Net Income/Salary after graduation seems very low for Ensigns?

Discussion in 'Naval Academy - USNA' started by informe, Mar 25, 2016.

  1. informe

    informe Member

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    Just curious as to the income for the USNA grads when they are serving their 5 year commitment.
    I understand that they get a base salary which is taxable. They get allowances that are not taxable.

    I am curious to know how the real cost of living will affect their salary and what one can save during the 5 year commitment for an average person.

    Gross Salary for Ensign: 2784/month to max 3502/month = 33408/yr [First year] to 42024/yr [At 5th year].
    After tax for Ensign: 28396/yr [First year after tax] to 31518/yr [At 5th year after tax].
    Or 2366/month to 2626/month after tax.

    Is this correct? [The allowances come to anywhere between 700 to a maximum of 1700/month, non taxable].

    It seems to be very low. How can the Ensigns manage with this salary? I have no clue, so please go easy on me.. :)
     
  2. Usnavy2019

    Usnavy2019 Member

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    Allowances are adjusted either up or down to factor in the cost of living of your duty station. An example would be somebody stationed at NAS Point Mugu (close to Malibu, CA) versus somebody station at Naval Submarine Base Kings Bay, GA. CA has a rather high cost of living so that officer would get a higher BAH than the officer at Kings Bay. You get to pocket whatever you don't use. Also, you won't be an ENS for your entire commitment. You make LTJG after two years and you make LT two years after LTJG.
     
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  3. FALgarand

    FALgarand Member

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    I know this belabors what you already know, but the Ensign compensation package implicitly includes roughly $50,000 per year in college debt service payback over those 5 years. Being college-debt free at age 27-28 is a sweet deal. Plus, USNA ranks in the Top 10 among universities in career compensation in the private sector. Though, if you want to see some scary high post-grad compensation, check out grads of USMMA and some of the state maritime academies.
     
  4. Capt MJ

    Capt MJ Member

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    Easily.

    One element to consider is they are paying zip for medical and dental insurance. No co-pay. No pharmacy or vision costs (if you get military frames and lenses). I never realized what a large benefit to my take-home pay that was until later, when civilian friends ponied up hundreds of dollars a month in premiums, plus co-pays, and any additional charges not covered by their insurance. Cheap term life insurance with no combat exclusion.

    Here are the BAH tables, by pay grade, with and without dependents. This is an untaxed allowance.

    http://www.stripes.com/polopoly_fs/1.384271.1450203758!/menu/standard/file/2016 BAH Rates.pdf

    And, though this is covered in another thread, they may be from a state of residence that does not tax active duty serving out of state. Or, as many do, the minute they get to a state with no income tax, establish residency there. For the remainder of active duty time, they are "military non-residents" wherever they serve.

    Commissary and exchange benefits offer some savings, depending on local competition, and military discounts on phone plans and other things come in handy.

    Time in grade pay raise every two years, which also includes BAH raise. Larger pay raises at promotion points. An 0-3 over four years makes considerably more than they did as an O-1.

    While on deployment in a combat zone, there are special pays, tax breaks and other incentives.

    There are bonuses for retention and selection of certain fields.

    Moves between duty stations are free, with a weight allowance based on pay grade and dependency status. Guaranteed fresh boxes and packing, dish packs, mirror packs, complete unpack and box takeaway, pianos/whatever, with short and long-term storage as needed and allowed by orders.

    Depending on life choices and spending habits, it's possible to be comfortable, very comfortable, well off, and very well-equipped to go on to a well-paying second career, either at separation or retirement from active duty.

    Edit: more than you ever wanted to know.

    http://www.dfas.mil/militarymembers/payentitlements/military-pay-charts.html
     
    Last edited: Mar 25, 2016
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  5. TexasBG

    TexasBG Member

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    Yep, add in medical (including free prescriptions), dental, moving expenses, use of the exchange/commissary, flight pay (for pilots)/hazardous duty pay, and housing allowance and a new O-1 is doing pretty damn good...
     
  6. gonavy14

    gonavy14 Member

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    Very easily. I'm currently an Ensign stationed in Norfolk. O1 base pay is $2972 not $2784. Then you also get BAS which is about $250. In Norfolk, the BAH is another $1219. Add in another $125 for flight pay in my case. That comes out to roughly $4570 a month.

    Taxes, soc sec, and medicare take out roughly $700 of that. That leaves about $3870 a month for spendable income. Throw in the fact that I'm splitting rent and utilities with 2 other Ensigns and I have more than enough to live comfortably.
     
