By Jia Chunniu
The Task & Purpose website of the US reported that although the US military’s salary is claimed to be the highest in the world, it is basically impossible for American soldiers to save money to achieve “economic security” when they leave the military. The website summarizes the economic pressures faced by US soldiers during the three service periods of new recruits, mid-career and retirement.
Tight life for new recruits
According to the salary standards issued by the US Department of Defense (DoD), newly recruited soldiers will sign the lowest-level E-1 contract, and therefore many of the new recruits cannot live a good life.
The biggest expense for most new recruits is the student loan. “The number of people joining the military with student loan debt is increasing. Debt doesn’t disappear just because you’ve joined the military. They have to take most of their salary and pay back the loan,” said a financial advisor who was once a US veteran.
The website suggests that the priority of the new recruits after joining the military should be to make a feasible budget and stick to it, so as to form healthy money habits. “Young recruits should also be wary of predatory financial products targeting military members. You’re likely to be offered all sorts of high-interest loans and be tempted to make big purchases, like a car or a house. Stick to your budget, make sure you understand the terms of any loans you take out ,” according to Task & Purpose.
Punitive economic crisis follows
The average US soldier serves 7 to 10 years in uniform. Usually, they will be promoted to a sergeant from the fourth year, and their salary will increase accordingly. At the same time, however, frequent changes in deployment will bring them some unforeseen economic problems, one of which is the “punitive economic crisis” caused by the failure to pay bills in time. “New Deployment can be tricky when banking systems, time zones, languages, and postal services are different from home,” investment advisor and US Army veteran Eric Nager said. “If families fall behind, they can be assessed late fees or other unnecessary charges.” Such changes may also jeopardize the stability of the household economy. According to the report, soldiers at this stage must first formulate a long-term plan for individuals and families to avoid bankruptcy due to such “punitive economic crisis.”
Re-enlistment is the only choice
Retirement can be tough for family members who rely on soldiers’ earnings, because the source of income will disappear if they leave the military. Once out of the service, many veterans have trouble in finding jobs, which makes their families suffer from financial difficulties, said the report.
Many retired soldiers will choose to re-enlist if they cannot find a job. The Defense Finance and Accounting Service (DFAS) of the US DoD says that re-enlisted soldiers can continue to accumulate service time in addition to bonuses, so they can finally qualify for the 20 years of honorable service. “The net value of a military pension is roughly $200,000 for an enlisted soldier, making it a powerful incentive,” according to Task & Purpose.