Transitioning or retiring from full-time service

Who is this guide for?

This guide is for you if you are transitioning, or thinking of transitioning, out of Defence or between service categories.  

How do I use this guide?

Watch the transition video for an overview on things to think about, then explore the sections of the guide that are relevant and of interest to you. Some sections also contain a short video to give more on the topic.  

How long will it take?

We estimate it will take around 30-60 minutes to read the guide and watch the videos, depending which sections are of interest to you. 

Transitioning from service

Thinking about transitioning from the ADF? Here’s a short video to explain some of the financial aspects to consider to make your transition as smooth as possible.

Transitioning from Defence is a time of change and some of the changes you will experience have financial implications. We want you to have a successful transition that is as stress-free as possible, but we also want to make sure you and your family are protected.

Understanding your superannuation

Super is a government mandated retirement savings vehicle. Whether you are leaving the ADF for retirement, discharging on medical grounds, being retrenched or resigning, when you transition out of the service, you’ll need to make some decisions about your super. 

Generally you cannot access super unless you are retiring after reaching preservation age and have met a condition of release, which for most people, will be reaching age 60 and leaving an employer. However DFRDB members can access their pension on resignation or retirement and MSBS members are eligible for a pension from age 55 after leaving full time Service. 

The benefits you may receive and what you can do with your super will depend on which fund you are a member of and why you are leaving the Service. 


DFRDB is a defined benefit super scheme which closed to new members on 30 September 1991. If you are a DFRDB member, you will receive a lifetime indexed pension based on your final salary and years of service. Part of your benefit may be commuted into a lump sum, and you may receive an additional lump sum from your MSBS ancillary account, made up of voluntary personal contributions, amounts transferred in from other funds and other contributionsplus investment returns. 

For more information contact the Commonwealth Superannuation Corporation (CSC). 

MSBS (Military Super)

MSBS is a hybrid defined benefit and accumulation super scheme which closed to new members on 30 June 2016. If you are an MSBS member, your benefit will consist of a lifetime indexed pension (employer component) based on your final average salary and years of service. Some or all of this benefit can be taken as a lump sum when you have met a condition of release (the defined benefit). The scheme also has a member component made up of your compulsory and voluntary personal contributions, ancillary contributions and investment returns, that you will also receive as a lump sum when you have met a condition of release (the accumulation benefit) 

The pension component can be taken from age 55. If you are retiring or resigning from the ADF after reaching age 55 or are entitled to a Class A or Class B invalidity pension, you will be eligible for a pension when you leave the Service.  For all other members, your employer benefit will freeze and be preserved, increasing with CPI each year, until you are eligible to receive it.  

The member component of your benefit may be left in MSBS, where it will increase with investment returns each year until you access it, or it can be rolled over to another complying super fund.  

For more information contact the Commonwealth Superannuation Corporation (CSC). 

ADF superannuation arrangement

If you joined the ADF for the first time after 30 June 2016, you will fall under the ADF superannuation arrangement, and will be a member of an accumulation fund, such as ADF Super. If you had previously served, and are a member of MSBS, you will be re-entered into MSBS on rejoining the Service. 

For accumulation fund (egADF Super) members, your benefit will be a lump sum based on contributions and investment returns. When you leave Defence, your money can be left in the fund, where it will continue to grow with investment returns until you meet a condition of release, or it can be rolled into another super fund. 

If you’ve been in the Service for more than 12 consecutive months, you can keep your ADF Super account when you transition out and your new employer can contribute to ADF Super. In this case your insurance cover will change so contact the Commonwealth Superannuation Corporation (CSC) to find out what you need to know. 

Post ADF super choices

If you need help choosing a new fund, the Moneysmart website has information on choosing a super fund. Comparison websites help you see what’s available in the market so you can choose a fund to suit your needs. 

The Australian Tax Office has a YourSuper Comparison Tool to assist you in assessing and choosing a superfund.

Personal insurance

ADF members have statutory death and invalidity cover through ADF Cover, MSBS or DFRDB, which provides benefits to you or your family if you become ill, injured or pass awayYou also have comprehensive compensation and rehabilitation cover.  This cover will cease when you leave the ADF. 

If you wish to maintain cover after you leave the service, you will need to source personal insurance privately. It’s a good idea to have your private cover in place before your termination date. Common types of personal insurance include: 

  • Death cover (also known as life insurance) – pays a lump sum to your nominated beneficiaries in the event of your death. 
  • Total permanent disability (TPD) cover – pays you a lump sum in the event you suffer a serious illness or injury and are unlikely to work again.  
  • Income protection – pays you a percentage of your income if you are temporarily unable to work due to injury or illness. 

