As a member of your service member’s support network, you may have heard the good news that bothactive-dutyandreservemilitary personnel received a 5.2% military pay raise in 2024. Beyond the salary bump, you’ll be glad to know that military service offers your loved one additional ways to be financially fit while shaping their lives and preparing them for the future.
The military provides notable compensation benefits, ranging from paid leave days to retired-pay plans that beat those which many private sector employers offer. It also offers free or reduced cost housing, a host of special and incentive pays for qualifying conditions, free financial and tax consultations and more. At the same time, the military offers your service member opportunities to develop both professionally and personally. Tuition assistance and opportunities to travel and develop leadership skills are just some of the reasons a military career is unlike any other.
Military financial benefits
Allowances:In addition to basic pay, service members may also receivehousing and food pay. A basic allowance for housing (BAH) helps your loved one offset the cost of housing. Whether they choose to live on the installation or in town, BAH provides a reasonable amount each month toafford housing based on their rank and the area where they live.
Basic allowance for subsistenceis a monthly allowance meant to assist service members in paying for meals. However, if your service member lives on the installation, they will not receive BAS but will have access to free meals on the installation.
Overseas Cost of Living Allowanceis a non-taxable allowance designed to offset the higher overseas prices of non-housing goods and services. It is not a fixed amount and may vary based on location, pay grade, years of service and number of dependents. OCOLA can fluctuate based on the exchange rate and should not be included in your monthly budget. Learn more about OCOLA and the2023 OCOLA adjustment process.
Special and incentive, or S&I, pays:While basic pay and allowances cover the fundamental components of military pay, special and incentive pays are used to compensate service members for qualifying conditions and to recruit and retain them. Common S&I pays are:
- Hardship Duty Pay, or HDP: Recognizes service at locations where living conditions are substantially below the continental United States.
- Assignment Incentive Pay, or AIP: Paid to service members to encourage them to volunteer for difficult-to-fill or less desirable assignments, locations or units designated by and under conditions of service specified by the military department.
- Hazardous Duty Incentive Pay, or HDIP: Paid to service members who perform duty that is inherently dangerous or risks physical injury.
- Special Duty Assignment Pay, or SDAP: Recognizes service in assigned duties determined to be extremely demanding, requiring a greater than normal degree of responsibility or difficulty, or requiring special qualifications.
Paid leave days: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 throughTRICARE 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 offersseveral plans that cover service members and their immediate family membersat 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 can also earn government-provided contributions to a 401(k)-like savings account called the Thrift Savings Plan. 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 the installation, they can enjoy living for free in the barracks or dorms. Service members who receive a housing allowance are offered affordable housing options on the installation or in town through the housing office.
Family Supplemental Subsistence Allowance Program, or FSSA:This is a Defense Department program that supplements an eligible active service member’s household income if it’s below 130% of federal poverty guidelines (maximum payment is $1,100 per month).FSSAis only available for members with at least one dependent in their households who are serving overseas (not including Puerto Rico, the U.S. Virgin Islands or Guam). For more information about the FSSA program or any other assistance, members should contact their Military and Family Support Center, command or community services financial management counselors. The FSSA Application, DD Form 2857 is available on the WHS DOD Forms website.
Affordable life insurance:Service members are automatically signed up forServicemembers’ Group Life Insurancethrough their branch. It offers low-cost coverage to service members for up to $500,000 at only $31 per month.
