Articles by Ryan Guina

Ryan is the founder and editor of this site. He is a writer, small business owner, and entrepreneur. He served over 6 years in the USAF and also writes about money management, small business, and career topics at Cash Money Life.

You can find him around the web at, Ryan Guina on Twitter, The Military Wallet on Twitter, and on Google.

Disney World Military Discounts – 2014

If you are a military member or retiree who is planning a Disney World vacation, then it pays to take advantage of the generous military discounts Disney offers. The promotion is good for a 4-Day Park Hopper ticket for just $169 per person, plus tax. The Park Hopper option gives you access to all four Disney World parks. You can also add park admission to the water parks for $29 more per person.

Disney World Military Discounts Eligibility

Disney World Military Discounts

See the Magic World of Disney without paying a fortune!

Eligible participants include:

  • Active duty members of the Air Force, Army, Marines, Navy, Coast Guard
  • Members of the National Guard and Reserves
  • Military Retirees

Valid ID is required to purchase and use these discounted tickets.

Where to buy tickets: Disney Military Promotional Tickets may be only purchased at participating U.S. military sales locations, and can only be purchased by the servicemember, or their spouse (but not both), for use by themselves and other family members and friends. Up to 6 tickets may be purchased at these discounted rates, however, the tickets may not be sold or transferred, so be sure to only buy what you will use!

The Disney website states, “The actual prices charged at the individual U.S. military base ticket offices for Disney Military Promotional Tickets may be less than the prices set forth above.” There are no guarantees your local base will offer these tickets for less than the stated price, but that would be a nice bonus!

Fine Print and Exclusions

As mentioned above, you or your spouse can buy up to 6 total tickets, however, they cannot be transferred. In addition, there are some blackout dates and locations:

  • December 20 to December 31, 2013: Not valid at any theme parks or gated attractions.
  • April 13 to April 20, 2014: Not valid at any theme parks or gated attractions.

Expiration dates and other fine print:

  • Tickets and options expire and may not be used after Sept. 27, 2014.
  • Valid military identification will be required for purchase and use.
  • No more than six (6) Disney Military Promotional Tickets may be purchased and (if applicable) activated by any Eligible Service Member or spouse (regardless of the place of purchase and whether purchased by that person or that person’s spouse).
  • In addition, one of the six (6) Tickets purchased must be used by the Eligible Service Member or his/her spouse.
  • Each Disney Military Promotional Ticket must be used by the same person on any and all days.

More Military Discounts, Disney, & Travel Savings

Here are some more savings you may find helpful:

For more information, see the Disney website.

Photo credit: Scott Smith.

TMW 003: Force Shaping and Involuntary Separations – How to Handle Being Laid Off from the Military

The military is cutting their end strength across all branches of the military, including active duty, Guard, and Reserves. In today’s podcast we discuss how you can decrease the odds of being involuntarily let go, and what you can do if you are informed that you will lose your military job, including the financial implications of being laid off, benefits eligibility, civilian career options, transitioning to the Guard or Reserves, and how to handle the emotional impact of suddenly being unemployed.

Force Shaping Involuntary Separation

Learn how to prepare for an involuntary separation.

Read this article and listen to the podcast. What follows is an in-depth version of my talking notes from the podcast, not a complete transcript. If you or someone you know is being impacted by the Reduction in Force, then I encourage you to listen to the podcast as well as read these notes. There is value in both. The podcast gives multiple anecdotes and examples. This article is almost 4,000 words and includes a variety of helpful links to internal and external resources. This is a huge topic, and one that you need to spend a lot of time on. Your life is being impacted in a huge way and it’s not something you can solve in an hour. As always, feel free to drop us a comment or question on this page, or our contact page.

The Military Drawdown – Reduction in Force

In the civilian world, you often hear about large companies laying off dozens, or hundreds of workers. In rare cases, a company may lay off thousands of employees. Rarely do you hear about this happening in the government sector, where job stability is often greater than in the commercial sector.

But right now, the military is going through some major downsizing. Call it a drawdown, Force Shaping, Reduction in Force, or RIF, or any other term, it’s all the same. The government is laying off tens of thousands of service men and women currently serving on active duty, and thousands from the Guard and Reserves.

This is a numbers game in Washington D.C., but this isn’t just a numbers game to the tens of thousands of people whose lives are being affected by the Force Shaping our military is experiencing. This is real life. And it’s hard.

Today we are going to talk about the problem, who it is impacting and how it is affecting them, and what you can do if your number is called and you are involuntarily separated from the military.

Joining us in our podcast is a special guest, Rob Aeschbach. He is a retired Marine officer and is in the process of starting a financial planning practice with the goal to help military members and their families. I met Rob at a financial conference about two years ago and we hit it off right away. He is a great guy, and knowledgeable about what’s happening in the military right now, and how you can protect yourself.

Find Rob Aeschback online: If you wish to learn more about Rob, or get in touch with him, you can find him at the following online locations:

Force Shaping – What is Happening in Each Branch

Let’s talk about the military drawdown going on. This is the largest drawdown since the Cold War, when the military reduced the size of their active-duty ranks by 494,000 from 1991 to 1995. That’s almost half a million people whose lives were affected by the drawdown (source).

In comparison, today’s cuts are a small percentage of that. But it’s important to remember these cuts don’t represent statistics, they represent real lives that are being affected. Each branch is cutting thousands of active duty troops, and in the case of some branches, tens of thousands of troops.

Here are some scary numbers (note: some of these sources are somewhat conflicting, and of course, are subject to change):

Army Cuts: The Army has the most significant Reduction in Force, with roughly 50,000 active duty spots in the next few years, and about 30,000 Guard and Reserve slots.

Air Force, Marines, and Navy cuts: The other branches are cutting their numbers at a lower rate.

  • Air Force is cutting 16,700 Airmen (source).
  • The Marines are cutting 6,100 by 2015, and another 4,000 by 2017. Also cutting 1,100 members of the Reserves (source). One source showed a cut of 15,000 Marines by 2017 (source).
  • The Navy is keeping their end strength the same for 2015.

Who is Affected – Officer, Enlisted?

Each branch determines which careers and ranks are being cut. This is something they normally decide based on desired end strength, current overages, and other needs. What is important to know is that the Reduction in Force affects officer and enlisted alike. For example:

  • In June 2014, the Army cut 1,100 Army Captains, and they were scheduled to cut 500 Majors in July. In most cases they are given a little less than a year to separate.
  • Many enlisted members’ jobs are also being cut. Instead of being given a separation date, enlisted members are often allowed to finish their enlistment, but aren’t allowed to reenlist.

Which jobs are being cut? There is no public list. If your career field is over-manned, or your officer class has too many people, then you may be in danger of being selected for involuntary separation. If you don’t know the status of your career field, then you may try contacting your personnel officer or assignments officer to find out what is happening with your career field. If you want to be proactive, find out if you are eligible to cross-train into a high-need career field, or one that is undermanned.

