What Public-Service Households Leave on the Table in 2026: Five Numbers to Check
Public-service pay is not one number. It is a salary plus a stack of separate systems: a match schedule, an allowance table, a ratings formula, a pension multiplier, a forgiveness count, each with its own rules and its own way of quietly paying you less than it should. Nobody at work is checking them for you.
Here are the five that go wrong most often in military, federal, teacher and first-responder households. Four are visible on a pay stub.
Quick answer
Contributing 3% to the Thrift Savings Plan instead of 5% forfeits $800 a year on an $80,000 salary, and $468 a year for a mid-career E-5. A VA rating with an out-of-date dependent list costs $175 a month for a spouse at the 80% rate, and a veteran who meets the unemployability threshold is $1,836 a month short of the rate they could be paid. Never running the on-base-versus-off-base subtraction is worth about $1,900 a year, in either direction. Retiring at 61 rather than 62 with 20 years of federal service costs 10% of the pension for life. And PSLF employment left uncertified puts about $17,500 of payments at risk.
The five, at a glance
| What goes wrong | Who it hits | What it is worth | Where to check |
|---|---|---|---|
| TSP at 3%, not 5% | FERS and BRS | $800 a year on $80,000; $468 for an E-5 | contribution % on your LES |
| Dependents or ratings not current | any rated veteran | $175 a month for a spouse at 80%; $1,836 for TDIU | your rating decision and VA.gov |
| On base vs off base not compared | anyone drawing BAH | about $1,900 a year, either direction | BAH on the LES against the lease |
| A pension date read wrong | anyone with a pension | 10% of a FERS pension, for life | your service computation date |
| PSLF months never certified | public employer, federal loans | about $17,500 of payments | your count at studentaid.gov |
1. The match schedule almost nobody reads
The agency or service contribution is not one rate but three: 1% of basic pay automatically, whether you contribute or not; dollar-for-dollar matching on your first 3%; fifty cents on the dollar on your next 2%. So 3% earns you 4%, and 5% earns the full 5%. Above 5%, nothing.
On an $80,000 salary that is $4,000 of agency money for a $4,000 contribution, or $3,200 if you stop at 3%, forfeiting $800 a year. An E-5 on about $3,900 a month of basic pay forfeits $468 a year at 3%; moving to 5% costs about $78 a month of take-home and adds roughly $140,000 by 58. Run your own percentage through the TSP contribution optimizer, or read how the two rates stack.
There is a second way to lose it: matching is calculated per pay period and never trued up, so hitting the 2026 limit of $24,500 in June ends the match for the rest of the year. Spread across 26 paychecks, that limit is about $942 each. Teachers have a different problem: most 403(b) plans have no match, so the number to check is the vendor's fee.
2. A rating that was combined wrong, or never updated
VA ratings do not add. Under 38 CFR §4.25 each rating applies to the efficiency you have left, so PTSD at 50%, a back at 30%, tinnitus at 10% and both knees (20% and 10%, combined with the bilateral factor to 30.8) land at 78, rounded to 80%, not 110%. That pays $2,102.15 a month for a veteran alone in 2026: $25,226 a year tax-free, about $32,300 of salary in the 22% bracket.
Two things get left unclaimed. First, dependents: from 30% up the VA pays add-ons, and at 80% a spouse adds $175 a month, a first child $117, with no change to the rating. A dependent list not updated since a marriage or a birth is money the VA is not sending. Second, unemployability: with one rating at 60% or more, or a combined 70% including one condition at 40%, a veteran who cannot hold substantially gainful work may be paid at the 100% rate: $3,938.58 rather than $2,102.15, a difference of $1,836 a month. See where you sit in the VA combined rating calculator, and why the arithmetic works this way.
3. The housing decision nobody actually runs
Off base you keep BAH minus rent, utilities, insurance and extra driving. On base you keep $0: privatized housing takes the whole allowance as rent by allotment. One comparison, turning on a break-even rent: your BAH minus the bills base housing absorbs.
Take an E-5 with dependents on the 2026 Abilene rate of $1,872. Count $200 of utilities, $14 of renter's insurance and $100 of driving, and the break-even rent is $1,558; at $1,400 of rent he keeps $158 a month, about $1,900 a year. The same E-5 without dependents draws $1,545, so the identical apartment loses $169 a month and base housing wins. Nothing about the apartment changed, only the rate. Which is why it is re-run at every move and lease renewal, in the on-base versus off-base engine; the full subtraction is here. 2026 rates rose 4.2% on average across 299 housing areas, with a $93–$212 monthly member cost share built in.
