$$MONEY$$ STAY NAVY!! NAVADMIN 076/08

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R 212124Z MAR 08
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TO NAVADMIN
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NAVADMIN 076/08
MSGID/GENADMIN/CNO WASHINGTON DC/N1/MAR//
SUBJ/PAY AND COMPENSATION - STAY NAVY CAMPAIGN//
REF/A/DOC/OPNAV/03DEC06// AMPN/REF A IS OPNAVINST 1040.11B GOVERNING
NAVY RETENTION AND CAREER DEVELOPMENT PROGRAMS.//
RMKS/1.  THE PURPOSE OF THIS SIXTH MESSAGE IN THE STAY NAVY CAMPAIGN
SERIES IS TO COMPARE NAVY PAY AND COMPENSATION WITH THE PRIVATE SECTOR
USING TWO SPECIFIC EXAMPLES.  ALTHOUGH SAILOR CAREER SATISFACTION IS
NOT BASED SOLELY ON COMPENSATION, WE RECOGNIZE THAT PAY AND BENEFITS
ARE AN IMPORTANT FACTOR IN SAILOR AND FAMILY SATISFACTION, AND AS A
RESULT, RETENTION.  TAKE THE TIME TO HELP ENSURE YOUR SAILORS
UNDERSTAND THEIR TRUE PAY AND BENEFITS PACKAGE.  THIS MESSAGE, ALONG
WITH ONLINE COMPENSATION CALCULATORS, IS INTENDED TO BE USED AS AN
ADDITIONAL TOOL IN THE BROADER CAREER COUNSELING AND REVIEW SESSIONS
THAT OUR SAILORS RECEIVE.
2.  COMPETITIVE SALARIES.  MOST SAILORS UNDERSTAND THEIR BASE PAY AND
BASIC ALLOWANCES SUCH AS BAH, BAS, AND CLOTHING ALLOWANCE. HOWEVER, TO
TRULY UNDERSTAND THE FINANCIAL BENEFITS OF A NAVY CAREER, SAILORS MUST
RESEARCH WELL BEYOND THE PAY CHARTS TO RECOGNIZE SOME OF THE
SIGNIFICANT BENEFITS THE NAVY OFFERS SUCH AS MEDICAL, DENTAL, AND
COMMISSARY PRIVILEGES.  ADDITIONALLY, THE MILITARY RETIREMENT SYSTEM
ENSURES THAT SAILORS WHO STAY 20 YEARS OR MORE WILL RECEIVE PAY FOR THE
REST OF THEIR LIVES, AND IS ONE OF THE FEW RETIREMENT SYSTEMS WITH AN
ANNUAL COST OF LIVING ADJUSTMENT.  UNLIKE MOST OF THEIR CIVILIAN
COUNTERPARTS PAYING INTO DEFINED CONTRIBUTION RETIREMENT PLANS (SUCH AS
THE 401(K)), NAVY MEMBERS MAKE NO MONETARY CONTRIBUTION TOWARD THEIR
MILITARY RETIREMENT.
3.  ENLISTED COMPENSATION ILLUSTRATION BASED ON 2008 PAY RATES:  A
PETTY OFFICER SECOND CLASS AVIATION MECHANIC STATIONED IN NORFOLK WITH
TWO DEPENDENTS AND OVER FOUR YEARS OF SERVICE.  HER MILITARY GROSS
ANNUAL SALARY IS APPROXIMATELY 46,487 DOLLARS, AS COMPARED TO A PRIVATE
SECTOR COUNTERPART AT APPROXIMATELY 43,790 DOLLARS.  BREAKING DOWN THE
PETTY OFFICER?S TOTAL ANNUAL SALARY, THIS SAILOR IS MAKING ABOUT 3,533
DOLLARS IN BAS, 15,324 DOLLARS IN BAH (W/DEPENDENTS), 680 DOLLARS
CLOTHING MAINTENANCE ALLOWANCE AND A BASE PAY OF 26,968 DOLLARS.