Special to the podcast: Rob shared some anecdotes about his time in the Marines. He joined in 1990, right before one of  the largest drawdowns in US Military history. He saw the end force strength of the Marines decrease each year he was in the service. Rob’s stories and tips can help you understand how others made it through a RIF, and possibly help you put things in perspective.

Options for those Facing Force Shaping

Let’s talk about some different classes of service members in regard to time in service and some of the options they have available to them if they are RIF’d. We’ll list a few, then tackle them individually.

  • Less than 6 years of service: Most members in this career group are simply let go from military service.
  • More than 6 years of service and less than 20 years of service: are often eligible for involuntary separation pay, which is similar to severance pay in the civilian community. Involuntary Separation Pay is based on your rank and years of service.
  • Voluntary Separation Pay: Some branches are offering select service members the option of voluntarily separating from the service in exchange for a Voluntary Separation Bonus.
  • Temporary Early Retirement Authority: Some military members are eligible for early retirement under TERA, the Temporary Early Retirement Authority.
  • Guard/Reserves: Members may also be eligible to join the Guard or Reserves.

Keep in mind that everyone facing a Reduction in Force or involuntary separation should be eligible for unemployment benefits. In fact, military members are eligible for unemployment benefits even if they voluntarily separate from the service at the end of their service commitment. One of the few exceptions may be for those who are receiving retirement pay. Unemployment benefits won’t cover all your expenses, but they should help defray your cost of living until you land on your feet. Check with your state for more specific information on filing an unemployment benefits claim.

Less Than 6 Years of Service:

Those who served less than 6 years on active duty are ineligible for involuntary separation pay. So they will leave with the ability to call themselves a veteran, and they will have some basic benefits, such as the GI Bill, VA Loan, and possibly other veterans benefits, depending on individual circumstances. With less than 6 years of service time, junior enlisted members and junior officers haven’t yet become career military members. The transition is difficult, but may be easier for many to bounce back from. The key thing to remember here is you are losing your job and benefits. The goal is to make yourself employable and find a new job as soon as you are able.

Special to the podcast: Rob gives tips on how to find a job using your military experience and credentials. There are many employers seeking those with military experience and leadership qualities.

More Than 6 Years of Service, But Less Than 20:

Those who served more than 6 years, but less than 20 years are generally considered mid-career personnel, or sometimes careerists, depending on how long they have been in. This can be a more difficult transition, especially if you have built your career and financial future around the military and potential military retirement. The good news is the military recognizes this. If you meet these service requirements are are involuntarily separated, you may be eligible for involuntary separation pay.

To qualify for full Involuntary Separation Pay, you must be involuntarily separated, be fully qualified for retention at the time you are let go, and your service must be characterized as “Honorable.” An involuntary separation due to Force Shaping or a Reduction in Force is a common qualifier for receiving Involuntary Separation Pay. There are also rules for receiving Involuntary Separation Pay at a half rate. You can find these rules here.

How to Calculate Involuntary Separation Pay:

Take your monthly base pay, multiple by 12. Then multiply this by your years of service (including full months as a fraction of the year). Then multiply this by 10%.

Example of an E-5 receiving involuntary separation pay at 6 years:

$2,734.50 base pay x 12 = $32,814.00

$32,814.00 x 6 (number of years served) = $196,884.00

$196,884.00 x 10% = $19,688.40 = Involuntary Separation Pay.

Involuntary Separation Pay is nice, but it’s no substitute for losing your career. This group of service members is often hit the hardest because they might be over half way to an active duty retirement. Many people who fall within this group have built their lives and financial future around serving until retirement, and then finding another career for their later years. Unfortunately, that option is taken from them.

Voluntary Separation Pay:

Some branches are offering Voluntary Separation Pay on a limited basis. This is often limited to select branches, career fields, and pay grade. In some cases it may only be open to certain ranks that have been passed up for promotion more than two times, or other various factors. Voluntary Separation Pay may be a good offer if you were already considering leaving active duty, and were not planning on making the military a career. Here is a news article from the Marine Corps which covers Voluntary Separation Pay for select individuals.

Temporary Early Retirement Authority

There is one group of servicemembers who are somewhat more fortunate than the others – those who are eligible to retire under TERA, the Temporary Early Retirement Authority. TERA allows eligible service members to retire from active duty with as little as 15 years of service, and less than 20. There are some caveats though. Each service determines which career fields are eligible for TERA, and you will receive a reduced pension if you retire under TERA. Let’s take a look at how the pension works compared to a normal pension:

  • High-3 Pension: 2.5% of average of top 3 years of service for each year served. So 20 years on active duty = 50% of base pay. You receive 2.5% of your pay for each year served above 20. (click here for an explanation of the REDUX retirement system, another retirement system many are eligible for).
  • TERA: TERA involves using a reduction factor of 1% per year of early retirement. You start with 100% as your base rate, then reduce that by 1% for each year you retire early. So if you retire at 15 years of service, your reduction factor is 95% (100%-5%). If you retire at 19 years, your reduction factor is 99% (100-1). Months also count toward service, but we will use round numbers to keep things simple.
  • Assuming we are using the High-3 Pension plan: Take the number of years you served and multiply by 2.5%. Then multiply that by a reduction factor. So if you serve 15 years, you multiply that by 2.5%, which comes to 37.5%, then you multiply that by your reduction factor, which is 95%. So that 37.5% multiplied by 95% now comes to 35.625%.
  • Multiply your new percentage by your average of high-3 pay and you will get your monthly pension.
  • This is likely to be a far cry from the 50% retirement you were expecting, but you also get your pension immediately, as well as all other military retirement benefits including TRICARE, base access, military retiree card, etc.

Here is another resource for calculating a retirement pension under TERA.

The decision to take TERA shouldn’t be taken lightly. You will need to run the numbers to see if it makes financial sense, or if you believe leaving the military early will enhance your quality of life.

Transitioning to the Guard or Reserves Can Be a Great Option

Many service members targeted for involuntary separation from active duty may be eligible to join the Guard or Reserves, provided they had a positive reenlistment or separation code. Keep in mind the Reserve Corps is also undergoing some Reductions in Force, as some branches are cutting thousands of jobs in the Guard and Reserves. But that doesn’t mean you won’t be able to get a job in a Guard or Reserve unit. It all depends on the needs of each individual unit, as well as your ability to cross-train into a career they may need.

Joining the Guard or Reserves may be an option for many people, depending on their branch of service, career, rank, and other factors. You may even be able to change branches of service, depending on your situation.

The Guard and Reserves offer some great benefits, and that may be a great way to continue earning benefits toward retirement, as well as inexpensive health care, education benefits, and much more. Don’t dismiss the Guard or Reserves out of hand. I did that, and it was a mistake. I have since changed my mind about serving in the Guard/Reserves. Chances are high that you will go through similar changes when you leave military service. It’s a huge transition.

Special to the podcast: Rob retired from The Marine Reserves and has a lot of experience with how you can make the Guard or Reserves part of your lifestyle and career.We discuss some specific examples and benefits of joining the Guard or Reserves. This is where listening to the podcast adds more value than this article alone.

Military Retirement + Separation Pay = Repayment

Read this next section carefully.

