How much will I need to make to get out of the Military?

In most occasions when I have a casual conversation with a Sailor or Marine who is leaving the military before retirement, I ask them their plans. They usually mention school or a job that’s lined up. I ask about their financial situation to include debt, credit cards, loans and an emergency fund. Not surprisingly, but I wish it was, they mention a heap of debt with no savings. Not startled or fazed, I ask, “how much will YOU need to make to get out of the Military?”

This is usually followed-up by a blank stare and them slowly repeating the question to themselves, “how much will I need to make to get out of the military?” In most cases, they respond with, “Huh. No clue.” Or something similar.

For my military leaders, does this sound all too familiar?

How much do you make in the Military?

The answer to that question depends on your rank, time in service, location of duty station, family members, and job specialty — just to name a few.

Review the 2019 Military Pay Scale

To put it simply, the military pay system has MANY factors or variables to consider. They might seem like “common” entitlements for servicemembers because it’s their first job and paycheck. But they don’t realize these “common” entitlements are not common. In the civilian sector they are unavailable and uncompensated.

Benefits such as healthcare and tax-free portions of their pay, help service members stretch their earnings farther than civilian counterparts. Paid time-off for being sick and/or recovering from surgery is automatic. Our civilian counterparts have to use paid time off (PTO) to afford these benefits. Or, finding a better job and paying on your own to move. The military pays and compensates us to move, unlike most civilian jobs.

I am by no means saying military life is easy for the servicemember or their family. But the amount a servicemember gets paid, surprises many. Even for servicemembers getting ready to retire. Why? Because they’re accustomed to a certain lifestyle and realize that their military pension will not cover those costs.

Compare your Pay

So, how much will I need to make to get out of the military? This might be easy if you have a budget, because you can see your annual expenses to include entertainment, vacations, food, shopping, etc.

If you don’t have a budget don’t cringe – AUTOMATE! There is no reason why you don’t have a budget. There are a ton of free apps and software that will automate the budget process for you. You can read all about it here.

For some individuals, they might add up their monthly/annual expenses and determine a salary or per hour cost for their services. This will vary greatly depending on an individual’s financial goals.

Even if you have a budget or can do the math — STOP! The government created an intuitive website that will calculate your regular military compensation — The Regular Military Compensation (RMC) Calculator.

The calculator allows you to plug in a few important variables and auto generates the compensation. This number tells you how much you need to make in the civilian sector to maintain the same financial salary.

According to the website:

Regular Military Compensation (RMC) is defined as the sum of basic pay, average basic allowance for housing, basic allowance for subsistence, and the federal income tax advantage that accrues because the allowances are not subject to federal income tax. RMC represents a basic level of compensation which every service member receives, directly or indirectly, in-cash or in-kind, and which is common to all military personnel based on their pay grade, years of service, and family size.

This calculator will compute your regular military compensation based on your inputs. Regular military compensation is the approximate amount of an equivalent civilian salary.

The information requested is necessary to determine your cash salary elements and estimate your marginal Federal tax bracket. No identifying data is requested nor retained by this web site.

Conclusion

Getting out of the military might seem daunting but at least you can project the civilian compensation to maintain your current financial situation. This will assist your career projections after the military. It will help you make a better decision about staying in or getting out. That job offer at $25 an hour without benefits or stability might seem less appealing.

Whatever you decide to do, at least you have another tool to make an educated decision.