If you have, or open, a civilian super fund you may have a basic level of death, TPD, and income protection insurance within super. You can usually increase the amount of cover to suit your needs, or cancel it completely if you wish to do so or have taken out cover elsewhere. Personal insurance policies are also available outside super. The Moneysmart life insurance calculator can help you calculate an appropriate amount of cover. 

If you are moving on to the Reserves, be aware that most personal insurance policies outside Defence have war and war-like exclusions. Check with your insurer whether your Reserve service will exclude you from being able to claim on a policy before you pay any premiums.  

For information on your current death and invalidity cover read our personal insurance money guide or visit the CSC website. 

The Department of Veterans’ Affairs (DVA) has rehabilitation and compensation schemes for serving and former serving ADF members. They also provide support for ADF members who are transitioning out of the service. To find out more about benefits and entitlements visit the DVA’s on base advisory service (OBAS) or go to the DVA website. 

Medicare & private health insurance

As an ADF member, Defence takes care of all your medical, dental, optical and ancillary healthcare needs. When you transition out of the Service, you will be responsible for your health. 


When you leave the service you’ll need to sign up for Medicare, and get yourself a Medicare card or have yourself added to your family card. You will start paying the Medicare levy, along with your income tax. For most people, this is 2% of your taxable income, although this can be more for higher income earners without adequate private health insurance. 

Medicare will cover 100% of your costs if you are admitted to hospital as a public patient, some of the fees charged by GP’s and other medical professionals, and subsidised prescription costs for medicines listed on the Pharmaceutical Benefits Scheme (PBS). 

You should register with Medicare before you leave the service but you won’t be able to use it until after you’ve transitioned out 

For more information, visit the Services Australia website. 

Private health insurance

Private health insurance covers a range of services not covered by Medicare, for example, a private hospital and the doctor of your choice, as well as ancillary services such as dental, optical and physio. 

If you are single and earn over $90,000 or a family earning more than $180,000 and you do not have private hospital cover you may have to pay an additional Medicare levy surcharge of up to 1.5%. This is in addition to the standard 2% Medicare levy. 

When considering private health insurance, think about your cover needs, now and in the future. Generally, the more you are covered for, the higher the premium. 

If you wait too long to take out private health insurance you’ll pay the Lifetime Health Cover Loading (LHC). This increases your premiums by an extra 2% for every year after age 30 that you haven’t had private hospital cover. There are special conditions that apply to full-time ADF members who discharge after age 30. For more information, visit the Government’s Private Health website. 


Many ADF members receive subsidised housing so when you leave Defence your cost of housing is likely to increase. If you are currently in Defence housing, you will need to find alternate accommodation. 

If you have a property, or are thinking about buying a home before you leave the service that you intend to live in, consider whether the Defence Home Ownership Assistance Scheme (DHOAS) could benefit you. 

DHOAS is a scheme that helps ADF members own their own home by giving you a subsidy, paid directly into your qualifying home loan. If you have a period of full-time service greater than 4 years, you may be eligible for assistance through the scheme. 

Service credit accumulated through eligible service can still be used after you leave the ADF. You have a limited window to use your DHOAS entitlement after you separate from Defence and you may benefit from obtaining a subsidy certificate before you leave. 

There are a limited number of approved lenders who participate in the scheme so it’s recommended you compare what DHOAS may offer you with the cost of obtaining a loan from other lenders. You can find more information on the DHOAS website. 

First home buyers

If you are looking to buy your first home, you may be eligible for the First Home Owner’s Grant (FHOG) and/or other incentives available to first home buyers. The FHOG is a national scheme, administered and funded by each state and territory, which provides a one-off grant to eligible first home owners. Some states and territories also offer stamp duty concessions to first home buyers. 

From time to time the federal government offers additional incentives to fist home buyers to buy or build a new home, so search out what is available to you to make the most of your new home purchase. 

Goals & budgeting

If you haven’t set a financial goal or looked at your budget for a while, this short video from our Principles of Financial Success series offers tips on getting your goals back on track.

Whether you are retiring or moving on to the next phase of your working life, when you leave the ADF your income and expenses are likely to change. To manage these changes it might be a good time to look at your budget and review your financial goals. 