If you received Voluntary or Involuntary Separation Pay and later joined the Guard or Reserves and remained on duty until you were eligible for retirement, then you would be required to repay the Voluntary or Involuntary Separation Pay you received. Upon retirement, DFAS will begin recouping your separation pay at a rate of 40% of your retirement pay. You cannot repay your separation pay in a lump sum, however, you can request DFAS increase your withhholding. Here is more information about paying back separation pay upon retirement.

Don’t let this stop you from joining the Guard or Reserves if you feel that is your calling, or in the best interest of your personal, professional, or familial goals. Just be aware that this exists.

Can You Avoid Force Shaping?

You may not be able to prevent Force Shaping completely. But you may be able to reduce your chances of being hit. To start with, Force Shaping is a way to reduce the manning from overly manned career fields. The best thing you can do is put your best foot forward. Imagine you are going in front of a promotion board. Those who have met their promotion schedules, completed Professional Military Education (NCO Academy, Squadron Officer School, War College, etc.), completed off-duty education, and achieved other benchmarks are likely to be looked upon more favorably than those who have negative marks on their personnel records. For example, you would want to avoid negative records in your personnel file such as Letters of Reprimand, an Article 15, or other non-judicial punishment. You will want to ensure you have completed all your training, pass your fitness exam, and avoid the military kiss of death – the dreaded DUI.

Special to the podcast: Rob gives more concrete examples of how some of his former colleagues avoided Force Shaping. It can take some creativity, but you may get lucky. The key here is to be proactive.

Big Picture – Financial Planning Before Separation

One of the benefits of being involuntarily separated, if you can call it a benefit, is that you know you are going to be laid off. This is a tough situation to deal with, but you have the benefit of knowing when you will lose your job. Many people in the civilian sector are only given a couple weeks notice at best. Many military members have several months to plan. That isn’t a long time, but it is enough time to get started with some basic preparation.

There is too much to cover in this article, but we go into more depth in the podcast.

Special to the podcast: Rob gives concrete examples of steps you can take to get your financial house in order before you are laid off.

Health Insurance and Life Insurance – Make Sure You’re Covered!

You will want to make sure you and your family are covered when you leave military service, especially with health insurance, which is mandated under the Patient Affordable Care Act.

TRICARE is often under appreciated by military members and their families. But it’s actually one of their most valuable benefits. Those who are involuntarily separated may receive a couple extra months of health care, but it doesn’t always extend to their families. There are a few programs to look at:

  • The Transitional Assistance Management Program offers 6 months of TRICARE coverage to the service member and their family if they are forced to leave the service involuntarily. The benefits are the same as active duty health care. Check to see if you are eligible for this program if you are forced out of the military.
  • The Continued Health Care Benefit Program is similar to COBRA. Basically you are eligible to continue receiving health care benefits similar to TRICARE – the benefits are administered through Humana. However, you have to pay 100% of the cost, which is roughly $1,200 per quarter for the servicemember only, or almost $2,700 per quarter for a family plan. You can receive these benefits for up to 18 months in most cases, and up to 36 months in some cases. (source).
  • You can also elect to pay for a private health insurance program, or find health insurance through your new employer or school, if offered.
  • Service members who deployed to a war zone may be covered by the VA for up to 5 years. However, that doesn’t cover their families.
  • More tips on getting health insurance after leaving the military.

Life insurance after the military: Life insurance is also important. SGLI is inexpensive life insurance, but you will lose access when you separate from the military. The good news is you will be able to convert your SGLI policy to a Veterans Life Group Policy shortly after you separate. The rates are based on age, and you may be able to find less-expensive life insurance from a commercial provider. It pays to shop around.

Career Search – How to Get Started

Finding a new job will be high on the list for those who are forced out of the military. It’s important to start the job search process as soon as possible after learning you will lose your military job. There are several things you can do, such as building out your resume, using Tuition Assistance or the GI Bill to start taking some classes or earning professional certificates, enhancing your skills, and building your professional network.

Again, this is a massive topic. We go into more detail in the podcast and list a few resources here:

Special to the podcast: Rob and I discuss some tips for getting started with your education and training, and how you can start your career search. The key is to get started right away. You don’t need to start trying to get interviews if your separation date is months away. But you do need to start thinking about what type of job you want to do, where you want to live, creating your resume, etc.

Emotional Fallout of Being Laid Off

We would be remiss not to mention the emotional fallout that comes with being laid off. It’s tough. I was jobless for 6 months after I left the military. Emotionally, it was very difficult for me to go from having a lot of responsibility to having none. This was the most difficult aspect of my transition from the military to civilian life. But there is something you need to remember: It’s not your fault. Many of these cuts are simply a numbers game for the bean counters in Washington D.C. It’s highly unlikely you were singled out to be cut.

Special to the podcast: Rob and I discuss the transition and how you can make it go more smoothly. Serving in the Guard or Reserves can be a great way for many people to replace the loss of being around the military community and the loss of responsibility. Other tips include joining professional organizations, becoming more active in your church or community, finding hobbies that get you out of the house and around other people, volunteering, and more.

There Are No Quick Fixes – This Takes Time

Losing your job isn’t easy. It’s more difficult when you have given so much to your country and you want to continue serving, only to have them inform you your services are no longer needed. Just remember this isn’t personal. It’s simply a numbers game and your number was called. The key is to take this a day at a time and dedicate the same energy and discipline you had in the service to providing for yourself and your family.

Finally, don’t be afraid to reach out for help: You can contact support services on your base – they offer financial and career counseling. You can contact a Veterans Service Organization if you need assistance filing for veterans benefits. And feel free to leave us a comment here. We are here for you.

Thank you for your service.

Servicemembers Group Life Insurance Premiums to Increase

Life insurance is an important part of financial planning, especially when your job often requires you to put your life on the line. Thankfully, military members have access to inexpensive life insurance through the Servicemembers Group Life Insurance program, or SGLI. The SGLI is a low-cost life insurance program available to military members. Family members are also eligible for coverage under the Family Servicemembers’ Group Life Insurance (FSGLI), (rates vary by age for FSGLI participants).

SGLI Rate Increase, July 2014: The SGLI rates are increasing slightly starting in July 1, 2014. But even with the small rate increase, the rates are still very affordable compared to many private life insurance options.

The new cost for SGLI life insurance is 7 cents per $1,000 coverage, a slight increase from 6.5 cents per $1,000 coverage (This is also the previous rate charged prior to 2007 when rates were decreased). To put this in perspective, the cost increase for the maximum amount of life insurance coverage of $400,000 is only a $2 per month increase, or $24 per year.

Current SGLI Rates Effective July 1, 2014

Here are the Servicemembers’ Group Life Insurance premiums:

Servicemembers' Group Life Insurance Rates

Coverage: You can elect to purchase coverage in $50,000 increments, up to a maximum of $400,000.

