Getting Rich In The Submarine Force

(Disclosure: After “seeing the real Navy” during this summer’s NROTC training, our progeny announced a desire to join the submarine force.  She’s smart, she’s persistent, and she’ll be good at it.  She’s a contender for “command at sea”.  I’m happy to support whatever decision she makes, as long as she has enough facts to make an informed decision.  And then after she makes that decision, just like me 30 years ago, she’ll have nobody to blame but herself…)

I was recently reminded about a persistent rumor circulating through the NROTC program: “Submarine junior officers earn a six-figure income!!”

Well, not right away, but eventually.  They certainly earn it.  But before we get into the pay scales of those filthy-rich nukes, maybe a little perspective is in order. I went waaaay back into my storage closet and pulled out my Leave & Earnings Statements. (Yes, I’ve saved over 30 years of pay statements. I’m worried that someday DoD will claim I owe them a refund.) In 1982 I was a brand-new ensign, finally earning the big bucks we’d been fantasizing about during four years of college. I was living in a somewhat gritty part of Alexandria, VA while on temporary duty at the nearby Naval Research Lab. My take-home pay was $1280/month and I remember being quite concerned about shelling out $355/month for a one-bedroom apartment.

I made the following table by taking those 1982 numbers from my LES and adjusting them to 2011 equivalents using this Employment Cost Index calculator and these tables.  (It’s reasonably accurate. If you know of a better method of comparing two different pay scales over time then I’d be happy to upgrade.) Finally I looked up the pay scale for this year’s brand-new ensigns, 29 years later:

Monthly Compensation 1982 ECI-adjusted to 2011 (x 2.87) 2011
Base pay $1098.90 $3154 $2784
BAH* $348.08 $999 $1674
BAS** $98.17 $223.84
Total monthly $1545.15 $4434 $4681.84
Total annual $18,541.18 $53,214 $56,182.08

* Basic Allowance for Housing. Actually BAQ+VHA, but for purposes of this post it’s close enough to BAH.
** Basic Allowance for Subsistence. It’s the officer version of a food allowance.

(Note that a military pension is based only on… base pay, which is just 71% of this total. Bonuses and other types of pay are not part of the pension calculation, and neither are allowances for housing or food. The Department of Defense would much rather hand out specialty pays, allowances, and bonuses that don’t count for retirement instead of adding to the base pay tables.)

It’s a relief to see that a 2011 ensign is keeping up with the ECI over the last 29 years.

By 1987 I’d served my obligation and had the option to leave active duty for the Reserves.  Coincidentally I had also finished my first sea duty, so my retention decision was going to be tied directly to the quality of my shore-duty orders. The assignment officers were keenly aware of this synchronicity, and part of their retention efforts included an update to the Nuclear Officer Incentive Pay program:  a $12K/year bonus for signing a contract of 3-5 years.  I could certainly use the money (I wasn’t even remotely near financial independence) so I stayed on active duty.

In 1984, after finishing nuclear training, I had also picked up eligibility for submarine pay.  “But wait, there’s more!”  By the time I returned to sea duty in 1989, I had over three years of sea duty and was entitled to sea pay.  (Retention was still low, so I was worth all of this extra money.)  Finally I added in the pay & bonus numbers for today’s six-year lieutenants:

Monthly Compensation 1989 ECI-adjusted 2011 (x 2.09) 2011
Base pay $2451 $5122 $5188.80
BAH $577.76 $1207 $2106
BAS $119.61 $223.84
Sub pay $595 $595
Sea pay $190 $210
NOIP $1000 $2090 $2500
Total monthly $4933.37 $10,310 $10,823.64
Total annual $59,200.44 $123,728 $129,883.68!

That NROTC rumor is correct— even without the bonus program, submarine junior officers can earn six figures after just six years of service!

Note that submarine pay hasn’t risen in over 20 years, and sea pay hasn’t done much better. Their actual value today is less than half of what it was only 22 years ago. NOIP has risen considerably to $30K/year, but that was boosted in 2009 due to the submarine force’s truly miserable retention numbers.  It’ll probably stay at that level for at least five more years.

BAH seems to have gone up quite a bit again. This may still be due to the inflated real estate values around Navy bases, but in the 1980s (especially in Alexandria) the housing allowance was only intended to cover about 85% of the actual off-base housing costs.  Over the last 20 years BAH has been raised to cover 100% of the area’s average housing costs.

An interesting side effect of all these incentives is that base pay in 1989 had dropped to 50% of the total, and in 2011 has shrunk even further to only 48% of the compensation package. In other words, if that 2011 O-3 submariner (with only six years’ service) could retire right now then they’d only receive 50% of $5188.80/month or $2594/month… about $31K/year or less than a quarter of their total active-duty compensation.

The good news is that the submarine officer’s overall pay has kept up with the last 30 years.  Perhaps the not-so-good news is that submarine quality of life (and work/life balance) hasn’t changed substantially in 30 years, either. But that’s just my opinion.