  7. Cerberi

    Cerberi Member

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    I don't think this is correct as all pay is identical regardless of commissioning source. There is no implicit payback for USNA tuition

    I think the junior officer pay though not great or terrible considers that for many careers the military is training you for the first 2 years

    If your commissioning source is an SA, you should be starting your career debt free (credit card debt is major issue for surprisingly many)

    USNA brags that their starting pay for graduates is higher than virtually all colleges but they don't compare engineering grads to engineering grads just graduates which all USNA grads have great technical and leadership training to schools with art history grads mixed in with engineering graduates

    Some junior officers live quite comfortably within their pay and others live check to check
     
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  8. LineInTheSand

    LineInTheSand USCGA 2006

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    Don't underestimate how huge that nontaxed BAH is...
     
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  9. cb7893

    cb7893 Member

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    Speechless
     
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  10. Capri120

    Capri120 Member

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    Using very rough figures, semi-accounting for allowances, raises for COL, time in service, etc. etc....over the five-year post-graduation period, you will have earned $200,000 - $250,000, or more.

    Now, providing you don't fall into the "I have to have it now" mentality, incurring a lot of credit card debt and/or new car loan, you can easily save a lot of money by the end of those five years. Try using the "Dave Ramsey" approach before, during, and after the academy, and you will be in much better shape than "normal" college graduates after they have been in the work force for five years.

    You have a "guaranteed" job and income THE day you graduate; not the case for too many college graduates these days, regardless of degree.
     
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  11. Islandmom4

    Islandmom4 Member

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    My mid sib is graduating from traditional college this year (education major). She will be lucky to make $30-35K a year, IF she finds a job. And she has to pay for health insurance and student loans.
    Our mids will be just fine.
     
  12. parentalunit2

    parentalunit2 Parent

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    OP, you're kidding with this, right? Junior officers do very well for themselves and always find ways to maximize their benefits (shared housing) and come out quite ahead of their civilian counterparts. Most begin investing with their cow loan and always seem to be able to purchase real estate far earlier than their non-military friends.
     
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  13. kinnem

    kinnem Moderator

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    BOOM! :D
     
  14. NavyHoops

    NavyHoops Moderator

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    If you are single as an O-1 with minimal debt, you will have a ton of beer money and money to save. Yes, it does take some money to buy grown up things when you get to your first real duty station, but you can save for that, buy at 0% finance and pay it back quickly. The Nom-taxable BAH essentially means $10,000 to over $25,000 a year in tax free income. As someone who now makes a pretty decent living and pays through the nose on taxes... That tax free pay is amazing. Go pull up the accurate numbers with a possible first duty station, look up apartments, make a budget... See how it works out. Having a room mate, you will pocket a lot.
     
  15. informe

    informe Member

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    As I mentioned in the post, I have no clue about military pay and how far the dollar will stretch. Especially with the cost of apartment rental and other monthly expenses.

    I truly appreciate the valuable input everyone has provided, it is enlightening.

    And thank you for going easy on me for this question.. :), it may help first time military people like me/us.

    Thanks again.
     
  16. Stealth_81

    Stealth_81 Super Moderator Moderator Founding Member

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    Our son was USAFA not USNA but the pay rate is the same. He lived in a 4-br house with three other lieutenants at his first duty station. Each one's share of the rent was $350 and their BAH was $830 so they were pocketing almost $500 a month tax free. Add that to BAS and base pay and they were living pretty well. Now, 5 years after graduating he makes about $98K/yr with his pay, BAH, BAS, and flight pay. 30% of that is not taxable. He owns one house in Arizona that is paid off and he rents that to another pilot for a net of $12K more per year after paying for management fees. He owns another home in South Miami that he is trying to pay off before his PCS this Fall. For the 6 months this year that he is in Afghanistan, none of his income is taxable so that is another big advantage. He has a ton of disposable income that he saves and has bank accounts that would make a 50-year-old happy. And he is only 26 years old. They will do fine with a little financial discipline.

    Stealth_81
     
  17. informe

    informe Member

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  18. FALgarand

    FALgarand Member

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    Perhaps more accurate to say "there is no explicit payback". Long ago I first heard the artful description of how a SA shoves a million dollar education a nickel at at time. Ain't nothin' free.

    I was unclear, and was referring to USMMA grads who go into the U.S. merchant marine service immediately, sometimes starting at toe-curling salaries with their 3/M or 3/AE licenses.
     
    Last edited by a moderator: Mar 30, 2016
  19. JaxNavymom

    JaxNavymom Member

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    We were married with a baby and I could make pretty much any recipe from ground round or tuna. I worked full time which helped but it was trying financially!
     
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  20. Capri120

    Capri120 Member

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