How these rates compare: These are group life insurance rates, which means that if you are in the military, you should be eligible for the same SGLI rates as everyone else. Individual life insurance plans bought on the open market have individualized rates based on your age, health, whether or not you smoke, and many other factors. You often need to fill out a questionnaire and health assessment before a company will issue you a private life insurance policy. This can make the SGLI insurance an excellent deal for those who are in an older age group, or who have health conditions that might make life insurance more expensive to purchase on their own.

Eligibility: You are automatically insured under full-time SGLI if you are one of the following:

  • Active duty member of the Army, Navy, Air Force, Marines, or Coast Guard
  • Commissioned member of the National Oceanic and Atmospheric Administration (NOAA) or the U.S. Public Health Service (USPHS)
  • Cadet or midshipman of the U.S. military academies
  • Member, cadet, or midshipman of the Reserve Officers Training Corps (ROTC) engaged in authorized training and practice cruises
  • Member of the Ready Reserve or National Guard and are scheduled to perform at least 12 periods of inactive training per year
  • Servicemember who volunteers for a mobilization category in the Individual Ready Reserve (IRR)

Ready to leave the service, or have already left? The SGLI provides 120 days of free coverage for those eligible for full-time SGLI from the date of separation from the military (or up to 2 years if the servicemember is totally disabled at separation). You may also be able to convert your SGLI policy to a Veterans Life Group Policy. This can be a good deal for people with pre-exisiting health conditions, as a straight policy conversion does not require additional health exams (those who convert their policy after 240 from separation are required to submit a statement of good health). However, VGLI rates are based on age and do not feature the same flat premiums as the SGLI program. Some younger individuals, or those who are in good health, may find it less expensive to purchase a private life insurance policy. It pays to shop around and examine your situation thoroughly before making the decision.

Related Topic: How Much Life Insurance Do Military Members Need?

SGLI Traumatic Injury Protection Program (TSGLI) Rates Unchanged

Servicemembers covered under the full-time SGLI program are automatically covered for the TSGLI program. Servicemembers’ Group Life Insurance Traumatic Injury Protection (TSGLI) provides financial assistance for servicemembers who experience a severe or traumatic injury. This includes combat injuries, as well as injuries that may occur on or off duty.

TSGLI coverage applies to active duty members, Reservists, members of the National Guard, those performing funeral duty honors, and one-day muster duty. The cost is $1 per month. You can read more about TSGLI benefits here.

Blue Star Museums – Free Admission for Military

More than 2,000 museums across the US have partnered with the military charity Blue Star Families, the Department of Defense, and the National Endowment for the Arts, to offer free admission to our nation’s service members, including members of the Guard and Reserves, and their families. Free admission at participating museums runs from Memorial Day, May 26, 2014 through Labor Day, September 1, 2014. This is the fifth year of the annual program.

Blue Star Museums - Free Admission for Military Members

The goal of the Blue Star Museums program is to help servicemembers and their families enjoy our nation’s national heritage and learn more about their new communities after completing a military move.

Participating Museums: There are more than 2,000 participating museums, which are located in all 50 states, Washington D.C., Puerto Rico, and the American Samoa. There are also a wide variety of museums participating, including museums that feature the fine arts, science museums, history museums, nature centers, and children’s museums. You can find participating museums at the following link:

Free Admission Eligibility: Free admission* is open to anyone carrying a valid military ID card (CAC Card), or a DD Form 1173 ID Card (Dependent ID Card). This includes members of active duty military, National Guard, Reserves,U.S. Public Health Service Commissioned Corps, and the NOAA Commissioned Corps. Free admission is valid for the service member, and up to 5 dependents.

*Some special events or limited time exhibits may not be eligible for free entry, so be sure to call ahead to verify availability.

U.S. Public Health Service Commissioned Corps, NOAA Commissioned Corps – and up to five family members. – See more at:
U.S. Public Health Service Commissioned Corps, NOAA Commissioned Corps – and up to five family members. – See more at:
U.S. Public Health Service Commissioned Corps, NOAA Commissioned Corps – and up to five family members. – See more at:

TMW002 – Financial Independence and Early Retirement on a Military Salary. An Interview with Doug Nordman

Retirement. It means many different things to different people. To some it means working until you are 65, then hoping you have enough money put away to live the rest of your life in relative comfort. Others are able to retire at an earlier age. How do they do it? How can they afford to retire after working a 20- or 30-year career? It’s easy to say some people just make a lot of money, so they can retire early. But there is a lot more to it than just earning money.

Yes, you need to earn money. But you also need to save and invest that money wisely. You also need to account for things like inflation and escalating health care costs, supporting your family, and outliving your nest egg.

Financial Independence & Earlly Retirement on a Military Salary

Want to retire early? Listen to this podcast!

In today’s podcast, I want to introduce you to my friend, and early-retiree, Doug Nordman. Doug is a retired Naval officer. He was able to retire at age 41 and never work again. But don’t let that fool you – Doug remains just as busy today as he was when he was in the service. The difference is he is doing the things he loves, not what he has to do.

Doug structures his day around his passions – surfing, writing, and helping others. In fact, Doug’s book, The Military Guide to Financial Independence and Retirement, had a large influence on me, as you will hear in this podcast. Doug also runs a blog called The Military Guide, where he writes about a variety of topics related to military benefits, veterans topics, retirement, and personal finance.

About the Book: The Military Guide to Financial Independence and Retirement explains how one can retire on a military salary and related retirement benefits, without having to work again. But it also explains how those who don’t serve a full 20-year career in the military can save for early retirement and reach their goals at their own pace.

Chapter 5 in his book had a big influence on me, as it covers serving in the Guard or Reserves, something I had thought little about until a few years ago. If you have separated from the military and haven’t considered joining the Guard or Reserves, then it might be something worth exploring. The personal, professional, and financial benefits can have a lasting impact on your life.

What You Will Learn in This Podcast

In this podcast, we cover the following topics:

  • Doug’s story about how he and his wife were able to engineer their lives to meet their personal and financial goals, allowing Doug to retire for good at age 41.
  • An overview of Doug’s book, and some of the personal stories that went into it.
  • Why Doug donates all his book’s royalties to military charities, including the Wounded Warrior Project and the Fisher House Foundation.
  • The definition of Financial Independence, and how you can achieve it.
  • The difference of being Financially Responsible, and Financially Independent.
  • How to live a balanced life while pursuing your values and goals.
  • Where to find additional resources for reaching Financial Independence.
  • The under-appreciated value of serving in the National Guard or Reserves, and the true value of the retirement benefits from the Guard or Reserves (most people vastly underestimate the value of a Guard or Reserve retirement!).
  • Doug’s current project, with the current working title of, “The Military Guide to Making Good Insurance Decisions.” Doug wants to help people understand which types of insurance they need, which they can skip, and why.

 You Don’t Want to Miss This Episode

If retirement is on your mind, you need to listen to this episode. Whether you will have a military pension and the related benefits, or whether you are going it alone with your own investments, you will want to hear the information in this podcast. You will learn a lot about how to approach financial independence and retirement.