A budget helps you work out where your money is going, allowing you to exercise control and make decisions about what’s most important for you. You can use an online tool like our online budget calculator, a free budgeting app, or even just use pen and paper. 

When youre doing your budget, don’t forget to include less frequent expenses like utility bills or car registration and insurance. 

Hopefully your budget will show a surplus. This is the amount you’ll have to save towards your goals. If it doesn’t, you’ll need to take a closer look to see what expenses you could reduce so that you don’t get into financial difficulty. 

If your income is less than your expenses, read our money guide on problems with debt. 

Review your budget regularly to ensure you stay on track. 

Setting goals

When you know what you’re working with you can then turn your attention to setting some financial goals. Think about what you want to achieve financially over the next: 

  • 1-2 years (short term) 
  • 3-6 years (medium term) 
  • 7+ years (long term). 

Write a brief description of these goals and a timeframe for achieving them. Work out how much your will need to save regularly using Moneysmart’s savings goals calculator. 

Tip: If you don’t already have an emergency fund, a good short-term goal might be to save 3-6 months’ worth of expenses as a safety net for any unforeseen circumstances. 

If you are retiring, think about the type of lifestyle you want and how much it will cost. 

The following table is an example of what your savings plan might look like. 

Goal Amount Timeframe Fortnightly Savings
Holiday $5,000 1 year $192
Home deposit $120,000 7 years, 6 months $508
Retirement savings top-up 25 years $50
Total Fortnightly savings to reach current goals $750

How much will you need in retirement?

If you are retiring, you may be wondering whether your income will be enough to sustain your lifestyle after you stop work.

Typically, when you retire, there will be changes to your spending habits. For example, work related expenses like transport, coffees, lunches, and uniform expenses may decrease, while spending on leisure activities and hobbies may increase. Think about how your income needs may change.

What do you want your retirement to look like? If you can answer that question it will be easier to work out the sort of income you’ll need to fund it. Often retirees plan to spend more in the first few years of retirement and less as they get older, perhaps something to consider when you’re planning your retirement income needs.

You may receive income from multiple sources in retirement, for example superannuation, DVA or Centrelink payments and income from investments. You’ll need to account for all income sources in your planning.

Savings & investments

From savings accounts to shares and property, choosing the right investments can play a key role in managing your money. Watch this short video for a brief introduction to investing.

After you’ve set your goals and worked out how much you’ll need to save for them, you can choose appropriate investments. Savings accounts are great for emergency funds and short-term goals, but if you are prepared to take on a little more risk, you could reach longer-term goals faster. 

Cash deposits with authorised deposit taking institutions (ADIs) are government guaranteed up to $250,000 per person, per ADI. These are low risk, low return investments. 

Fixed interest investments such as bonds, debentures and unsecured notes vary widely in risk and returns so make sure you understand what you are investing in. 

Property and shares give you an income (rent/dividends) and may also increase in value over time (capital gain). Short-term risks are higher but long-term average returns are also typically higher. They are suitable for longer term investments. 

Share and property funds offer an alternative to traditional share and property investments. These are managed investments in which money from thousands of investors is pooled and a professional fund manager decides which assets to buy and sell, and manages the investments. Common types of pooled investment funds include managed funds, Australian Real Estate Investment Trusts (A-REITs) and Exchange Traded Funds (ETFs)Funds have much lower entry and exit costs and you usually gain exposure to a broad range of investment assets for a smaller initial outlay. 

Active vs passive management are terms used to describe managed investment schemes, such as managed funds, A-REITs and ETFs. An actively managed fund is one in which the fund manager buys and sells assets frequently in an attempt to beat the market return. These funds have higher costs and rarely beat the market consistently. Passively managed investments, also known as index funds, work on a buy and hold strategy. They take an index, such as the ASX200 (the 200 largest shares on the Australian Securities Exchange), and buy the same shares, in the same proportion as the index. Index funds are cheaper and usually deliver a return, before fees, similar to the market or index they are tracking. 

Our investing money guide has more information on investing and how to develop and manage an investment portfolio. 

Managing debt

Managing debt is a critical part of good money management. Here’s a short video to help you keep your debts under control and create a positive credit history.

Australian personal debt levels are among the highest in the world. Not all debt is bad, for example, most of us could not buy a home without taking on some debt, but too much of it can put a strain on your finances and create stress in other areas of your life. 

