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They say you can’t get rich in the military, but I’m not so sure. No, there won’t be any huge windfalls from a stock option package. No, you won’t crush your salary negotiation when you PCS to a new job. Hey sir, I’d like to review my salary (that’s not going to go well!). And no, the only equity you’ve got in your “company” is sweat equity, and plenty of that.  

 

While all of that is true, there are some sweet financial advantages to serving in uniform. Here are six that may not translate to overnight wealth, but could create financial security for a lifetime: 

  1. 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 to get things going. Think about it: You’ve got an annual cost of employment increase in January, time-in-service pay increases every couple of years and promotions.   

  2. Top-notch retirement benefits. The number of folks in the civilian sector receiving pensions is minuscule.   

  3. 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 $476/month toward health care coverage in 2017. 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 calls for party hats and horns.   

  4. PCS resets. 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 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 up your budget or add some additional income through new employment opportunities, moves can inspire a fresh start.  

  5. Tax bennies. 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 are all worth at least a golf clap.    

  6. Deployments: Like the regular requirement to uproot your family and move from one duty station to another, deployments cut both ways. However, on the financial front, allowances make your paycheck a little fatter, 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 may help put a positive financial spin on deployments.  

  7. Education benefits. My son didn’t celebrate the completion of his third year of service. However, he will be celebrating the full Post-9/11 GI Bill benefits earned through that service. And his nephew will benefit from the 529 plan funds that will be freed up to help the next generation of our family. Education benefits associated with military service change the lives of those who wear the uniform. That’s worth a full-out stadium wave. 

 

Do you feel more financial secure due to your military service? Share your advice in the comments.

 

Other articles you might like:

6 Big Money Drains

Forget the Joneses

 

About the Author: 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.

 

 

* Disclosures: "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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