I highly recommend his book. The Military Guide to Financial Independence and Retirement is the best book I have read about military finance. And I don’t make this statement lightly. This book is also not just for current servicemembers. It can be an excellent resource for anyone who has served. I have read it cover to cover twice, and I have read certain sections multiple times. This book opened my eyes to many aspects of my own finances and has shaped my view of working and saving for retirement. As you will hear in the podcast, Doug recommends you see if your library has a copy you can borrow. He also recommends seeing if your unit can purchase copies for people on base. If those avenues don’t work, then you can find it on Amazon in paperback or Kindle format. It can also be found at several other online retailers. You can also read much of the content from the book in the archives on his site.

Where to Find Doug Online:

You can lave comments here on our site, or if you want to reach Doug, you can find him at the following locations:

TradeKing Promotional Code – $1,000 Commission Free Trades!

There is never a better time than right now to start planning your future. If you are thinking about opening a new investment account, now is a great time to do it. TradeKing is one of my favorite places to open an account for online stock trading – I’ve been a customer for several years now and recommend their service to anyone looking for an online brokerage account that offers a combination of price, service, tools, and educational products. Are you looking for more incentive to open an account? Then check out this TradeKing overview and these current TradeKing promotional codes, including TradeKing’s best promo offer ever – $1,000 in commission credits!

TradeKing Promo code and sign up bonusAbout TradeKing. TradeKing is one of the one of the leading online discount brokerage firms and is the broker I use for my online stock trades. TradeKing was rated #1 overall discount broker by Smart Money Magazine in 2006 and 2007, and was rated #4 overall online broker in 2011. SmartMoney also rated TradeKing best in customer service in 2008, 2010, and 2011. TradeKing has also received numerous awards from Barron’s (4 Star rating 5 years running, and #1 in usability in 2011), Kiplinger’s, and other periodicals.

TradeKing Features: TradeKing is one of the leaders in the discount brokerage community and features:

  • $4.95 stock trades
  • No fee IRAs
  • Variety of investments, including stocks, bonds, mutual funds, options, and exchange–traded funds (EFTs). They also offer U.S. Treasury and Agency Issues and CDs.
  • Free automatic dividend reinvestments (DRIPs)
  • Money Market Sweep to earn interest on your idle cash
  • Top rated investment research and learning center (free to everyone)
  • Free access to Maxit Tax Manager tax management software
  • Receive up to $150 to transfer your funds to TradeKing from another brokerage with the TradeKing Asset Transfer program to get up to a $150 asset transfer reimbursement.

We wrote a full TradeKing Review on our sister site which overs TradeKing’s features in more detail.

TradeKing Promotional Code – $1,000 in Commission Free Trades

I have been a TradeKing customer for over six years now, and this is the most generous offer I have ever seen from them – $1,000 in commission credits for new customers! The $1,000 commission credit is good for equity, ETF and option orders including the per contract commission. This makes this an excellent offer for active traders and options traders.

Get this deal while it lasts:

You will receive your $1,000 commission credit within one business day of opening your account. The credit will be good for 60 days, and as mentioned previously, will apply to equity, ETF and option trades. This is the largest commission free trade credit I have ever seen from TradeKing or any other discount brokerage.

As always, there is some fine print, which you can read here:

The fine print: New customers are eligible for this special offer after opening a TradeKing account with a minimum of $10,000. You must apply for the free trade commission offer by inputting promotion code FREE1000 when opening the account. New accounts receive $1,000 in commission credit for equity, ETF and option trades executed within 60 days of funding the new account. The commission credit takes one business day from the funding date to be applied. To qualify for this offer, new accounts must be opened by 12/31/2014 and funded with $10,000 or more within 30 days of account opening. Commission credit covers equity, ETF and option orders including the per contract commission. Exercise and assignment fees still apply. You will not receive cash compensation for any unused free trade commissions. Offer is not transferable or valid in conjunction with any other offer. Open to US residents only and excludes employees of TradeKing Group, Inc. or its affiliates, current TradeKing, LLC account holders and new account holders who have maintained an account with TradeKing, LLC during the last 30 days. TradeKing can modify or discontinue this offer at anytime without notice. The minimum funds of $10,000 must remain in the account (minus any trading losses) for a minimum of 6 months or TradeKing may charge the account for the cost of the cash awarded to the account. Offer is valid for only one account per customer. Other restrictions may apply. This is not an offer or solicitation in any jurisdiction where we are not authorized to do business.

Click Here to Open a New TradeKing Account and Receive $1,000 in Commission Free Trades.

TradeKing also offers other promotions, such as the $150 asset transfer reimbursement, which makes it easy to transfer your assets to TradeKing without losing your tax base or requiring you to first liquidate your stocks or other assets.

TradeKing $150 Asset Transfer Reimbursement

TradeKing is currently offering to reimburse new customers up to $150 in ACAT fees when they transfer their investment assets to TradeKing. Why is this a big deal? Brokerages often charge customers an Automated Customer Account Transfer fee when they transfer their assets to another brokerage. This fee is called an ACAT fee. It varies from broker to broker, and can cost you a fairly decent amount, depending on how much you are transferring, and your broker’s rules. TradeKing is offering to make it easier on you to transfer your investments without having the pay a large transfer fee to your current broker. It’s their way of saying thanks! Switch to TradeKing and get up to $150 in transfer fees reimbursed.

TMW 001 – Thrift Savings Plan Basics & Why You Should Participate

Military members and many government employees have access to pension plans, which are fast becoming hard to find in the civilian sector. But even if you qualify for a pension plan, will it be enough to finance your retirement, or will you need additional savings and investments? The answer, as you have probably guessed, is that most people will likely need more money to fund a lifestyle that is equivalent to their current way of life. That’s where other retirement plans come into play. The most notable among these for military members and government employees are the Thrift Savings Plan, and IRAs.

Thrift Savings Plan Basics - Military Wallet Podcast

The TSP is a great way to save for retirement!

The Thrift Savings Plan and IRAs are both great options for investors, and I’m going to walk you through the basics of these plans, along with our guest, Robert Shaye, an active Duty Coast Guard member, and a recent MBA graduate from UC Berkeley Haas. Robert shares some excellent information about the TSP, investing, and how you can accomplish your retirement goals.

Covered in this episode are topics including:

  • Why you should save for retirement.
  • How Robert helped a friend put over $450,000 back in her pocket by making some small changes to her retirement account.
  • The differences between the Thrift Savings Plan and IRAs.
  • The difference between Roth and Traditional Retirement accounts.
  • Why the Roth IRA and Roth Thrift Savings Plan options are often the best choice for military members.
  • Thrift Savings Plan contribution limits.
  • Roth IRA and Traditional IRA contribution limits.
  • How to open your Thrift Savings Plan account.
  • Where you can open a Roth IRA.
  • How to get started investing, even if you don’t know how or where to get started.
  • Investment options within the Thrift Savings Plan, and how they differ from IRAs and other investment accounts.
  • The importance of investment management fees, and how they will impact your investments over time.
  • The pros and cons of Life-Cycle, or Target Date Funds.
  • Why it’s important to keep your money invested in stocks, even when the markets aren’t doing well.
  • Pros and Cons of transferring funds in or out of the TSP.
  • Strategies for Guard Members or Reservists who are also Federal Employees and are eligible for both versions of the Thrift Savings Plan, the civilian and Uniformed Services.
  • Strategies for investing in the TSP when you have tax-exempt combat pay (this can have a huge impact!).
  • Why you might want to open a TSP with a minimum of $500, even if you don’t plan on making the TSP your primary retirement account (this strategy can literally put thousands of dollars back in your pocket due to the low fees the TSP charges!).


