Tummy , 01-25-2016 12:33 PM
Gets Weekends Off
Everyone likes to point out the financial benefits of joining the reserves, so I thought it might be worthwhile to take a closer look. As a 1st year 7ER FO, I make $70.51 per flight hour. My average daily guarantee is 5:15, so my average daily guarantee is $370.18. I get a 15% contribution to my 401k and I’m going to receive 21% profit sharing this year, so my average daily guarantee plus 401k contribution and profit sharing is $515.10. On 2nd year pay, I’ll get $815.06, on 3rd year pay I’ll get $953.79. If I pick up a green slip, it’s $1,030.20, $1,630.12, and $1,907.58.
The reserves at the active duty unit I just left make $887.84 per day while drilling as an O-4 with over 10 years. The unit expects them to work 5 days per month (60 days per year) of which 48 are drill days and 12 are active duty for training. They don’t make double pay on active duty days, and they have to commute either to their reserve job or to their airline job.
$887.87 * 5 / 7 (commuting adjustment) = $634.17
(($634.17 / 2 * 12) + ($634.17 * 48)) / 60 [adjustment for active duty vs drill ratio] = $570.75
They also get a reserve retirement, but it’s not the same as an active duty retirement. I was on active duty for 11 years and 16 days. That gives me 4,031 points towards retirement. 108 points a year for 9 years would give me 5,003 points which is good for a 34% retirement starting at age 60. That’s $67,155.27 per year. The present value of a perpetuity of $67,155.27 a year at a 6.37% discount rate (the historical rate of return for Vanguard’s LifeStrategy Income Fund) is $1,054,242.84, so it’s almost like they give you a million dollars on your 60th birthday.
The present value of $1,054,242.84 on my 60th birthday is $139,447.21 right now if I use a 7.78% discount rate (the historical rate of return for Vanguard’s LifeStrategy Growth Fund). $139,447.21 / 9 / 60 = $258.24, so we can add that much to the pay the reserves give us each day. That comes out to $828.99 per day for working in the reserves as an O-4 with over 10 years.
We would make more money than that as a 3rd year FO on the 7ER. We would make way more money than that any time we ever pick up a green slip.
Right now, I bid avoid ACC and DKR. If Delta told me that I had to go to the Al Anbar province of Iraq and sleep in a tent for seven months to a year, I would tell them to go get bent. If the Marine Corps Reserves tell me that I have to go to the Al Anbar province of Iraq and sleep in a tent for seven months to a year, and I tell them to go get bent, things turn out poorly for me.
Having said all of that, I do miss the Marines. I miss sitting around the ready room lying about how good I can fly airplanes. I miss the people. I miss flying airplanes upside down, and I even miss the students I flew with. I’m just not sure that participating with the reserves is the no brainer financial windfall that so many make it out to be.