When both members of a couple serve in the military, they share a greater understanding of the mission and life demands that come with putting service before self. They also share the unique financial planning opportunities and challenges created by their double duty lives.
While dual military couples enjoy the financial advantage of two incomes and twofold benefits; they also to juggle the challenges that come with two military careers – two missions, two commanders, two demanding work schedules. Add a couple of kids to the mix and you’ve got a recipe for financial challenges created by tag-team deployments, maintaining multiple households, and paying for sky-high childcare expenses.
Across the Department of Defense, seven percent of service members are in a dual military couple; or looked at another way, one in five military women are in a dual military couple.
If you’re a member of a dual military couple or a couple considering jumping into military service together, this article will help you understand the unique financial planning opportunities you may experience and the financial and career challenges you may face.
Let’s look at the top ten financial opportunities and challenges dual military couples experience.
#1: Two Incomes
No matter the rank, two incomes make life a little easier – easier to live within your means and easier to avoid debt. Two incomes allow dual military couples to save more aggressively for both short and long term goals, provided they’re able to establish a standard of living more closely aligned with one income, than two.
The key for dual military couples is to take advantage of this opportunity from the beginning of their careers. Demographic data tells us that the number of dual military couples drops off dramatically as rank increases. Among enlisted ranks, the number of dual military couples peaks at E-6; for officers, the peak is O-3. (DOD Demographic Report.)
This data suggests that dual military couples are wise to maximize their savings and investing opportunities in the first ten years of their careers in part to benefit from the power of compounding; but also, recognizing this two income opportunity may be fleeting.
#2 Two Housing Allowances
In many situations both members of a dual military couple receive a basic allowance for housing (BAH). Let’s walk through a couple of scenarios –
First, if a dual military couple is assigned to the same location and live off base, both members of the couple receive BAH. If they’re able to carefully manage their housing costs, this is a golden opportunity to ramp up their savings rate by applying their second housing allowance toward their Thrift Savings Plan (TSP) account or other savings accounts.
If this same couple lives on post in privatized housing, they both receive BAH, but their rent is based on one BAH at the with dependent rate. This too can be a great opportunity to maximize their savings rate by applying the additional housing allowance toward savings. By contrast, if this same dual military couple is assigned government provided housing, neither receives BAH.
If a dual military couple has a dependent child, one of the two members receives BAH at the dependent rate. In the not so rare case that the couple is not assigned together and each of them has a dependent child living with them, then both members could receive BAH at the dependent rate.
Let’s walk through an example of this last scenario. A dual military couple with two kids is stationed overseas when the husband receives a one-year stateside school assignment. He relocates stateside with one of the couple’s children, while the wife extends her assignment overseas and keeps their other child with her. Both receive a housing allowance at the with dependent rate.
This example of multiple households leads to our first challenge –
#3 Living Together or Not?
The services try to keep dual mil couples together when possible, the Air Force refers to these assignments as a “join spouse” assignment, while the Army calls it a “joint domicile” assignment.
Like everything in military life, the needs of the service always comes first. It isn’t always possible to perfectly align two military careers every step of the way, especially as both careers progress into leadership positions.
When it all works out, one roof with two BAHs, it’s an amazing opportunity to save, save, save.
When it doesn’t work out, when the couple needs to maintain two households because they aren’t stationed together, that’s when they’re really glad they decided to live within the value of one BAH at their previous assignment.
Technically a “joint domicile” assignment could assign the spouses to two separate installations within 50 miles from each other. In this scenario, a dual military couple might decide to live somewhere in the middle and each commute to their duty station. This scenario is common with dual military couples who are not in the same service.
#4 VA Loan Entitlements
With all this moving to and from installations, sometimes together, sometimes not; it’s important to understand that each member of a dual military couple earns their own VA Loan entitlement.
When they buy a home, they can either use one of the entitlements and save the other for a future home purchase, or they can split the entitlement, leaving each of them with a partial VA entitlement.
An important consideration is if one of the spouses is a member of the Reserve Component and has already established a VA disability rating; their VA loan entitlement allows them to avoid paying the VA funding fee, which could substantially reduce their upfront costs for purchasing their primary residence.
So far, we’ve looked at several financial opportunities that dual military couples experience which allow them to maximize their savings; but it’s important to consider a few of the common financial challenges.
#5 Military Childcare
Obviously, quality childcare is critical to all working parents, military or not. Across corporate America, only 20% of employers provide any assistance or subsidy for their working parents’ childcare needs. Fortunately, the DOD has invested substantially in installation Child Development Centers (CDCs) and Family Childcare programs.
The DOD’s childcare program is the largest employer sponsored childcare program in the US, providing care to over 200,000 military children at a cost of about $1B per year.
CDCs provide nationally accredited childcare to our military families at an affordable price, but dual military couples still face several childcare related challenges.
Availability. There are more than 400,000 military kids under the age of 5, yet only half that many CDC slots across the DOD. Unfortunately, waitlists are the norm at many installations. Single military parents and dual military families have priority at their installation CDC, but even that advantage is not always enough to guarantee a slot when they need it.
Duty Hours. The typical duty day rarely fits neatly within the CDC’s hours of operation, leaving parents with extended duty days or shift work scrambling for alternatives. Training exercises and temporary duty assignments stretch dual military parents even further beyond the CDC’s hours.
Cost. To say that childcare is expensive is an understatement, even on two incomes. Nationwide, parents spend on average more than ten percent of their income on childcare; in high cost of living locations like Washington DC, couples can spend over $2000 a month on a single child’s care.
For dual military couples who can’t fit their duty day within the CDC’s workday, they often turn to nannies to provide in home care including early morning and late evening care, or overnight care when necessary. On average, nanny’s charge $700-800 a week or over $30,000 a year.