The Thrift Savings Plan is fairly easy to understand and even easier to start. It’s never too late, or too early, to begin investing. And the TSP is a great way to start saving for your retirement. You can get started through your MyPay account if you are in the military, or contact your finance unit for assistance.

More to come: The Thrift Savings Plan is fairly basic as far as retirement and investment accounts go. But as basic as it is, there are some advanced strategies you can use to supercharge your retirement plan. We will be sure to address some of these topics in future podcast episodes.

Note: This is our first episode. We plan on making this a weekly event. We will be on iTunes, Stitcher Radio, and other outlets soon. Thanks!

Questions or comments? Drop us a line in the comments section and we will be sure to get back with you!

Veterans Service Organizations for Benefits Claims Assistance, Career Guidance, and More

Making the transition from the military world back to the civilian world is a difficult task. The problem is compounded if you are a still recovering from combat, recuperating from wounds, moving to a new location, transitioning with a family to take care of, and many other factors. The good news is there are dozens of agencies and Veterans Service Organizations (VSOs) that were created to help veterans and their families, or their survivors.

Many of these organizations offer veterans a variety of services, including VA disability benefits claims assistance, education and job training, job fairs, resume writing services, financial grants, opportunities to participate in community service projects, and more. In most cases, these services are free. The best part is you get to tap into the experience and expertise of service officers who have been there, done that, walk the walk, talk the talk, and know how and where to get help. If these organizations can’t help you, they can certainly put you into contact with someone who can.

Veteran Service Organizations Offer You Assistance

Veteran Service Organizations are one of the best places for veterans to go for help. There are hundreds of VSOs out there, including organizations at the local, state, regional, and national levels. Please note this is not a comprehensive list of every Veteran Service Organization. The VA has a published guide that is 128 pages long, which is too long to cover here.

Instead of recreating that list, we decided to focus on some of the largest and most well-known VSOs. This list includes some of the larger national VSOs that focus on helping veterans with VA Benefits Claims, career guidance and job placement, and similar programs that are applicable to almost all veterans.

Get Individualized Assistance. Service Officers at these organizations can help you review your benefits eligibility to see which benefits programs you may be eligible to receive. They will go through your service records, medical records, and other information you provide, and they will help you identify which benefits you are eligible to receive or which programs you may be eligible to participate in. They can also help you file a VA benefits claim for a service-connected disability, place a claim education or training benefits, and more. Some of these VSOs also offer grants, training, scholarships, and other forms of assistance.

VSO’s – Help Filing VA Claims and More

Here is a list of nationally recognized VSO. Many of the following organizations have state and local branches, which makes them easier to visit in-person. Visit their websites or give them a call to see if you can benefit from their services, or if you can volunteer your services to their organization.

American LegionAmerican Legion: The American Legion was chartered in 1919 as a patriotic veterans organization. The American Legion is one of the largest military organizations, with over 2.4 million members at over 14,000 posts. They offer a wide range of programs that extend to local communities up to the national level, where they lobby on behalf of our nation’s veterans. Some of the benefits programs they offer include:

American Veterans AMVETSAMVETS – American Veterans: AMVETS was founded in 1944, and by 1947, it was chartered by Congress as the first WWII veterans organization. Their mission continues today as they welcome anyone who is currently serving, or who has hon­or­ably served, in the U.S. Armed Forces from World War II to the present, to include the National Guard and Reserves. AMVETS has a strong lobbying presence where they lobby for veterans benefits, adequate VA funding, services for homeless veterans, con­cur­rent receipt of retire­ment pay and dis­abil­ity com­pen­sa­tion by dis­abled mil­i­tary retirees, vet­er­ans employ­ment and train­ing, POW/MIA account­abil­ity and flag protection. Some of the benefits they offer veterans include:

  • Free Assistance for compensation and benefits claims
  • Transition Assistance,
  • Career Centers,
  • Scholarships for high school seniors, ROTC students, and veterans pursuing higher education,
  • Other programs,
  • Learn more at

Disabled American Veterans DAVDisabled American Veterans (DAV): The DAV stretches back to 1920, when it was formed as an organization to support wounded World War I veterans. Today, the DAV continues to serve disabled veterans, their families, their widowed spouses, and their orphans through lobbying efforts and a variety of benefits and assistance, including:

  • Filing a VA Benefits Claim,
  • Transition Assistance benefits claims,
  • Transportation to and from VA and other appointments,
  • Job search assistance,
  • Outreach programs and information seminars,
  • Disaster relief,
  • Assistance for homeless veterans,
  • and much more.
  • Learn more at

Iraq Afghanistan Vet­er­ans of Amer­ica (IAVA)Iraq Afghanistan Vet­er­ans of Amer­ica (IAVA): The IAVA exists to improve the lives of those who served in Iraq and/or Afghanistan. IAVA hosts hundreds of events nationwide each year, creating opportunities for vets and their families to connect with each other and gain access to customized health care, education and employment services. Additional services include transition assistance through the Rapid Response Referral Program (RRRP), which provides individualized assistance or referrals for:

  • Disability Claims,
  • Education Benefits,
  • Mental Health,
  • Financial Assistance,
  • Employment Services,
  • Housing Services,
  • And more.
  • Learn more at

Veterans of Foreign Wars VFWVeterans of Foreign Wars (VFW): The VFW traces its roots back to 1899, following the Spanish-American War and the Philippine Insurrection. Today the VFW and its Auxiliaries have over 2 million members who contribute to their local communities. The VFW also offers the following assistance benefits:

  • Filing a VA Benefits Claim,
  • Separation Benefits,
  • Assistance claiming education benefits,
  • Veterans Scholarships,
  • Financial Aid – up to $2,500 financial assistance through the Unmet Needs program,
  • And more.
  • Learn more at

Vietnam Veterans of America - VVAVietnam Veterans of America (VVA). The VVA features over 600 local chapters in 43 states. They offer fellowship, volunteer opportunities, and community service, lobbying at the national level, and other programs. The VVA also offers one-on-one benefits counseling and claims assistance through a veteran Service Officer. Learn more at

Wounded Warrior ProjectWounded Warrior Project: The WWP provides a variety of benefits and assistance programs for servicemembers who were injured or wounded in military service after September 11, 2001. The WWP offers programs to help veterans get over the stress of combat, improve their health and wellness, find work, and engage in their community. You can learn more at the Wounded Warrior Programs page.

More Recommendations? As we mentioned, this is only a partial list of national organizations that focus on helping veterans with VA benefits claims, career guidance, and similar objectives. Feel free to download the VA list for a more comprehensive overview of different VSOs. We will also be happy to add other national Veterans Service Organizations that focus on the aforementioned topics. Let us know which organizations you recommend and we will add them to this list.