UNLIKE HER PRIVATE SECTOR COUNTERPART, THE PETTY OFFICER RECEIVES A TAX
BREAK BECAUSE ALLOWANCES SUCH AS BAH AND BAS ARE NOT SUBJECT TO FEDERAL
INCOME TAX.  THIS TAX ADVANTAGE INCREASES THE VALUE OF THE PETTY
OFFICER?S ANNUAL SALARY BY 5,721 DOLLARS.  AS A CIVILIAN, THE AVIATION
MECHANIC IN THIS EXAMPLE WOULD HAVE TO EARN ABOUT 52,000 DOLLARS TO
HAVE A COMPARABLE AFTER-TAX INCOME.  THIS AMOUNT DOES NOT INCLUDE
ANNUAL INDIRECT COMPENSATION ATTAINED SUCH AS MEDICAL, DENTAL, VISION,
AND COMMISSARY BENEFITS WHICH ADD UP TO APPROXIMATELY 6,875 DOLLARS.
IF THIS SAME SAILOR MAKES AN INFORMED DECISION AND DECIDES TO “STAY
NAVY” AND RETIRE AFTER 24 YEARS AS A SENIOR CHIEF PETTY OFFICER, SHE
CAN EXPECT ONE OF THE FOLLOWING:
A.  HIGH-3 MILITARY RETIREMENT PAYOUT OVER 40 YEARS OF OVER FIVE
MILLION DOLLARS.  AS A CIVILIAN, YOU WOULD HAVE TO ACCRUE 2,652,892
DOLLARS AT THE TIME OF RETIREMENT TO RECEIVE A COMPARABLE PAYOUT.  IN
ORDER TO ACHIEVE THIS AMOUNT, YOU WOULD HAVE TO INVEST 57,972 DOLLARS
ANNUALLY AT AN EIGHT PERCENT RETURN OVER A 20-YEAR PERIOD.
B.  IF SHE OPTS TO TAKE THE CAREER STATUS BONUS (CSB) AT 15 YEARS
OF SERVICE, SHE WILL RECEIVE A REDUX MILITARY RETIREMENT PAYOUT OVER 40
YEARS OF 4,360,782 DOLLARS.  AS A CIVILIAN, YOU WOULD HAVE TO ACCRUE
2,354,259 DOLLARS AT THE TIME OF YOUR RETIREMENT TO RECEIVE A
COMPARABLE PAYOUT.  IN ORDER TO RECEIVE THIS AMOUNT, YOU WOULD HAVE TO
INVEST 51,446 DOLLARS ANNUALLY AT AN EIGHT PERCENT RETURN OVER A 20-
YEAR PERIOD.  ALL DOLLAR AMOUNTS ARE PRE-TAX ESTIMATES.
C.  IF SHE OPTS TO TRANSITION TO THE RESERVE COMPONENT AFTER
SERVING EIGHT YEARS OF ACTIVE DUTY, SHE WILL RECEIVE A MILITARY PAYOUT
OVER 20 YEARS (STARTING AT AGE 60) OF 1,606,604 DOLLARS.  DOLLAR
AMOUNTS ARE PRE-TAX ESTIMATES BASED ON AVERAGE SELECTED RESERVE
PARTICIPATION.
4.  OFFICER COMPENSATION ILLUSTRATION BASED ON 2008 PAY RATES:  AN O-3
FROM THE SOUTHERN CALIFORNIA AREA WITH DEPENDENTS AND OVER FOUR YEARS
OF SERVICE.  HIS MILITARY GROSS ANNUAL SALARY IS APPROXIMATELY 83,620
DOLLARS.  BREAKING DOWN THE LIEUTENANT?S TOTAL ANNUAL SALARY, THIS
OFFICER IS MAKING ABOUT 2,433 DOLLARS IN BAS, 26,640 DOLLARS IN BAH
(W/DEPENDENTS) AND A BASE PAY OF 54,547 DOLLARS.  AS PREVIOUSLY
MENTIONED, UNLIKE THEIR PRIVATE SECTOR COUNTERPART, THE LIEUTENANT
RECEIVES A TAX BREAK BECAUSE ALLOWANCES SUCH AS BAH AND BAS ARE NOT
SUBJECT TO FEDERAL INCOME TAX.
