For
National Guard Service Members, your financial journey begins the moment you take
your oath. You have entered into a military career, which introduces new benefits
and experiences that may significantly impact your finances.
1) Your Pay and Benefits
As
a National Guard member, you earn one day of active duty pay and allowances for
each day of active duty you serve. Here’s how earning pay and benefits works:
- On active duty: You are eligible for all active duty entitlements and benefits
which may be more than what the state offers (Check with your unit or Military Pay
section for more details)
- On drill status: Earn one day’s pay for every four hours of inactive duty,
not to exceed two drill periods a day
- On inactive duty: You may be eligible for other entitlements and benefits,
such as
- Flight pay
- Parachute pay
- Other proficiency pays - paid at the rate of 1/30th of the monthly rate
multiplied times the number of periods of inactive duty
- Coverage by your Servicemembers' Group Life Insurance (SGLI) and state workmen’s
compensation laws
2) Allotments and Deductions
While
serving in the National Guard, you have the opportunity to enter into allotments
of your pay – dedicated amounts which are automatically deducted from your earned
pay and accounted for on your Leave & Earnings Statement. Some allotments you
can enter into include:
- Paying off loans
- Paying insurance premiums
- Purchasing savings bonds
- Paying off debt
During periods of inactive duty, members are authorized to make one allotment from
their pay for the payment of premiums under a group life insurance program sponsored
by the state military department in which such member holds a National Guard membership
or by the state associations of the National Guard. For those serving on active
duty, there are two types of allotments: discretionary and non-discretionary. You
can have up to six discretionary allotments per month, and any number of non-discretionary
allotments, as long as the total allotments per month amount to 15 or less.
3) Thrift Savings Plan & Risk Tolerance
The Uniformed
Services Thrift Savings Plan (TSP) is the same plan Federal civil service employees
enjoy, but without the matching contribution from the government. TSP is a retirement
benefit that allows Federal employees and members of the uniformed services to increase
their retirement income by contributing to a long-term savings and investment plan
with tax-exempt income.
If you are nearing retirement, you should think twice before taking a lot of risk
in hopes of earning bigger returns. If you've just started your career, you have
quite a few years before you'll need the money in your TSP account. You can let
time work in your favor and accept more risk in choosing a fund later in your military
career.
There are 5 funds in which you may invest:
- G Funds: Government securities specially issued to TSP with no risk of losing principal
money
- F Funds: Government, corporate, and mortgage-backed bonds with the objective of
matching performance of the Barclays Capital U.S. Aggregate Bond Index
- C Funds: Stocks of large and medium-sized U.S. companies with the objective to match
the performance of the Standard & Poor’s 500 (S&P 500) Index
- S Funds: Stocks of small to medium-sized U.S. companies not included in the C Fund
with the objective to match the performance of the Dow Jones U.S. Completion TSM
Index
- I Funds: International stocks of 21 developed countries with the objective to match
the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia,
Far East) Index
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