Images: Each of these emblems and logos are owned by their respective organization.

AAFES Coupon Guide – How to Save Big at the Exchanges

The Army Air Force Exchange Service (AAFES) offers eligible shoppers tax free shopping opportunities. Shopping at the Base Exchange is a great way to save money on a variety of everyday items, big ticket items, and other purchases. The PX and BX can also be a life-saver when you are stationed overseas. I remember frequenting the BX when I was station in the UK. Shopping out on the economy was fun, but it was also expensive! Having the Base Exchange nearby made it easy to stay within my means.

A good way to save even more money is with coupons. I’ve always been a fan of using my resources the best way possible, and coupons are an excellent way to do that. Here are a few tips for maximizing your coupons when shopping at AAFES.

AAFES Coupon Guide

AAFES Coupon GuideAs you would expect, there are some rules and limitations to the types of coupons AAFES accepts. Thankfully, the AAFES website breaks it down for us. In general, AAFES has a fairly liberal coupon acceptance policy compared to many US companies. In general, the following types of coupons are accepted:

  • Manufacturer’s Coupons: Must state “Manufacturer’s coupon”, “Military Coupon”, or “Military Store Coupon” (no “Commissary Only” coupons accepted); item must be identical to coupon description; must have a scannable bar code, expiration date, and valid address for redemption; Can be combined with a price match and one Exchange coupon (unless either coupon states otherwise); cannot exceed value of item purchased; must be an original coupon (no photocopies); can be accepted up to 6 months past expiration date at OCONUS locations
  • Internet (print-at-home) Manufacturer Coupons: Same rules as above, plus: No coupons for free items with no purchase requirements (BOGO coupons are accepted); can be color or black and white; One Internet coupon per purchase; Can be combined with Exchange coupon unless prohibited by either coupon; cannot be combined with other coupons.
  • Exchange FaceBook Coupons: These coupons are only valid at Exchanges – they are not manufacturer coupons. Selection varies by location and sales are limited to stock on hand. Limit one per purchase. May be combined with manufacturer’s coupons unless either coupon prohibits this. Valid at all Exchange locations; however the expiration date is finite, including for overseas locations.
  • Buy One Get One Free Coupons (BOGO): Manufacturer’s BOGO coupons cannot be stacked with another manufacturer’s coupon (multiple coupons for the same purchase; for example, you save a dollar on a purchase with one coupon, then also use a BOGO coupon on the same purchase). Manufacturer’s BOGO coupons can be stacked with a cents off Exchange coupon unless prohibited by either coupon, and vice versa – Exchange BOGO coupons can be stacked with a cents off Manufacturer’s coupon unless prohibited by either coupon. You can use multiple BOGO coupons if you purchase multiple items (unless prohibited – some coupons limit one BOGO per customer).
  • Local Competitor’s Copuons: Local Competitor’s Coupons are part of the We Price Match policy. Coupons must include a specific price and an expiration date to verify it is a current promotion. One manufacturer’s and one Exchange coupon may be applied after the final sales price is determined unless either coupon prohibits.
  • Combining Coupons with the We Price Match Policy: The price adjustment through the We Price Match policy will be the first discount applied. You can then apply one manufacturer and one Exchange coupon (unless prohibited by either coupon). You can a use manufacturer’s coupon that states, “cannot be combined with any other offer,” in conjunction with a price match, but not with any other coupons.

Verdict – AAFES has a generous coupon policy: Most of these rules are common sense and are actually quite generous. You won’t find many other stores or organizations allowing you to use more than one coupon on a purchase, or that will price match a competitor and still allow you to apply two more coupons to your purchase. About the only thing you won’t find price matching for is online only deals. You won’t be able to price match with, or other stores that are only available online.

AAEFES Downloadable and Printable Coupons

AAFES Printable CouponFollowing the Exchange FaceBook page is a great way to find coupons only available at the Exchange. They regularly publish fliers and coupons you can print from your computer. They also have exclusive giveaways for merchandise and gift cards, and announcements for special events, grand openings, and other news.

Another great place to find downloadable coupons is the Exchange PCS center, where you can find a new set of coupons each month. I remember receiving a coupon book when I PCS’d when I was on active duty. These were typically given to us when we in-processed the base. Now you can download them directly from the AAFES website, print them from home, and use them when you are ready. (Note: Some of the coupons state you must present your PCS orders when you redeem the coupon, however, not all of these coupons have this requirement).

AAFES Mobile Savings

You can save money by signing up for text messages from AAFES. To do this, you should text “Exchange” to 95613. You will receive a welcome message, then begin receiving text messages with coupons. You may receive up to one text per day, so keep this in mind when signing up for this service. Reply “Stop” to the same number to stop receiving these messages.

AAFES Exclusive Savings Notifications – Exchange Buddy List

The Exchange just released a new service called the Exchange Buddy List, which is a weekly email that delivers the latest news for deals and savings. This weekly email includes savings, promos, events, and other offers at your local Exchange. This list is now available worldwide. To sign up, simply visit the link above, select your location, and sign up for the weekly newsletter. This is a great way to keep up to date with the events at your local BX/PX!

Keep an Eye Out for Other Coupons

AAFES often advertises in base newspapers and newspapers like Stars and Stripes. You can often find fliers and printed coupons in these periodicals. Be sure to keep an eye out for these coupons because the savings can be helpful.

Not for the Faint of Heart: The Military Star Card

Finally, I would be remiss if I didn’t mention the savings you can get for opening a Military Star Card. I opened a Military Star Card when I was in the Air Force and saved an immediate 10% off my first purchase. I was also smart enough to pay it off in full and only use it when I could do that every month. The Military Star Card often gives users other savings, depending on current promotions. I only recommend the Military Star Card, or any other credit card as an option if you have the discipline to pay it off in full each month. You aren’t saving any money if you are paying finance charges! If you have the discipline to pay your balance in full each month, then the Military Star Card or other cash back credit cards can be a great way to save more money on your everyday purchases.

Enlistment and Reenlistment Bonus Guide – Everything You Need to Know about Bonuses

Enlistment bonuses and reenlistment bonuses are just one way that the military entices people to join the military or choose to reenlist for additional service. These bonuses aren’t available to everyone, however. Bonuses are most often used as a tool to get people to sign up for hard to fill jobs, those which require a lot of training, and jobs that offer high paying jobs in the civilian sector. Let’s take a look at enlistment and reenlistment bonuses, including how much they can run, how they are paid out, and what you can expect if you receive one.

Enlistment Bonuses

reenlistment bonus guide

Read this guide before reenlisting!

Some jobs in the military are eligible for an initial enlistment bonus of up to $40,000. Keep in mind this is only for the most difficult to fill positions, and bonuses are not available for every job. The size and availability of bonuses depends on your branch of service, job specialty, and the length of your enlistment (typically between 3 and 6 years). As you can imagine, a 6 year enlistment bonus generally pays more than a 3 year enlistment bonus. If your job is eligible for a bonus, you will typically receive it after you finish your basic training and initial technical training.