THIS TAX ADVANTAGE INCREASES THE VALUE OF THE LIEUTENANT?S EFFECTIVE
ANNUAL MONETARY COMPENSATION BY ALMOST 14,094 DOLLARS.  AS A CIVILIAN,
THE LIEUTENANT IN THIS EXAMPLE WOULD HAVE TO EARN ABOUT 97,000 DOLLARS
TO HAVE A COMPARABLE AFTER TAX INCOME.  THIS AMOUNT DOES NOT INCLUDE
ANNUAL INDIRECT COMPENSATION ATTAINED SUCH AS MEDICAL, DENTAL, VISION,
AND COMMISSARY BENEFITS WHICH ADD UP TO ANOTHER 6,759 DOLLARS.
TYPICALLY JUNIOR OFFICERS WHO LEAVE ACTIVE DUTY WILL HAVE INITIAL
STARTING COMPENSATION THAT IS 10-20 PERCENT LESS THAN THEIR ACTIVE DUTY
COMPENSATION.
IF THIS SAME LIEUTENANT MAKES AN INFORMED DECISION AND DECIDES TO ?STAY
NAVY? AND RETIRE AFTER 22 YEARS AS A COMMANDER, HE CAN EXPECT ONE OF
THE FOLLOWING:
A.  HIGH-3 MILITARY RETIREMENT PAYOUT OVER 40 YEARS OF 7,019,980
DOLLARS.
AS A CIVILIAN, YOU WOULD HAVE TO ACCRUE 3,724,065 DOLLARS AT THE TIME
OF RETIREMENT TO RECEIVE A COMPARABLE PAYOUT.  IN ORDER TO ACHIEVE THIS
AMOUNT, YOU WOULD HAVE TO INVEST 81,379 DOLLARS ANNUALLY AT AN EIGHT
PERCENT RETURN OVER A 20-YEAR PERIOD.
B.  IF HE OPTS TO TAKE THE CSB AT 15 YEARS OF SERVICE, THE RETIRING
COMMANDER WILL RECEIVE A REDUX MILITARY RETIREMENT PAYOUT OVER 40 YEARS
OF 5,991,688 DOLLARS.  AS A CIVILIAN, YOU WOULD HAVE TO ACCRUE
3,212,646 DOLLARS AT THE TIME OF YOUR RETIREMENT TO RECEIVE A
COMPARABLE PAYOUT.  IN ORDER TO RECEIVE THIS AMOUNT, YOU WOULD HAVE TO
INVEST 70,230 DOLLARS ANNUALLY AT AN EIGHT PERCENT RETURN OVER A 20-
YEAR PERIOD.  ALL DOLLAR AMOUNTS ARE PRE-TAX ESTIMATES.
C.  IF HE OPTS TO TRANSITION TO THE RESERVE COMPONENT AFTER SERVING
EIGHT YEARS OF ACTIVE DUTY, HE WILL RECEIVE A MILITARY PAYOUT OVER 20
YEARS (STARTING AT AGE 60) OF 2,692,347 DOLLARS.  DOLLAR AMOUNTS ARE
PRE-TAX ESTIMATES BASED ON AVERAGE SELECTED RESERVE PARTICIPATION.
5.  INDIVIDUALS CAN CALCULATE THEIR PERSONAL PAY AND COMPENSATION DATA
(INCLUDING SPECIAL PAYS) USING THE PAY AND COMPENSATION CALCULATOR FROM
A LINK ON THE NPC WEBSITE: WWW.NPC.NAVY.MIL.  OTHER STAY NAVY TOOLS
AVAILABLE ARE THE SELECTIVE REENLISTMENT BONUS AND ACTIVE AND RESERVE
RETIREMENT CALCULATORS.  THESE STAY NAVY TOOLS PROVIDE VALUABLE,
INDIVIDUALIZED CAREER COUNSELING AND CAREER DECISION INFORMATION.
6.  POINT OF CONTACT:  CAPT WILLIAM FOSTER (DIRECTOR, CENTER FOR CAREER
DEVELOPMENT) AT (901) 874-2410/DSN 882 OR EMAIL AT
WILLIAM.F.FOSTER(AT)NAVY.MIL.
7.  RELEASED BY VADM J. C. HARVEY, JR., N1.//
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