As a member of your service member’s support network, you may have heard the good news that both active duty and reserve military personnel received a 3.1% military pay raise in 2020 – among the biggest in a decade. Beyond the salary bump, you’ll be glad to know that your loved one has several ways to be financially fit.
The military provides notable compensation benefits to your service member, ranging from paid vacation and retired pay plans that beats many private-sector employers to free or reduced cost housing, a host of special and incentive pays to free financial and tax consultations and more.
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Military financial benefits
Allowances: In addition to base pay, service members may also receive housing and food pay. A basic allowance for housing helps your loved one offset the cost of housing. Whether they choose to live on base or out in town, BAH provides a reasonable amount each month to afford housing based on their rank and the area they live in.
Basic allowance for subsistence is a monthly allowance meant to assist service members in paying for meals. However, if your service member lives on base, they will not receive BAS but will have access to free meals on base.
Special and incentive pays: While base pay and allowances cover the fundamental components of military pay, special and incentive, or S&I, pays are used to compensate service members for hazardous or difficult duty assignments and to recruit and retain them. There are more than 60 special and incentive pays. Common S&I pays are:
- Hardship Duty Pay: For service members at duty stations where the standard of living is significantly below the continental United States.
- Assignment Incentive Pay: This incentive is paid to service members for unusual assignment circumstances like extended tours.
- Hazardous Duty Incentive Pay: For service members who perform hazardous duties like air crewmembers.
Paid vacation: Service members receive 30 days of paid leave each year as well as all federal holidays. Whether it’s a short or long trip, your loved one can go on vacation and fully enjoy their time off while still receiving salary and any other allowances that are due to them. If a service member has accumulated over 60 days of paid leave, they must use the excess days or lose them by the end of the year.
Full military health and dental insurance: You can rest easy knowing that your service member is fully covered at no cost to them through TRICARE Prime. Active-duty service members will never pay out of pocket for any type of care within the network for this comprehensive medical insurance program. TRICARE also offers several plans that cover service members and their immediate family members at competitive rates.
Retired Pay: Service members who stay in the military for a full 20 year career will qualify for monthly retired pay, which provides a continuing source of income long after the member has ended their service. In addition to this “pension-like” benefit after a full career, new members and those who previously opted into the Blended Retirement System(BRS) can also earn government-provided contributions to a 401(k)-like savings account called the Thrift Savings Plan (TSP). This option is available to all members covered by BRS, even for those who do not intend to serve a full 20 year career. TSP is another avenue for service members to save and secure their finances for retirement. Service members can choose between a traditional or Roth account. Even if a service member decides not to retire from the military, they can roll their TSP into another 401(k) after separating from the military, or leave those funds in the TSP to continue growing until they reach full retirement age.
Free or reduced-cost housing: For those service members who are required to live on base, they can enjoy living for free in the barracks or dorms. Service members who receive a housing allowance are offered affordable housing options on base or out in town through the housing office on base.
Affordable life insurance: Service members are automatically signed up for Servicemembers’ Group Life Insurance through their branch. It offers low-cost coverage to service members for up to $400,000 at only $29 per month.
Free financial help: The military provides free financial perks to service members like financial counseling and tax services through Military OneSource. Your service member can be coached through several money-related issues like budgeting and money management, and MilTax allows them to easily prepare and file their taxes every year.
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Military discounts: Maybe one of the greatest financial perks and least considered is military discounts. Service members have access to many perks like tax-free shopping at exchanges on base as well as discounts at the movies, restaurants, amusement parks and much more. And for their traveling needs they never have to worry about paying for luggage when flying within the continental United States.
Signing and reenlistment bonuses: At times, the military offers enlistment and reenlistment bonuses to service members in certain career fields. These bonuses are usually offered to help recruit and retain for jobs that are hard to fill or that require high skill levels, and they can range in the thousands. Each branch determines how much to offer. Bonuses are not guaranteed and change constantly at the discretion of each branch. For accurate information on bonuses, it is best to contact a local recruiting office.
You can be confident knowing that your loved one is being fully compensated while serving their country. Check out more Friends & Extended Family articles to keep connected with your service member’s military life.