Military Pay Not Safe Forever (Nor Retired, nor Disability, nor ….)

Important Update 7 October 2013:  15 October 2013 Pay Is Coming

Important Update 5 October 2013:  DFAS Unsure of 15 October Military Pay

Military pay is protected during a budget-related government shutdown due to a bill signed into law late Monday night, but that doesn’t mean that we can all relax.  The next big challenge to pay is the debt ceiling.  The debt ceiling is the limit on the amount of money the government can borrow.  Under the current limit, our government will run out of money on or about 17 October 2013.  (Technically, it has already run out of money, but it has done some hocus-pocus to get us to 17 October 2013.)

For many reasons, this is a significantly larger problem than the current government shutdown.  Imagine if you paid all your bills with credit cards, and you hit your credit limit.  That’s what’s happening to the government.  Just like a family budget, the income and bills tend to come in bunches.  In a month, the Treasury typically brings in roughly $222 billion and owe roughly $328 billion.   There are several big bill days each month, where Treasury has huge financial obligations.

Big Bills Coming Up

While the government has a lot of bills due every day, certain days are more expensive than others.  In the weeks following 17 October 2013, the following expenditures are scheduled:

23 October 2013:  $12 billion in payments for Social Security obligations are due.

31 October 2013:  $6 billion in interest on Treasury bonds are due.

1 November 2013:  $68 billion in Social Security payments, disability payments, Medicare payments, military pay and retirement pay are due.

Robbing Peter to Pay Paul

Just like a family who doesn’t have enough money to pay all its bills, the federal government end up paying some bills first, and other bills later.  There are a number of issues that come into the decision:  legal authority, physical capability (in terms of computer systems, etc.), long-term implications and sensibility.

There are several theories about how the Treasury could make its payments.  The US federal government has never been in this situation before, so no one really knows.  What seems sensible it prioritize the payments that are deemed the most urgent, such as interest on Treasury bonds and payments to individual citizens.  However, there doesn’t seem to be legal authority to do this; even if there is, it is unlikely that the computer can be reprogrammed to effectively sort the approximately 100 million payments made each month.  After that, one possible solution is to pay bills as the money comes in.  Another solution is to wait until the Treasury has enough money to pay an entire days worth of bills, and then do so.  Both run into the same legal and technological questions.

What Does This Mean For You?

In short, it is possible that the 1 November 2013 military paycheck will be delayed.  For exactly the same reasons, it is possible that the 1 November 2013 payments to military retirees, disabled veterans, federal retirees, Survivor Benefit Plan recipients, and other federal payments will be delayed.

Because we can’t predict if it will actually happen, the best thing to do is prepare.  Look at your current situation, consider your options, and make a plan for how to survive this situation.  While you may not believe it could happen, that doesn’t make it OK to not think about it.  A little preparation can help prevent a lot of unnecessary stress.

Most of this information was derived from the Bipartisan Policy Center’s website and Absolutely Everything You Need To Know About the Debt Ceiling at The Washington Post’s Wonkblog.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Deanna

    Why haven’t a lot of people receive their retirement checks yet for October 1st

    • Cara

      I got both of my checks for the 1st and the 3rd. Im just worried for my check in november. I called the SSA today and they said they arent sure if the checks for next month are comming or not

  • marcus

    the 15th paycheck isn’t exactly safe either. DOD lawyers have NOT allowed the bill to be processed because they don’t like the wording. therefore there is no guidance from the DOD to tell DFAS how to pay out. So no, the 15th pay is NOT safe, yet.

    • KateKashman

      Thanks, Marcus, I’ve updated! Things are changing by the minute, aren’t they? I hope you aren’t too affected.

  • Jim

    My grandson has been given a ten day RIF notice and is being told that the Marine Corps will not provide transportation home and that he will not be paid his accrued leave. Does anyone have any intel on this?

    • KateKashman

      Jim, that sounds very unusual. First, the outprocess is usually longer than 10 days, the Marine Corps always provides transportation home, and there is no reason he would not be paid his accrued leave. Readers, do you have any thoughts?

