Recently, I've read a lot about the challenges the services are having in meeting their recruiting goals. When I think of how my family, over three generations, has contributed, benefited and grown from wearing the uniform, I feel like there may be a lot of folks out there dismissing a fantastic financial opportunity. If you volunteer, military service offers a great way to jump-start your finances.
I know there's a lot more that goes into the decision to serve than just the financial implications, but with all the uncertainty today, I would think that money would be an important part of the decision.
And on that front, there are some financial advantages to serving in uniform. Sure, you may not get rich in the military, but your service could be an important contributor to a lifetime of financial security, though:
Reasonable Health Care
It's hard to celebrate health care, because often we seek it out under dire circumstances. According to the Kaiser Family Foundation, the average American worker kicked in $497 per month toward health-care coverage in 2021. With no enrollment fees or in-network copayments using Tricare Prime, an active-duty family would pay a lot less. In that context, the military health-care value proposition provides a reason to serve.
Regular Pay Increases
Every pay increase is an opportunity to put money that's not part of your spending routine to work. Whether you're trying to pay down debt, build savings or invest for the future, military life provides frequent chances -- yes, jump starts -- to get things going. Think about it: You've got an annual cost of employment increase in January, time-in-service pay increases every year or couple of years and, of course, promotions.
Top-notch Retirement Benefits
The number of folks in the private sector in positions that offer a pension is minuscule. According to CNN Money, less than 20% of companies include a traditional pension as part of their retirement benefits. The military does. Add in the Thrift Savings Plan (TSP), and up to 5% in employer contributions for those covered by the Blended Retirement System, and you have a compelling package.
Moving, and sometimes moving a lot, is one of the significant challenges military families face. Along with regularly turning your family's life upside down, these permanent change of station (PCS) moves can present financial challenges.
However, taking the glass-half-full perspective, a move can provide an opportunity to reinvent yourself and your money habits. Whether it's an opportunity to make a better housing decision, tighten your budget or add some additional income through new employment opportunities, moves can inspire a fresh start.
Tax-free housing and subsistence allowances, special capital gains rules when you sell a home, tax-free combat pay, favorable rules for deducting moving expenses and free tax preparation assistance all add value.
Like the regular requirement to uproot your life and move from one duty station to another, deployments cut both ways. However, on the financial front, special pays raise your income, and reduced taxes and perhaps fewer expenses at home all add up to an opportunity to make financial hay.
If you're looking to save, check out the 10%-earning DoD Savings Deposit Program. And if you're investing for retirement, the opportunity to use the Roth TSP and/or a Roth IRA offers the very special opportunity to take tax-free, combat-zone income and invest it in a tax-free Roth account.
Taken together, you have the potential to accumulate a big pile of money that's never taxed. All this is worth considering and should help put a positive financial spin on military service.
My son didn't celebrate the completion of his third year of service in the Army. However, as he finishes his undergraduate degree, he will certainly be thankful for the full post-9/11 GI Bill benefits he earned through that service. And his niece and nephew will benefit from the unused 529 plan funds that we will redirect to help the next generation of our family. Education benefits associated with military service change the lives of those who wear the uniform.
The education, skills and experience gained through military service are valued by civilian industries. There's a lot to do when leaving the military, but countless organizations and resources are focused on connecting transitioning service members with those opportunities.
If you're serving, thank you and good luck on your journey. If you're in the consideration zone, don't sell the ability to serve your country short.
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