You submariners are chuckling ruefully and shaking your heads at the reasons behind these numbers.  Even if you’re not a submariner, you more experienced service members are already asking the question: “Why are they being so nice to the submariners?” The answer:  judging from the retention statistics, money seems to be the only way that the Navy can make up for the submariner’s quality of life… or lack thereof. I don’t have 30 years of retention statistics at hand, and I don’t think the Navy wants those numbers to be publicized, but I suspect that they’d validate my opinion on submarine quality of life.

Luckily my daughter will have two more summers of NROTC training aboard ships & submarines to ask more questions and to help her make her choice.  (Feel free to offer additional info in the comments!)

Most of all, it’ll be interesting to see what the submarine lieutenant in her NROTC unit decides to do when his tour is finished.  He’ll be eligible to either leave active duty or to start picking up his own six-figure paychecks.  If he shares his thoughts with the midshipmen about his own retention decision, he could help them avoid the “What if I miss this $$$ chance?” thinking which might make them feel compelled to go submarines.

Of course it’s good to have a job, let alone to assess these difficult choices.  But it’s even better to be able to contemplate them when you’re financially independent!

Related articles:
Sea story: Looking for an Engineer in all the wrong places
Sea story: “Hang on!!”
Sea story: “Secure blowing sanitaries!!!”
Sea story: “Battle Stations Missile”
Saving base pay and promotion raises
Where to put your savings while you’re in the military

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About Doug Nordman

Author of "The Military Guide to Financial Independence and Retirement" and co-author of "Raising Your Money-Savvy Family For Next Generation Financial Independence."
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5 Responses to Getting Rich In The Submarine Force

  1. msrusso says:

    My daughter is also thinking Nukes. Just some thoughts—
    1) If the NROTC instructor is studying on the USN’s dollar, then he owes one-for-one payback (not sure if the NROTC tour counts in this equation).
    2) Selection for Nuke Officer is no sure thing. While ADM Rickover is no longer physically around, I suspect some type of psych fitness test and subjective judgment based on ever-changing criteria is still in play in the NUKEOFF brotherhood. It’ll be interesting to see what develops from NAVPERS in respect to screening the Women Officer Candidates (and will those criteria be openly shared or “need to know”?).
    3) As a former non-warfare desig, those bonuses retrospectively made a huge difference. If I’d been earning and saving them, my investment portfolios would be much more substantial than current holdings. However, times change. During my service period, there was little or no opportunity to claim the right to obtain the jobs where these benefits/entitlements/inducements were possible.
    4) Operational skills and knowledge translated much more easily (and monetarily) than the ashore ones did, even with a substantial sub-specialty [R&D program management +expensive clearances]. I could claim experience as a mid-level manager and that was all. Unless a non-warfare type is hired directly into a related field right out of service – little leverage existed. Re-education [based on the limited-tuition matching 2-1 of my era’s GI Bill] and a new life. PERIOD.
    5) So while 6-figures is possible for a NUKEOFF- what are the long term realities of that life? What is the most useful and realistic advise that we former USN officers can provide to our Midshipmen Daughters (because our Sons will still be considered differently)?

    • Doug Nordman says:

      I think the good news is that the gender gap is finally closing. In another generation, the Navy’s new people will wonder what all the fuss was about. “If Mom wanted to be CNO then she should have worked hard to get the job, just like I’m going to do.”

      Nuclear selection has see-sawed back & forth with the billets and the retention numbers. (In 1979-80 Rickover actually “drafted” midshipmen into the community against their will.) I think the criteria will be gender-neutral. (You’d be surprised at how little psychological screening and subjectivity exists in the selection process.) The minimum standards (GPA, physically qualified) are designed to get people into the pipeline so that they have a chance to show their skills on written exams, oral interviews, and supervised watchstanding. The standards at the end of the pipeline won’t change– if too many people drop out then tours will be extended and billets will be gapped. The men & women are also currently competing for different billets (although in 30-40 years that may be irrelevant too), so the assignment officers can make allowances for attrition. They’re already learning that now.

      NROTC is still training mids for “command at sea”. Especially now that both genders have the opportunity, that goal is more relevant than ever. And while money’s always nice, I’d still suggest that people perform better in a community whose mission is complex, challenging, fulfilling, and maybe even a little fun. Those criteria worked for the first 10 years of my submarine career, and I’d suggest to my daughter that she tackle it for the challenge & fun first– and not for the money.

      I’d also suspect that once she got into the submarine force she’d find it very difficult to laterally transfer to SeaBees or any other community. She just has to decide which is more important to her…

      • ms russo says:

        thanks for the reply. I heart-fully hope that your insights are correct; you seem the optimist and that appears to have taken you good places..

  2. Jan says:

    :>) My son graduated in Nuclear Physics- from WP. He now flies helicopters. He had to sign up for 12 years to get the slot. No bonuses in the Army for most officer positions.
    Still, he clears more as a junior Captain than my husband did at retirement. Fortunately, we taught him how to save for retirement. Hopefully, the drawdown will not boot him before his time!

    • Doug Nordman says:

      12-year obligations for helo pilots? Ouch!
      I bet the “good news” is that he’s cost the Army too much training money & time to be considered a drawdown candidate.

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