Financial institutions sell debt, it’s how they make their moneyThink carefully about the level of debt you are comfortable with so that you don’t get in over your head.  

Borrowing for business

If you are borrowing for a business venture, ask yourself, can I repay this if the business doesn’t generate the income I think it will? Consider having a fall-back position of 612 months worth of expenses in a high-interest saving account you can access in an emergencyor if the business takes time to generate a profit. The more uncertain you are of generating an income, the larger your fall-back position should be 

If you’re thinking about starting a business, watch our video Starting, Operating and Selling a Business – The SOS Principles. 

Controlling high-interest debt

If you are paying off any high interest debt, such as a credit card or personal loan try to make getting it paid down a priority. If you have more than one highinterest debt: 

  • Choose the one with the highest interest rate and make additional repayments until it is paid off. 
  • Then allocate additional repayments to the debt with the second highest interest rate, and so on until all debts have been repaid. 

If you are struggling to repay debt or your circumstances are more complex, read our Problems with debt money guide or contact us so that we can put you in touch with a free financial counsellor to help you get back on track. 


When borrowing money to buy a property, a comparison website will give you a good idea of the home loan rates available in the market. Look for the best rates you can find, on loans with the features you want. Use the information to negotiate a better rate with your current bank, or start fresh with a new lender 

Features such as a redraw facility or offset account, allow you to net your savings off with your loan, reducing the amount of interest you pay. It’s a bit like earning a mortgage interest rate on your savings. Always look for a loan you can pay off early without penalty.  

Will & power of attorney


A will is a legal document that dictates how your assets should be distributed when you die. If you die without a valid will you will be said to have died intestate and your assets will be distributed according to intestacy laws in your state, which may not be in line with your wishes. 

For a will to be valid it must meet certain criteria, which is why we recommend seeing a lawyer (ADF LEGALOs can usually help). Never use a will kit.  

Store a copy of your will in a safe place and tell your executor and next of kin where it is. If you are concerned about how your beneficiaries will manage their inheritance, ask your lawyer about a testamentary trust. 

Review your will whenever your personal circumstances change, for example, you get married, separated or divorced, or become a parent, and make arrangements to update it if necessary. If you need to update your will, consider doing this before you leave Defence, as permanent ADF members can usually have a simple will written or updated for free. 

Power of attorney

While a will is something that all adults should have, a Power of Attorney (POA) is something that you might want to think twice about. 

When you grant someone a POA, you are giving them the power to manage your money on your behalf. That means they can operate your bank accounts, buy or dispose of assets, and make financial decisions as if they were you. 

You can limit a POA, for example, you could make it valid only for a specific period of time, or only allow transactions up to a certain dollar amount. 

There are different types of POA, for example: 

  • General  ceases if you lose mental capacity 
  • Enduring  continues to operate after you have lost mental capacity 
  • Medical  allows your appointee to make decisions about your medical treatment if you become mentally or physically incapable of deciding for yourself. 

Only grant a POA to someone you completely trust and get appropriate legal advice first. 

Getting professional advice

Before choosing a professional adviser, make sure they have the qualifications and experience to give the kind of advice you are after. Make sure you understand and agree the scope of the job and the fees before proceeding, these should be outlined in an Engagement Letter.

Financial advice

If you are thinking about getting financial advice, read our Getting financial advice money guide, and watch our video Financial advisers: the facts & the fiction, which will give you an idea of what to expect when you see a financial adviser. 

Our financial advice referral program is a good place to start if you are looking for a fee-for-service financial adviser. Be aware that we do not recommend or endorse the advisers on the list and any relationship between you and the adviser is a strictly private relationship. 

Tax advice

For help with a simple tax return, a registered tax agent may be all you need. You can find a registered tax agent in your area by using the search function on the Tax Practitioners Board website. 

If your financial affairs are more complex, you may be better off speaking to a qualified accountant that has completed additional professional training. You can find a list of appropriately qualified accountants on the websites of industry associations such as Chartered Accountants of Australia and New Zealand or CPA Australia. 

Legal advice

For legal issues, start with the on-base Reserve legal officers. If they can’t help you they can probably point you to someone who can. LEGALOs can prepare, or update, a simple will free of charge.


Here’s a handy checklist summarising the actions suggested to prepare you for transitioning from the ADF.



Watch these videos to help you prepare for transition.



Here you’ll find calculators and other resources to help you transition smoothly.




Head to our Referral Program to find an advisor who is free from remuneration-based conflicts of interest.



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