Opportunity Cost of Military Orders

For most of my Reserves career I operated on the assumption that TDY orders (Temporary Duty Y’all) meant making bank.  In the past few years in my civilian career I started to earn a decent salary and my assumption switched to “I’m going to lose money on these orders” – or there will be a financial opportunity cost to taking orders.  The simple answer would be to compare my civilian pay stub against my military pay stub and compare.

That wouldn’t be any fun and there are some intricacies that I would miss so I thought about this a little deeper.  I don’t have a background in military finance so I’m really just reverse engineering much of this and like most military finance situations I have about a 0.0001% chance of being totally accurate.  I think I’ll get somewhat closer than just comparing paystubs and I’ll be able to share with you my thought process. 

As is my idiom, I created a spreadsheet for you to use/follow along with.  You can fill in the boxes in green and the boxes in grey will automatically adjust to your numbers.    

Days on Orders:  Here this is just used to calculate annual values into daily values for the length of your orders.  There are other benefits that arise with different orders length (how much unpaid leave you can take after, if you get a DD214, TAMP-free healthcare for an extra 6 months, reduced retirement age, etc.)  I’ll save those for another discussion. 

Civilian gross annual salary:  How much do you make per year in your civilian job?

Regular military pay- your annual military salary:  Click the link to run a calculator.  Be sure to use the zip code you get BAH (probably your home) at and not your TDY location if different.  This will automatically add your base pay, BAH, and subsistence allowance.  It also factors in a calculation for tax benefits since you are only taxed on your base pay.  I don’t think this is the best way to calculate your tax savings but it’s close enough for this exercise and you won’t have to consult an accountant. 

Civilian PTO accrual:  If you are fortunate enough to have a civilian employer who allows you to accrue PTO or vacation time while on military leave you can calculate the value of that here.  I generally opt to take it in the form of time off later on but in theory one could cash it out.  My employer caps PTO at 200 hours so if I hit it during leave I’ll request to cash some out so I don’t lose any.  Take Fridays off for the first 6 months back?  Don’t mind if I do!     

Family separation pay:  If you receive it (orders more than 30 days and a dependent not with you?) you’ll get $250 per month.  Doesn’t come close to offsetting the sorrow I feel from being separated from my wife, but hey, I’ll take it.

State Income taxes: If you don’t live in one of the 7 states without income taxes, you may be fortunate enough to live in a state that doesn’t tax military income (like Minnesota).  Google it, and if you do you can input what tax rate you think you’ll fall into and put in your annual taxable income from the regular military compensation calculator to factor how much you’ll save on state taxes vs. paying them at your civilian job. 

Health Insurance Premiums:  I have to pay insurance premiums at my civilian job but get free health care while on orders this time.  So if this is the case put in what your monthly premiums were.  For this I’m assuming my spouse has her own insurance.  Tricare is tricky with dependents of reservists on orders depending on where you live, how long your orders are, etc.  So go ahead and crunch the math on that if you want.  I’ll save that for another post. 

Paid military leave:  Some employers (most government agencies) allow 15 days of paid military leave per year.  You can use this section to calculate the value of that.  Don’t forget to double if your orders are over your fiscal year and you’re able to use twice.  You may have a great employer who goes above and beyond and might have to run extra calculations.  Some employers will pay you the difference between your salary and your military salary (sometimes base salary -nice!).  3M (the post it note company) paid it’s employees 50% of their salary while on orders (back in 2005, not sure today’s policy). 

Per Diem:  This is a little grey for me and I haven’t fully figured it out.  The link will take you to a site for per diem rates but what I’m actually getting is far less than what is on the site.  I believe I get only 55% because of the length of my orders but that math doesn’t add up either.  The $19 is what I actually received in total on my first travel voucher.  My lodging is fully paid for here as well.  I’m assuming rent or mortgage is still being paid back home so I’m considering this a wash.  If you are able to store your belongings at your parents and end your lease, for example, you could factor in what you were spending on rent as “income” while on TDY orders. 

Disability:  If you are fortunately unfortunate enough to be collecting any sort of disability payment that will fall into a loss category.  You can’t collect disability pay and regular military pay at the same time.  Generally, it is better to waive your disability pay and for me that means $487 a month less earned (30% rating).  

That sums up the tangible benefits that I’ve thought up so far.  I’m certain I missed some intricacies (leave time, travel days, etc.) but this isn’t a full tax audit and this should paint a close enough picture.  For my situation it turns out to be not nearly as bad as I thought and I make quite a good salary on orders, I can’t imagine how nice it must be for officers! 

Again, this just summarizes the benefits that I can fairly quantify on a spreadsheet.  If I tried to factor in any amount of time being separated from my wife there would be an infinitely negative gain to being TDY 😉.  In this case life is much less stressful, military life is pretty easy and routine – how would I quantify that?  I have daily maid service so I have to do very little cleaning.  I haven’t had to put gas in my car in 2 months now since I can bike around base.  I’m missing (or would be if not for Covid) all of the BBQ’s, birthday parties, camping trips, etc. for the whole summer. 

Since I try to be mindful and appreciate and enjoy the moment at hand I consider the intangible aspects a wash and accept that life is what it is in the moment.  After this lengthy analysis I can bury any thoughts that I’m sacrificing a great deal of income serving our nation.    

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