      • There’s got to be missing details. Is he in trouble? Court martial tends to take away a lot of benefits.

      • TabithaChambers

        If they don’t have the money to pay it, then they can’t pay it! It doesn’t mean that he necessarily won’t get paid later, for the way home, but they aren’t authorized to pay for any PCS at the moment. Also, the 10 day RIF does happen. Especially in times when contracts are up in question. If his commitment was up and he was just counting on being able to re-enlist, but hadn’t done it yet, they can just cut you loose:/

      • jim

        He is not telling you the whole story .Sounds like he got into trouble with his command and they garnished his pay and is being sent home

    • Connie Manifold
  • Not Interested

    Shame on our government. No need for us to be in a situation such as this.

  • Mary Kelly

    What does our government have to sale off to help pay its bill I sale my firniture lands holdings etc.

  • Terry Porter

    I’m a disabled vet and all I have is my VA check to live on. If they miss Nov. how long will it be till I recieve my check. Bills still need to be paid. I still need to eat.

    Hasn’t anyone considered that since them people caused this problem that they didn’t do their job, they quit on us and no longer work for us anymore. Those jobs are open and need to be filled. Don’t look to them anymore as leaders.

    Time is took short for that.

    • Jenny

      Terry,

      This is just a thought if you aren’t paid, you may want to call local area food banks, churches, etc to see about getting some food. It could at least feed you. Private organizations are very helpful and understanding during these times. Also, as far as bills, it may help to call creditors and explain the situation. They may be willing to delay your bills until you get paid. I did this when my Mom was in the hospital. I called her mortgage company, insurance, etc and explained that she was ill and unable to pay that particular month’s payment. They were willing to forgo that particular month (she just had to pay twice the following month). Creditors would rather hear directly from you than have you default. Usually they are willing to work with you on a monthly basis. If you do call them, ask them to make the appropriate comments in your file. Also, get the person’s name who you spoke with or ask to speak with a supervisor just so you know your account will reflect the conversation that you had with them (especially if they agree to let you pay late). If they do agree to let you pay late, ask them to waive any late fees and to note that waiver in your file as well.

    • dave brewer

      I know what you are going through–the VA and Social Security is all I have-so thanks to the feckless low life’s we call congress and the administration those with the most to lose will be the ones hurt first and worst. I feel that a recall of as many in congress as possible—I feel my service in the Corps was a waste of time

      • rachel ashley
  • arthur j fryer

    Its amazing how our government will let it people suffer while the polititions get there money and benefits as well as them giving money to other countries who poop on us after we help them yet the diableded veterans and citizens who served suffer to the point of disaster. we need to clean house in DC were the people come first and not the big businneses or elected officials who are in there back pocket getting money for protecting the rich and screwing the poor. I am a disabled veteran and I don’t celebrate veterans day nor do I feel proud to have served causeits not the county I remember serving. its a shame we the people allow it to come to this.

    • cav

      I am a disable veteran and I feel for those as well, Arthur. I served with pride, and because this government is not giving us credit for it, that doesn’t mean that we now be not worthy or proud any more. I served to maintain our country safe, and not because any elected president was in office while my military duties. I hope, up there in their pride, these congress put themselves together and remember for once, that they still are and was and will be protected by us, military families, who sacrifice every detail of our given freedom to keep us, as well the government safe, and let us get pay without excuses, because when we served this country, we did it without excuses.

      • Al

        I am a disabled VietNam vet that has worked up until 3 yrs ago, at which point I had to retire for medical reason, I am 68 yrs old, not able to go out and find a job, my disability and ss check are what I live on, then I hear things like you should have at least 3-6 months money saved, please tell me how , for the average american ( not politician) lives from check to check. and then still struggles, what r we supposed to do. please call your government officals and lodge your complaints until somebody hears us. this is not about health care, its about greedy people still getting payed while we sit and worry about how we will live from one day to the next. I fulfilled my military obligation , now its time for the government to fulfill their obligations to us , the people

  • Ron Van Vlack

    From what I’m gathering here, as of November 1, all military, military retirees and disabled veterans will not receive pay until the debt ceiling is raised or the “powers that be” agree on a budget. Is this correct? If so, we know MANY who will be affected drastically, including ourselves. Try telling the one holding your mortgage that you’re going to be late (indefinitely) with your payment.

