When leaving the military, many people want to buy a house. It’s a perfectly normal desire – for many military families, it’s been a long-term dream to put down roots and buy their “forever” home. No more crazy landlords, white walls, and unpacking every two years! I am so sick of unpacking!
Unfortunately, the “forever home” is likely a myth, and acting on this desire can have some seriously negative long-term consequences. For the vast majority of military families, it’s smarter to rent for a year or two and then consider whether buying a house is the right choice for your particular situation at that particular time. There are three main reasons why this is true: employment instability, stress and decision-making, and financial upheaval.
This post is part of The Comprehensive Military Retirement Checklist. Be sure to read all the other posts that go with the checklist, too!
As with all information on this website, this is not an official source. We gather and distill information so that’s easy to access and understand, but we can’t share every possible variation and exception. Always refer to official sources and verify that information provided applies to your unique situation.
43% of veterans leave their first post-separation job within the first year. Does that surprise you? It surprised me. And lest you think that those 43% are somehow outliers, an additional 21% of veterans leave their first post-separation job the second year. The path to a forever second career is rarely straight or simple.
Plus, those job changes often come with geographic moves: The same study reported that over 37% of veterans currently lived in a different state from where they originally settled when leaving the military. These two facts are important to know when making the decision to buy a house.
Tying yourself to a house (and probably a mortgage) limits your options, financially and geographically. What do you do if you buy a house and then discover that your first job isn’t the one you want to be in forever?
- remain in a job that you don’t like because you have a house there
- limit your job search to the area of your home
- sell the house (probably at a loss since it has been such a short period of ownership)
- turn it into a rental property (keeping in mind that most “forever” homes aren’t great rentals)
Imagine being stuck in a job that isn’t right, and facing these options. Compare that to the relative freedom of waiting until your lease ends or exercising a break-lease option, and moving on without the burden of that real estate. Which one seems better to you?
While nothing in life is guaranteed, you should assume that the first few years after leaving the military will be a little unsettled. It just doesn’t make sense to buy a house when life is unsettled.
Stress and Decision-Making
Leaving the military is one of the largest transitions that most folks will make in their lives. For civilians, retirement from a job ranks 10th on the list of the 100 biggest stressors. For military families, the transition to civilian life is more complicated than just a retirement or job change. It combines a wide variety of financial and emotional stressors, possibly including but not limited to:
- a major change of financial state
- changing to a new field of employment
- change of housing situation
- spouse beginning or stopping working outside the home, or a spouse switching jobs
- change of location
- starting or stopping an educational program
- change to working hours, social activities, and recreational pursuits
Scientifically and anecdotally, transition is a challenging time for nearly everyone involved: the service member who is separating or retiring, the spouse, and affected children. The impact is compounded when multiple family members are dealing with these stressors, and each is also trying to help the other. There’s no doubt that transition is hard all around.
Which brings us to the next point: Our brains are hard-wired to make decisions differently when we’re under stress. It’s a survival mechanism that helps prevent analysis paralysis and allows us to identify the fastest way to security. Unfortunately, society has programmed Americans to believe that homeownership represents security while discounting the amount of insecurity that comes with the responsibility of having a mortgage and actually owning a home.
You’ve probably heard the common wisdom, “Don’t make any major life decisions for the first year after (fill in the blank.)” The same logic applies to the transition from military to civilian life.
There are a lot of major decisions that HAVE to be made during the transition or retirement process: Should you choose the Survivor Benefit Plan? Where do you want to live, and what do you want that life to look like? Will you work, and will your location be decided by the job or will your job search be decided by the location? Allow yourself to focus on the decisions that HAVE to be made, and give yourself the time to adjust to your new life before tying yourself to a house.
The first few years after leaving the military can be financially chaotic. You may or may not have retirement pay, or be working through the process for disability compensation. You may have a long job hunt, or you may take lower-paying work until you find something more suited to your skills and experience. You may choose to go to school before returning to work full-time. A spouse may leave or return to the workforce, or finding that another move means yet another career change.
With all this financial change, it’s hard to pinpoint how much house you can actually afford. Hopefully, you’ve completed the 12-month post-retirement budget that is (allegedly) required during the (supposedly mandatory) transition program offered by the military. But let’s be realistic: those budgets, while useful, are just guesses. Leaving the military can come with a lot of financial surprises.
Buying a house is typically the largest purchase anyone will make in their life. Buying a house when your budget is built on guesses is a bad idea.
Stepping Back and Stepping Surely
I absolutely understand the desire to buy a house and never move again. Just yesterday, I asked, “I wonder how long we would have to live in this house before every single item was unpacked and put away in the right place?” I have no idea that answer, but I know we haven’t reached that point yet, and I hope that happens someday. Plus, it’s nice to think of painting without having to worry about painting back, or putting an unlimited number of holes in the walls, wherever you want, or starting an amazing garden, or whatever “homeowner” dreams you’ve been stacking up.
As big as those dreams may be, give yourself just another year or two before you jump into a house. Make the conscious decision to rent for a year or two, and use that time to discover how the next phase of your life is really going to shape up. You’ll be well-positioned to adjust to the inevitable surprises without the burden of a house, and then you’ll be a in a great place to decide when (or whether) to buy that “forever” home. When you are ready to make that purchase, you’ll be emotionally and financially prepared to make a great decision and choose a house that truly works for you. How awesome will that be?