4. A pension date read wrong
Pension formulas have cliffs, and a date read wrong costs more than any investment decision here. Under FERS the multiplier is 1% of your high-3 for each year of service, but 1.1% at 62 or older with at least 20 years. On a $100,000 high-3 with exactly 20 years, that is $20,000 a year at 61 and $22,000 at 62. One more month of work, 10% more pension, every year for life.
The same shape appears everywhere. MRA+10 lets a federal employee leave from the minimum retirement age with 10 years, cut 5% a year for every year under 62: 25% at 57. Illinois police and fire Tier 2 cuts half a percent for each month before 55. Teacher plans turn on a Rule of 80 or a vesting cliff, and military retirement has its own 20-year wall. Which formula governs you depends entirely on who employs you, which is why the pension engines are grouped by service on the I Serve hub. Look up your service computation date and years-at-62 before you pick a date.
5. PSLF months that were never certified
Public Service Loan Forgiveness cancels whatever is left on federal Direct Loans after 120 qualifying payments, and the cancelled amount is excluded from federal income under 26 U.S.C. §108(f). Its size is set by your monthly payment, not your balance.
A hospital nurse with $90,000 at 6.5%, $75,000 of income and 40 payments made pays $437.50 a month under the Repayment Assistance Plan. Over her remaining 80 payments she pays $41,268, and $83,733 is forgiven. Certifying employment protects the 40 payments already made: about $17,500 of value otherwise resting on records she may not still have. Two things end it: refinancing with a private lender, which forfeits the whole $83,733 permanently, and months in an ineligible forbearance, which can be bought back after 120 months of qualifying employment. Check the count against the balance in the PSLF calculator, and see how the forgiven figure is built.
The landscape moved in 2026 and stale advice is everywhere: SAVE ended March 10, 2026, RAP replaced it and is the only income-driven plan for loans first disbursed on or after July 1, 2026, PAYE and ICR close by July 1, 2028, and IBR remains open.
Which of these is yours
In uniform, items one and three are both on this month's LES. With a rating, item two takes one look at the dependents on file. Within five years of a pension date, item four is worth more than the other four combined. With federal loans and a public employer, item five is an annual form. Each has an engine that settles it, grouped by service on the I Serve hub.
FAQ
I am a teacher, not military or federal. Which of these applies?
Three of the five. Most 403(b) plans have no employer match, so the item-one number becomes the vendor's fee: a low-fee provider is worth about $187 a month of retirement income on a typical mid-career balance. Public school employment qualifies for PSLF, so item five applies in full. Item four applies with different rules: a Rule of 80, or a vesting cliff that pays nothing if you leave a year early.
Does VA disability compensation count as income for my student-loan payment or Medicare surcharge?
No. VA disability compensation is not federal taxable income, so it does not appear in adjusted gross income. RAP and IBR payments are calculated from AGI, and the Medicare income surcharge (IRMAA) from a modified AGI, so compensation raises neither. How VA compensation interacts with military retired pay is a separate question with its own waiver rules.
I already refinanced my student loans privately. Can I get back into PSLF?
No. Private refinancing replaces federal Direct Loans with a private loan, and a private loan can never qualify for PSLF, RAP or IBR. There is no undo. In the nurse's case that decision would have cost $83,733 of forgiveness, in exchange for a lower rate on a balance she was never going to pay off.
How often should each of these be re-run?
The TSP percentage at every raise or promotion, and each January when the limit changes ($24,500 for 2026). BAH at every move and lease renewal; new rates take effect January 1. A VA rating whenever a condition worsens or the family changes; 2026 rates took effect December 1, 2025. PSLF certification annually and whenever you change employers. Pension eligibility five years out, and again the year before you file.
Sources
- TSP: contribution types and agency contributions
- IRS Notice 2025-67: 2026 limits
- 38 CFR §4.25: combined ratings
- 38 CFR §4.16: unemployability
- VA: 2026 compensation rates
- DTMO: Basic Allowance for Housing
- IRS Publication 3: BAH untaxed
- OPM: FERS computation
- OPM: FERS eligibility
- Federal Student Aid: PSLF
- 26 U.S.C. §108(f)