Lazarus said:
What rank would it require to make $100K/year in with five years service?
It ain't the rank, it's the lifestyle. Every O-3 earns the same basic pay but some duty assignments "reward" better than others.
A Navy lieutenant (O-3) with five years of service earns $4297.50/month in 2006. Some of this money, up to $1250/month, is probably going into the TSP, the federal govts' unmatched tax-deferred version of a 401(k). The rest of the pay is fully taxable.
Then there's "bonus money". When I joined the submarine force in 1982 as a lowly O-1 ensign I was awarded a $3000 signing bonus (before taxes). When I passed the training schools in 1984, almost a lieutenant junior grade, I got another $3000 bonus (before taxes). When finished my initial five-year obligation in 1987 as a lieutenant, I was given a choice-- $7200 at the end of every year that I stayed around, or a contract (3, 4, or 5 years) at $10K/year paid up front. After taxes this bonus money, of course, went straight into the retirement portfolio.
Today that bonus contract prices at $25K/year. The Navy is telling Congress that it needs to be raised to $30K/year. There's even crazy talk about depositing the bonus in member's TSP accounts to boost its tax-deferred compounding.
Then we start playing the "military compensation" game. First is the officer's non-taxable "basic allowance for subsistence" (food), about $180/month. But if you're eating your meals on board a seagoing vessel then you have to pay that $180/month for your food. Otherwise it's yours to keep!
Next there's the "basic allowance for housing", also tax-free. It varies dramatically with location at the "average" rental cost. For a single officer in San Diego it's $1800/month for rent+utilities, which Laurence will tell you is "OK". Most single officers boost that by finding roomates.
If you're in a high-cost area you might get an additional COLA. That's a complicated magic (political?) formula that also varies with location. In Hawaii an O-3 would get $360/month, again tax-free.
So an O-3 grosses about $36K/year taxable, another ~$15K/year tax-deferred, and roughly another $28K/year tax-free. Throw in the $25K nuke bonus and you're over $100K.
But wait, there's still more! You may be eligible for submarine pay ($525/month), sea duty pay ($260/month), and possibly dive pay if you've been to the extremely rigourous school & desire the extra work($240/month). Aviators get similar goodies and even surface-ship officers get sea pay. If you're subject to imminent danger or hostile fire (usually a combat zone) then you get another $220/month, and if you're in a combat zone then EVERY PENNY OF PAY earned in that zone is tax-free forever. The
2005 pay table shows how complicated this has become. Longevity hint: none of these pays are worth the amount of effort & risk it takes to become eligible for them.
By the way you have the weekend duty, we have a ton of repairs & maintenance that are way behind schedule and your gear is looking pretty ragged too, we're getting underway on Monday but we're having a little reactor controls problem to figure out, and you'll be standing midwatches while we spend our days running ship's drills for the next few inspections before we start our six-month Western Pacific deployment. (If the scheduling gods smile on us we might get a portcall in Perth.) Your family wants to know when you'll be coming home and, oh, your assignment officer says it would help to learn Farsi before he tells you your next duty station.
The Dept of Defense likes to focus on "compensation" when comparing military salaries to the "equivalent" civilian sector (whatever the heck that is). The idea is that your military income is boosted by living in base housing (or by receiving a housing allowance to live off base), having "free" medical/dental care, shopping at commissaries/exchanges, and receiving tax-free allowances. You can have a lot of what-if fun on the
RMC calculator!
For those of you wiping the drool off your keyboard and looking up the address of your nearest recruiter, remember that I didn't join the military for the money and you shouldn't either. The military pension is only awarded to those surviving at least their first 20 years. Your military experience will vary from mine, and hopefully that's a good thing.
For those of you considering what your tax dollars are buying, remember that the military is earning "all of" that money so that you don't have to.