Subsidized Fees. In order to keep CDCs affordable, the military subsidizes the program and charges parents on a sliding scale based on their total family income. These fees can range from just under $300 to almost $800 per month per child; both well below the national average.
Fee Assistance. Additionally, the services now offer financial support to families who cannot find care for their children on the installation, either because of a lack of availability or the distance between the duty station and the CDC. The Fee Assistance Program is meant to partially cover the difference in cost between what the servicemember would be expected to pay at the CDC and what they are required to pay at an off base childcare facility.
# 6 Tag Team Deployments
Let’s look at another financial challenge for dual military couples – potential Tag Team Deployments. When spouses are in separate units, that can mean separate deployment schedules.
In some cases, dual military couples with kids intentionally alternate their deployments so that one parent is always home with the kids. While this is an amazing sacrifice, it can be a strain on their relationship and their wallet.
This constant churn of one parent always being deployed can increase childcare expenses, travel costs, and spending on household help to balance the demands on the family. Fortunately, when the demands of duty keep these couples apart, they may be eligible for the Family Separation Allowance (FSA).
The one positive of these dual deployments is that it provides ample opportunity to push up their tax-free Thrift Savings Plan Roth contributions while in a combat zone. They may also contribute up to $10,000 to the Savings Deposit Program earning 10% interest during their deployment.
#7 Estate Planning
You can’t talk about dual military couples’ deployments without addressing the importance of proper estate planning. Because both members could and often do deploy, their estate planning preparedness is even more critical to their overall financial plan.
If they have minor children, they have the added requirement to complete their services’ Family Care Plan, which requires among other things, naming short-term and long-term guardians for their children should they need to deploy on short notice.
Dual military families frequently list this as their biggest pain point. Each time they PCS, they find themselves in a new community, a long way from family, asking brand new neighbors they barely know to take responsibility for their kids on a moment’s notice.
#8 Two GI Bills
One of the most amazing financial benefits dual military families earn is two GI Bill education benefits. All that money they spent on childcare–they finally get a benefit that can work for them! For dual military couples, this provides the ultimate education funding flexibility.
From a planning point of view, each member of the couple should transfer their benefit to other spouse as soon as they’re eligible, this starts their service commitment clock. If they have children, they should both transfer at least one month of GI Bill benefit to each child. This sets them up to take full advantage of this amazing education benefit when their kids are college bound.
#9 Two Careers
It can’t be overstated how difficult maintaining a marriage and raising a family can be when there are two military careers involved – two separate but important missions to achieve, two commanders to serve, and two deployment schedules to meet. It’s a lot.
Dual military couples face a constant challenge to live together while meeting the needs of their services. Every career milestone is fraught with possibilities and tradeoffs between the two careers. Every assignment cycle brings another “should I stay or should I go” conversation. Whose career will take priority? Will we be able to live together? Where will we find childcare?
What frustrates many dual military couples is that they have little or no control over these life changing decisions. This lack of flexibility leads many dual military couples to decide that one member will step off active duty and into the reserve component to gain more control of their lives.
From a financial planning point of view, it’s important to recognize that the competing demands of two careers and raising a family may put achieving two active duty retirements out of reach.
By optimizing your savings opportunities in your early career, you can ensure you’re financially prepared to make decisions when career challenges arise later in your career.
#10 – Two Pensions
Finally, if a dual military couple survives all the deployments and meets all the competing mission demands, in the end, they earn the best financial opportunity of all, two military pensions.
For many dual military couples, if they’ve saved and invested properly all along, this can mean a “BIG R” retirement.
They may not need to take on a second career. They may be able to hop in the RV and travel the county or more likely, chose work that is rewarding rather than focusing on earning power.
Looked at from investment portfolio point of view – two military pensions mean double the income floor provided by their inflation protected government pension; which could allow them to carry a higher equity to bond ratio in their portfolio than would be typical for their age or retirement timeline.
Also important is that they will have two Survivor Benefit Plan (SBP) decisions to make. If both members of the couple had careers of equal length and rank, if they don’t have any dependents at home and have saved aggressively, growing a large investment portfolio on which to rely, their SBP decision could be simple.
On the other hand, if they have significant career differences, maybe one left as soon as they reached 20 years, while the other continued to get promoted and retired at 30 years; then their SBP decision is a little more complicated.
Another factor to consider is that because of the competing work/life demands, dual military couples frequently wait to have children until later in their careers. This means their kids are younger when they retire from the military and have a longer time horizon until they become financially independent adults. This can create a scenario where it is important for dual military couples to extend SBP coverage to their children.
Follow these links for more insight on the Survivor Benefit Plan and Reserve Component SBP.
A Financial Strategy for Dual Military Couples
If you’re a member of a dual military couple, what is important to understand is that you will experience opportunities and challenges along the way. If you’re able to maximize your savings and minimize your debt when your dual military careers align, you’ll be prepared for the inevitable financial and career challenges when your careers don’t align.
As a dual military couple, you don’t need to get every financial decision correct, nor do you need to perfectly align your career aspirations at every turn. If you’re able to maximize your savings opportunities, you’ll have the financial freedom to make decisions that best support your combined professional goals and your family’s priorities.
Every military family’s situation is unique and presents its own challenges and opportunities. We recommend working with a financial planner who understands your military benefits from first-hand experience and specializes in serving military and veteran families. The advisor members of MFAA understand your life, your challenges and your benefits because they’ve walked in your shoes.
The information provided in this blog is simply that, information. It is not intended to serve as an individual recommendation and should not be relied on as investment or tax advice.
