Summary: Re-enlisting for 2 years with no bonus is sometimes better than 3 years with a bonus, because you will make VA Disability compensation as soon as you get out.
Look, if you are considering re-enlistment in the 2-3 year range, you probably see yourself getting out of the Army in the near future. You may be unsure of what you want to do with your life and you're willing to give yourself a few more years to figure it out. For most people, the decision for any re-enlistment often comes down to getting the most out of the Army, while also maximizing money and freedom.
When comparing 2 years vs. 3 years, think about both options in 3 year chunks. What will you get in that 3rd year of the 2 year option (you'll be out of the Army) that you would not get if you were still in? During the ETS transition process, you will file for VA disability. The whole VA disability process is a blog for another day, but essentially it's tax free money in your pocket every month, for life. You will get anywhere from about $150 to $3,200 per month, depending on how your claim goes. The trick here is to think of this like a 2 year re-enlistment bonus.
For example, let's say the current 3 year re-enlistment bonus is $12,000 (assuming you could get overseas and get it tax free). Now, lets say you were confident that you could get at least a 60% disability rating (more on this later). The 2020 amount for a 60% rating without dependents is $1,131.86 per month. This means that for your first 12 months out of the Army, you would pocket $13,582.32 in VA disability compensation. In this example, if you took the 2 year option you would end up with more money and less of a time commitment to Uncle Sam.
The numbers will obviously vary from person to person, but the point is to show that you do essentially get a "bonus" for a 2 year re-enlistment. If the numbers work for you, great. But sometimes, the disability you think you will receive is less than amount of the current 3 year bonus. In this case, you need to ask yourself, "What is the rough dollar value I place on being out of the Army 1 year sooner?" Personally, I value that freedom pretty highly, so I would be willing to make a couple thousand dollars less in the end to have an extra year of civilian life.
Now I know what you're thinking, " Tom, how do I know what my disability rating will be? What about health care as a civilian? What if I want to go National Guard or get back in someday?" Look, there is no standard answer that I can give to each of these questions without turning this blog into a novel. You need to do your research. Get all your bumps and bruises documented. Google how much of a rating certain medical conditions usually receive. Look up health care rates (for single veterans its pretty cheap). Talk to a NG recruiter and ask what conditions would be disqualifying. The point of this blog is not to say that a 2 year re-enlistment is always financially smarter, but VA disability is often an overlooked source of income that can bridge the gap between getting $0 and whatever the current 3 year bonus happens to be.
Any questions, tips, or a specific topic you want to see next? Email tomdipietro@teamroommedia.com
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