PAY AND COMPENSATION – STAY NAVY CAMPAIGN

RTTUZYUW RUEWMCS0000 0812124-UUUU--RUCRNAD
ZNR UUUUU
R 212124Z MAR 08
FM CNO WASHINGTON DC//N1//
TO NAVADMIN
INFO CNO WASHINGTON DC//N1//
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UNCLAS //N01040//
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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