I’m not the type of person to live with regrets, but one thing I wish we’d done earlier is open Roth IRAs and fully max them out. Until a few years ago, we were intimidated by the stock market and our only real investments were our Thrift Savings Plan (TSP) accounts, the U.S. federal government’s version of a 401(k). I can’t help but think of the tens of thousands of dollars in potential investment gains we left on the table.
Thankfully, at least we were always great savers and hoarded cash and not debt. We finally came to our senses in 2012 and opened our Roth IRAs and brokerage accounts. Since then, we’ve maxed out our Roths every year we were eligible. Because we currently both earn above average incomes, it has been fairly easy to do this without even noticing the money being gone.
That’s about to change later this year when I quit my full-time job leading up to our big move to the UK. Just like that, our income will be cut in half. My wife will become the breadwinner for our family and my primary source of income will be my military reservist salary. For me, this has been a great way to continuing serving our country while making a little extra on the side. For others, it could be a way to learn new skills and become part of a larger mission, along with earning some spare cash. In some cases, it may even provide enough to help pay off debts or fully fund a Roth IRA as I’ll show in a few examples below.
I know many are not too familiar with the structure of the military, so I’ll begin with a little bit of background information. The U.S. military’s reserve forces are comprised of seven components:
- Army Reserve
- Navy Reserve
- Marine Corps Reserve
- Air Force Reserve
- Coast Guard Reserve
- Army National Guard
- Air National Guard
The first distinction to note is between the Reserve and the National Guard. While the Reserve forces are subordinate to the federal government much like their active duty counterparts, the National Guard reports to their respective state’s governor. This is why you often see the National Guard activated following localized natural disasters such as hurricanes, tornadoes, fires, and earthquakes. These forces are often trained in search and rescue, communications, logistics, and other humanitarian efforts. In times of national crisis, the National Guard can be called into federal service by the President of the United States.
Within the reserve components, there are multiple categories. Part-time Reserve members, can generally be split into two types: those who train with a reserve/guard unit and those who are assigned to an active duty unit. I fall into the latter group as what is known as an Individual Mobilization Augmentee or IMA.
IMAs are used to augment the active duty force in times of mobilization, filling in at their home station for active duty counterparts that may be forward deployed. Because of this, the IMA program is geared towards experienced professionals who are fully qualified in their military specialty. IMAs typically have a great amount of flexibility in scheduling their duty days. Some will complete their annual service requirements in one 5-7 week chunk. Others will spread their time over the course of the year. This is coordinated between the member and their supervisor/commander.
However, when most people think about military reservists, the phrase “weekend warrior” comes to mind. These are traditional reservists/guardsmen assigned to the unit program. In this program, unit members drill together one weekend a month, along with completing a two-week annual tour on active duty. In addition to supporting the unit’s mission, drill weekends may consist of readiness and specialty skills training. Some units participate in larger scale exercises during their annual tour. Traditional reservists/guardsmen do not have nearly as much flexibility since their training schedule is determined by their unit.
No matter the category of reservist, the pay structure is the same. Military members are paid based on two primary factors: rank and time in service (TIS). Reserve pay charts found online typically show the pay a member would receive for four Inactive Duty Training (IDT) periods, where each IDT is four hours long. Four IDTs equals 16 hours of pay, or one weekend. Pay for the two week annual tour is prorated based on the active duty pay charts and includes base pay, basic allowance for housing (BAH), and basic allowance for subsistence (BAS). Both BAH and BAS are tax free.
See the chart below for a few examples of how to calculate reserve pay. For these examples, BAH is based on the 2016 rate for San Antonio, TX, and will vary based on the unit’s location. This pay is for approximately 38 days worth of service.
Although the pay may not be great, especially at the lower ranks, even a young enlisted member could earn almost enough to max their Roth IRA from meeting the minimum service requirements alone. Depending on the branch of service and unit, there may be other opportunities throughout the year to go on orders for additional training or to support mission requirements, thus earning extra pay.
Those unfamiliar with the military may assume that all service members are boots-on-the-ground types or that everyone in the Air Force is a pilot (seriously, that’s always the first question). While a portion of the military does serves in these more operational roles, there is actually a wide variety of military occupational specialties, many in support functions. These include engineering, cyber security, maintenance technicians, personnel administrators, as well as healthcare and legal professionals, to name a few. After completing basic training, service members are sent to technical training which may be as short as a few weeks to over a year in duration. There, they will learn the basic skills needed to perform their job. In many cases, these skills can translate directly into the private sector.
Additionally, Reserve members qualify for education and health benefits, and even bonuses in some instances. National guardsmen and reservists are eligible for full Post-9/11 GI Bill benefits after completing three years of active duty service. Some states even offer free or reduced tuition for national guardsmen at public state universities. For health insurance, TRICARE Reserve Select 2016 monthly premiums are $47.90 for the member only and $210.83 for the member plus family. The annual outpatient deductible caps out at $300 per family. On top of these benefits, high demand occupational specialties often include sign on bonuses of $15-20K.
To be fair and transparent, serving in the military, even part time, is not all rainbows and butterflies. This is a serious commitment that may include long work hours with the possibility of deployment to combat zones and time away from family. Depending on the branch of service and career specialty, those likelihoods can vary drastically. Be sure to understand the risks and responsibilities before you sign on the dotted line.
Military service as a reservist or national guardsmen is not for everyone. If it does not align with your core beliefs and you just want the benefits, you probably shouldn’t join. However, those who are interested and meet eligibility requirements may find this to be a rewarding experience. If you’re looking to earn some extra cash to help pay off debt or fund retirement accounts and want something a little more meaningful than a typical part-time job, this could be for you. If you’re seeking the flexibility to pursue a side career, but may want at least a small flow of steady income and affordable health insurance, this could be a good option. Like anything, there are pros and cons to part-time military service and I hope I’ve at least sparked an interest or appreciation in something you may not have previously thought much about.
Disclaimer: I am not a recruiter. Both my wife and I have had positive experiences serving in the military, and I wanted to share an option that many may not consider. If you think you’re interested in joining the military, please perform due diligence, research your options, and talk with several people who have previously served so you can better understand what you’re signing up for.