5 Financial Reasons to Consider Continued Service in the Reserve or Guard

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I was lucky. I hit the 10-year mark in service and was leaning towards a decision to leave the Army Reserve. I wanted to focus on my civilian career and was, frankly, tired of monthly drills and dividing my attention between my still-new career in financial planning – I left active duty just after six years of service -- and the obligations of continuing to serve. Coincidentally, at that point in time, my father hit age 60 and began to receive his reserve retirement benefits.


When I saw the results, the financial planner in me said, “you’re going the distance,” and I did. Whether you’re currently serving in the Guard or Reserve, or contemplating a move from active duty to the Guard/Reserve, finances may not be your top consideration, but they certainly should be a big consideration.


Here are 5 financial considerations:

  • Don’t underestimate the value of reserve retirement. Although you generally must wait until age 60 for the retirement checks to start, reserve retirement can be a powerful supplement to your other retirement efforts. In my case, I retired with roughly 4,000 points. According to the Army Reserve retirement calculator, at age 60 I can expect a monthly retirement check of around $3,000 per month and each year it will be adjusted for inflation. That’s valuable. It’s roughly the equivalent of having an additional $700,000 in my retirement nest egg! And that’s not even considering the value of the health care benefits that are part of the retirement package. 
  • Healthcare, part I. Speaking of health care, continuing to serve can open up your eligibility for TRICARE Reserve Select. This premium-based health care option is available to members of the active Guard and Reserve and it’s a fantastic deal. In 2018, you can get coverage for your entire family for $247/month and individual coverage is less than $50/month. You won’t find that type of value in the civilian sector. Whether you’re buying coverage on your own or through your civilian employer, it will likely cost substantially more than TRS.
  • Healthcare, part 2. As I mentioned earlier, at age 60 your TRICARE health care benefits begin. If you’re like my Dad and still working at that point, it might offer you an opportunity to save big money by opting out of your civilian employer’s health coverage. If not, you can rest easy knowing you have very affordable and comprehensive health care coverage – something your civilian counterparts are probably not able to say. Furthermore, once you sign up for Medicare, you’ll switch to TRICARE for Life and have no need to purchase Medicare Supplemental Insurance. 
  • Retired Reserve vs. Discharge. Many Guard and Reserve members wait 15-20 years from the time they stop serving until their retirement benefits begin. By transferring to the Retired Reserve instead of discharging, they ensure that their retired pay is based on the pay scale in effect at the time benefits begin (not when they quit drilling). They also continue to add longevity (years of service) while they are in the Retired Reserve. From a financial perspective, transferring to the Retired Reserve is vastly better than requesting a discharge. In the unlikely event of a full mobilization, those in the retired reserve can be recalled to active duty.
  • Drill Pay powers retirement. Continuing to serve also affords you the opportunity to earn monthly drill pay along with active duty pay for annual training (or mobilization). If you’re making ends meet with your civilian pay alone, this “extra” income can be used to save, invest or pay down debt. Furthermore, you’ll continue to be eligible for SGLI while you are in the Reserve or Guard.

As a financial planner, I know I can get caught up in the money component of any decision. However, but when it comes to continued service, a move to the Reserve Component may be a rewarding endeavor.


Are you currently serving in the Guard or Reserve, or contemplating a move from active duty to the Guard/Reserve? Share your plan in the comments.


Author Bio: JJ Montanaro is a Certified Financial Planner® professional and part of the Military Affairs team at USAA. He’s a graduate of the U.S. Military Academy and has over 20 years of financial planning experience.


* Disclosure: "Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements."


The information contained is provided for informational purposes only and is not intended to substitute for obtaining professional financial advice. Please thoroughly research and seek professional advice before acting on any information you may have found in this article. This article in no way attempts to provide financial advice that relates to all personal circumstances.


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