    • Shirley P

      Active duty, active reserves, and some civilian workers will be paid Military Retirees and Social Security are not dependent upon ceiling heights. HOWEVER, the US Treasury has already started prioritizing who will get paid and who won’t…too include those groups that have separate funding (Military Retirees and Social Security). It may be a “rob Peter to pay Paul” situation where the Treasury determines that it is more important to pay our national debt interest to China, etc., than to pay Americans in the above categories. The Treasury Dept has control of all money until the debt ceiling legislation is passed, unless the President and Congress pass a stop gap measure that would allow Treasury to prioritize those 2 groups and pay them before any others. FYI: Unfortunately, military disability is not covered under the Military Retiree separate funding. At this, they are also under the “prioritization” scrutiny.

      • KateKashman

        Shirley, I am curious. In your explanation, where do you think the Treasury is planning to get money to pay military retirees and social security? The Treasury Secretary Jacob Lew specifically identified Social Security as one of the first entitlements to be affected by a debt ceilling crisis. I’d love to know your sources. Thanks!

    • Cara

      what about a retired veteran? My dad is a retired marine but he is no longer in the service. And do the disability people get there checks?? Im on disablity and im also on medicare due to disabllity.

  • Paul

    If you don’t get paid most Credit Unions will loan you interest free for one month so check on that, also if you have your pay going to USSA bank they will
    also deposit the same amount of your pay.

    • Cara

      what if u have bad credit?

  • william Houle

    I retired in 1996 from the Army. I need my retirement check to pay my bills. I had to take a second job after retireing from the Arny but it’s not enough to pay my bills. I had a job on Fort Riley but due to cutbacks was laid off so I had to take a job for lesser wages in the civilian work force. I did my part now somebody on capital hill should do theirs. Congress has the nerve to complain because they have to wash their own towels. Shame on them.

    • william Houle

      I’m Williams wife and we have been married 40 years of which he did 22 years in the Army. When he joined in 1974 there were a lot of promises made and a lot broken. Like free medical and dental for the rest of our lives. Many bases were closed which made it hard on the retirees who too depend on the commisarry and pharmacy and other things.Please someone do something to stop this madness we need our retirement check to live on. My husband has given his time and its about time someone started keeping their obligations to those who served. Charlotte Houle

  • Charlotte Houle

    I’m the wife of a retired Army man. We have been married for 40 years. My husband came into the Army in 1974 and when he came in there was many things that was told to us such as health care and dental care for life. We have lost a lot of benefits but along with that many bases were closed. We depend on our retirement check to pay our bills. We depend on the post for our groceries even though we drive 90 min each way but its worth it in the long run. My husband had a job on a military post as a civilian but do to cutbacks was laid off. So he had to take a job for longer hours and less pay. He is lucky to have this job as 1,200 employs were laid off. Some people were fightning for jobs at McDonalds. Please! My husband and I served our time and now it is time for someone to do something.Please! I know I’m not the only one that has concerns. What would Congress or the President do if they were not paid? But then they don’t have to worry.

  • Ali

    God bless you Charlotte, we’re in the same boat.

  • Charlotte Houle

    God bless everyone that is in the same sinking boat with me. I only hope and pray that someone does the right thing. Or husband or wife has done their time in the military and honored their obglation. now its the goverments turnnto do the right thing. we thought when we retired we would be free to do anything we wanted like go on trips etc and then we woke up. I’m 11 years older than my husband and can’t wait till he collects social security. We don’t know what a vacation is. I wish they would reinstate the federal jobs on post. We did not know what we had till we lost it. God bless America.

  • Josh

    Well all pay has occurred as it was supposed to. No issues with 1st or 15th paycheck. lol.

  • CECIL

    SGT FRYER THIS C, DAILEY 1/39INF ARMY BUDDY