The Financial Benefits of Being Active-Duty Military (Or a Dependent)

[@donaldtrainer7811]

Here are some other benefits as seen from the perspective of a Navy physician: 1. If you receive bonus pay as part of your compensation it is not subject to FICA tax. For military physicians much of our pay is comprised of bonuses and not paying that 7.65% will save you a lot. 2. The commissary: if you are into frugal living (as I am) then shopping for groceries at the commissary will save you a lot of money. Sure, you will find better deals on some things at other stores but if you consistently shop at the commissary, you will probably save 20-30% on your grocery bill. 3. They make moving less painful. I am about to move to Japan in a month. I haven't packed a thing because the movers will pack everything without me lifting a finger. Pretty nice. 4. State specific benefits: your state taxes are based on where you are domiciled so a lot of us are domiciled in TX and FL despite where we are stationed. Katie's husband may be eligible for the Hazelwood act if he entered the Air Force in Texas. It provides 150 semester hours of tuition waiver (graduate or undergraduate) at a Texas public university after GI Bill benefits are exhausted. I believe it can be passed to children. I have thought about using my benefit to pursue an executive MBA from UT. 5. USAA insurance. Always shop around but they tend to have the best rates out there and have great customer service. 6. Credit card fees: Katie mentioned this, but I don't think people realize how valuable this is. You'll see a lot of platinum Amex cards in the military because we don't have to pay the $600 annual fee, yet we get all the high dollar benefits. My two primary cards would cost me $1300 in fees each year, but I pay nothing. 7. Cheap MWR activities: cheap sailing lessons, beach cabin in Hawaii for $150/night, free admission to the San Diego zoo. All these little perks and more add up.

[@MoneywithKatie]

These are incredible additions! We should've brought you on to collab for this one. Haha

[@donaldtrainer7811]

@@MoneywithKatie Always happy to share my largely superfluous knowledge base.

[@markuscg1]

The "Home of Record" is what you were referring to when you talked about state taxes. As long as you were assigned in that state, or lived there when you entered the military, you can keep your home of record as long as you stay in the military. One of my duty stations was in Texas, so I kept that as my home of record until I retired. To me, the pension is one of the biggest benefits. It allows me to be more flexible in my career choices post-military. Tricare is nice too. I use Tricare Select since I live over a certain distance from the closest military treatment facility so I get to choose my provider and don't need referrals.

[@MoneywithKatie]

Yes! Home of Record! Thank you, Mark - I couldn't remember for the life of me

[@DeathFromAbove2005]

Your home of record is where you were living before you join the military. Your state of residency is different and that determines your state income tax owed. Home of record is still important because you are entitled to a home of record move when you join and when you leave the military. Your HOR doesn’t change (there is a way I believe to change it but it’s very difficult), because at your final duty station of your career, you final HOR move will allow a fully reimbursed move from your duty station back to HOR or anywhere of a lesser distance. Let’s say you grew up in Colorado, serve and retire in Virginia, but get a job in Georgia. The government will pay for your move from VA to GA at no cost. If you were going to move to California however, you must pay the additional amount.

[@kerryrinderr]

Katie! I've been listening for a short while but just learned you are a military spouse! I'm active AF myself. You are correct on state residency status. Service members and even their spouses can choose to keep state residency as their home of record, or base legal and finance office can help change it to where you are currently stationed.

[@kblakrs08]

Can you talk about how a HSA plays into an overall investment strategy for active duty military members with Tricare Prime healthcare insurance? Or it may not play into one at all. Thanks!

[@MoneywithKatie]

Hello! I'm actually not sure off the top of my head if any Tricare plans qualify for an HSA, unfortunately! This may be a better question for a benefits specialist

[@donaldtrainer7811]

@@MoneywithKatie Tricare plans do not qualify for an HSA. However, that is something I have long advocated they do. There is a lot of wasted health care utilization in the military health system because it is essentially free. My idea is to create a Tricare High Deductible plan with the military contributing a set amount to a person's HSA. It would reduce health care costs and allow those judicious users of health care to leave the military with a tax advantaged account. Of course, preventive health care and operational/combat related health issues would be exempt from a deductible. But I doubt such an idea would ever gain traction at DHA or be approved by congress.

[@rapidfilspo1738]

Is credit card a trap?

[@BarbellFinancial]

Only if you don’t trust yourself to be responsible with it. You are in the driver’s seat of your money and your life.