money with them, instead of leaving with nothing, as they do now. The Department of Defense estimates that the BRS will save it about a billion dollars a year.

For the first time, service members will contribute to a Thrift Savings Plan (TSP), similar to a 401(k). After two years of service, their contributions of up to 5 percent will be matched by the government.

Anyone who enters the military in 2018 will be automatically enrolled in the BRS, but troops with one to 12 years of service can choose between the new and old plans, prompting a lot of number crunching on their part.

Service members may not know how important it is to take advantage of the match the government is offering, says Air Force Capt. Daniel Kopp, a pro bono financial counselor for airmen and their families. “Many of the airmen I counsel live paycheck to paycheck, so dedicating money to savings will be a major transition,” he says.

Since the vast majority who enlist do not stay the full 20 years, the matching funds and the ability to walk away with some retirement benefits may encourage more to join, or to stay past their first term.

But the downside is that there will be little incentive to serve for 20 years or longer—only more TSP contributions by the government. This may affect retention. The current annuity is something that keeps service members focused through tough years and hard jobs.

The Veterans Opportunity to Work to Hire Heroes Act, signed by President Obama in 2011, brought a revamp of the military’s Transition Assistance Program (TAP), among other measures to help vets find their feet. TAP offers guidance on civilian salaries and benefits and advice on resume-writing, job hunting, and interview skills. In the Army, it consists of about 40 hours of training. But many service members “treat it like another military requirement,” says Meese, and may not recognize its value.

With the drawdown increasing regular turnover, nonprofits that help veterans transition and companies that hire them are going to remain busy. The retirement changes could make them a little busier, but won’t be the deciding factor for most troops, predicts Kopp.

“I’m glad to see that the 83 percent of service members who leave before the 20-year retirement mark will have some retirement benefits with this new plan,” Kopp says. “Although most of my peers, along with myself, won’t be making a decision to stay in or get out based on retirement benefits alone. Most people are making their decision to get out based on the high deployment rates, and I don’t think that this new system is going to sway that decision.”

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