Reenlistment Bonuses

Reenlistment bonuses may be available to current service members when they reenlist for another term, again, usually in 3 to 6 year increments. As previously mentioned, reenlistment bonuses aren’t available for every career field. Each branch of service is able to determine which specialty (Rating, MOS, or AFSC) is eligible for a reenlistment bonus.

You may be eligible for a reenlistment bonus if you are a member of the uniformed service who:

  • has completed at least 17 months of continuous active duty (other than for training) but not more than 20 years of active duty;
  • is qualified in a military skill designated as critical by the Secretary of Defense, or by the Secretary of Homeland Security with respect to the Coast Guard when it is not operating as service in the Navy; and
  • reenlists or voluntarily extends the member’s enlistment for a period of at least three years in a regular component of the service concerned; or in a reserve component of the service concerned, if the member is performing active Guard and Reserve duty (as defined in section 101 (d)(6) of title 10).
  • You are not currently receiving special nuclear-training pay.
  • You reenlist or voluntarily extend your enlistment for a period of at least three years.
  • You enlist in a regular component of the service concerned; or continue in a reserve component of the service concerned.

How much can you receive as a bonus? Reenlistment bonuses cannot exceed the lesser of:

  • The amount equal to the product of 15 times the monthly rate of basic pay to which the member was entitled at the time of the discharge or release of the member; and
  • the number of years (or the monthly fractions thereof) of the term of reenlistment or extension of enlistment.
  • Reenlistment bonus not to exceed $90,000.

Note on Special Retention Bonuses: Some specialties are eligible to receive retention bonuses of more than $90,000. These are usually limited to those in the medical field, aviators, and those in select nuclear specialties. These are all on a case-by-case basis and are spelled out in US Code: 37 U.S. C, Chapter 5.

How (Re)enlistment Bonuses Are Paid

This is the section everyone wants to read! If you qualify for a bonus, you want to know when you get paid, right? Fair enough. If your bonus is less than $20,000 you can generally expect to receive it in a lump sum, upon completion of the terms in your contract. This is generally after completion of your initial technical training. If your bonus is more than $20,000, you can generally expect to receive half up front (again, upon completion of training), and the remainder spread out among annual installments. The Navy pays out their annual installments on October 1, which is the start of the fiscal year. The other branches of the service pay their enlistment and reenlistment bonuses on the anniversary of the date you received your initial installment.

Why annual installments? The military wants to ensure they are getting their money’s worth. You must continue to meet standards for your Rating/MOS/AFSC in order to be eligible to continue receiving your anniversary bonus payments. Failure to meet the technical standards for your career field, or failure to meet other standards may make you ineligible to receive your bonus payment.

Example: If you have a $40,000 bonus, you would expect to receive a $20,000 lump sum upon completion of training (or when your reenlistment actually begins). You would receive the remaining $20,000 in 5 annual installments of $4,000 each on the anniversary of your reenlistment beginning, or on Oct. 1 if you are in the Navy.

Don’t forget about taxes! You will also have taxes automatically withheld from your bonus, generally at the 25% or 28% rate. This is automatically done by the government, and not something you can change. If the withholding is too high for your tax bracket, then you will likely receive a larger than normal refund the following year.

What About Tax-Exempt Bonuses?

Count yourself lucky if you reenlist or receive your bonus while you are in a tax exempt combat zone. If you reenlist in a tax-free combat zone, you will receive your entire bonus tax free, which can be a substantial savings. Even better – your anniversary installments will also be considered tax-exempt, even if you receive them after you leave the tax-exempt zone. This is because you signed the contract in a tax-exempt zone. It’s not uncommon for people who are due to reenlist to request to go on an overseas deployment and reenlist at that location so they can receive a tax-exempt bonus. This tax exemption has another important factor which we cover in the next section about the Thrift Savings Plan.

Contributing Bonuses to the Thrift Savings Plan

You are eligible to contribute some or all of your enlistment or reenlistment bonus to the TSP, from 1-100%, provided your contributions do not exceed the federally mandated TSP contribution limits ($17,500 for 2014; $23,000 for age 50 and over). However, there are some exceptions. The $17,500 contribution limit only applies to taxable income. If your bonus is tax exempt, you can contribute up to the Annual Addition Limit of $52,000 ($57,500 for age 50+). You would be able to contribute up to $17,500 of your base pay, and up to $34,500 of your bonus pay, to reach the $52,000 limit. Taking this a step further, tax-exempt TSP contributions are extremely valuable as the income has never been taxed. This gives you some advanced retirement planning options should you choose to go that route (we’ll save that for another article).

Refunding a Bonus

This is the part no one wants to read, but it must be understood. If you receive a bonus, you are on the hook for the term of your contract. You may owe a prorated refund to the government if you are unable to fulfill the terms of your contract. This will be based on the amount of money you have received and how much time remains on your contract. Reasons you might have to repay your bonus can include, but are not limited to: voluntary separation, misconduct, failure to meet standards, failure to meet technical qualifications, and possible other reasons.

You aren’t generally on the hook to repay a portion of your bonus if you aren’t qualified to serve due to illness, injury, or other reasons for which you aren’t at fault.

Note on repaying a bonus due to early separation: Voluntary early separation often requires you to repay a portion of your bonus, but it may depend on why you separate. Repayment of bonuses has been waived at times during Reduction in Force (RIF) measures, but only in cases when the branch of service specifically waived the requirement. In other words, don’t take it for granted! Be sure to read the contract you signed when you received your bonus, and the contract you will sign to separate early. The terms will spell out whether or not you will need to repay your bonus.

Meet with your finance and/or personnel  office for more information: If it is determined you will owe a refund to Uncle Sam, be sure you know how much you will owe, and how you will be required to pay it back. Your finance or personnel office should be able to help you with this.

Which Jobs Offer an Enlistment or Reenlistment Bonus?

Great question, and I’m sorry, but it’s one I can’t answer because it’s a moving target. Each branch of service determines which specialties are eligible for enlistment or reenlistment bonuses, and they frequently change as the needs of the service change. If you are considering joining the military, then you will need to speak with a recruiter to find out if a bonus is available to you. If you are currently in the service, you can generally find a list on your service’s website, or by contacting your personnel or retention office.

Word of advice: Don’t just do it for the money. A bonus is nice, but make sure 1) you want to serve; you aren’t just joining the military for a fat bonus, and 2) you want to serve in the job that is offering the bonus. Nothing will make the next few years drag more than a job you hate. Secure happiness first, then worry about the money.

More reading:

  • Enlistment and Reenlistment bonuses are part of the US Code: 37 U.S. C, Chapter 5, subchapter 1 (§ 309 – Enlistment bonuses), (§ 308 – Reenlistment bonuses)
  • There are special sections of the US Code that cover certain hard to fill specialties, particularly those in the medical, aviation, nuclear, and other professional fields. These are also listed in subchapter 1.
  • Contact your recruiter or personnel office for more specific advice regarding any bonuses you may be eligible to receive. And as always, get it in writing!