A popular topic among retiring and separating military members is whether or not it is better to take terminal leave or sell it. I have heard a lot of heated debates about which is better, and I have even heard people raise their voices about this topic.
Most people feel selling back leave is a black or white issue, but it’s not. It is a very important and emotional financial issue to consider. Separating or retiring can be a stressful time, so it is well worth your time to plan ahead! I hope this information helps make a few people’s decisions easier.
The argument for taking terminal leave: Most of the people that argue in favor of taking terminal leave stress that you get the full benefits while you are on terminal leave (BAH, BAS, incentive pay, health care, etc.). Their main argument is that you are shorting yourself by not getting the full monetary benefits when you sell leave.
Another popular argument for taking terminal leave is that this is time off you have earned and have not taken because operations tempos were too high, you didn’t have time to take leave, or you chose to save your leave.
The argument for selling leave: The decision to sell leave usually stems from either wanting more money, or not being able to take all of the terminal leave. My wife will separate from the USAF this fall (she is not retiring) and has been told by her supervision she will only be able to take 2 weeks terminal leave. The rest of the leave she will have to sell. This is common for critically manned fields, especially for those who are not retiring.
My brother, who is a Marine, told me their old Top would allow Marines who were separating after completing their first enlistment to take only 5 days of terminal leave no matter what. I guess a lot depends on the unit.
Another reason for selling leave is to get extra money. If you have no immediate plans for employment following separation, or if you absolutely need the money, you can choose to work until your separation date and sell the remaining leave. In effect you will be getting more money than had you taken terminal leave because you would have received full pay and benefits until your separation date; the sold leave is compensation for time off you never took.
Pros to selling leave:
- Extra money (great for transitions when changing careers, paying bills, resolving debt, etc.)
Cons to selling leave:
- You do not get benefits such as BAH, BAS, medical benefits, or incentives such as special duty pay for the time off that you earned.
- You do not get to take the time off that you earned.
Other factors to consider: Leave that you sell back is automatically taxed at 25%. It is easy to figure out how much you will receive: Multiply your base pay by .75; this is how much you will receive per month of leave sold. It is prorated if you sell back a portion of a month.
You can mix and match. You can elect to take as much terminal leave as your unit will allow and sell back the rest (up to 60 days).
The choice is (mostly) yours. No one can force you to take terminal leave. They can, however, require you to work until a certain date and force you to sell some or all of your leave.
What did I do when I separated? I sold all of my leave, over 50 days. Why? There were several reasons. When I was at my last duty station my family and high school friends only lived a 6-7 hour drive away. I deployed several times while I was in the AF and we got a week or more in comp time when we returned from our deployments. I used my comp time and long weekends to visit my family and friends. During my last 2 years on Active Duty, I rarely had to take leave.
When I transitioned out of the AF I did not have a job lined up immediately. Selling leave allowed me to take a month off before beginning a serious job search. I visited my brother halfway across the nation, stayed with my parents for a couple weeks, then took the scenic route and visited with some friends when I moved to the Midwest.
Selling my leave gave me the freedom to take some time off without having to worry about paying for my car, cell phone, or any other bills while I was between careers.
Conclusion: Selling back leave should be taken on a case by case basis. Some people should sell it all, some people should take terminal leave, and for others, a combination works best.
Take your time when making the decision, and good luck in your post-military career!