About that Blended Retirement System, here’s what you need to know

Matt Saintsing
December 06, 2018 - 1:38 pm

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Eligible military members must make a decision by Dec. 31 on whether to enroll in the government’s new Blended Retirement System (BRS).

The cutoff date for opting in may be coming to a close, but as of the end of November, only about 306,000 have signed up for it of the more than 1.6 million eligible. 

Whether you are on active duty, in the reserves or in the National Guard, the clock is ticking and you won’t want to leave any potential benefits on the table, especially if you get out before 20 years. 

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So, what’s the difference between the BRS and a normal retirement?

Think of regular military retirement as binary, it’s a light switch either “on” or “off.” Service members who serve at least 20 years receive a pension, while the vast majority who get out before then (81 percent) get nothing.  

But under BRS, it’s estimated that 85 percent of service members will see some retirement benefit, even if they don’t do the full 20. 

If you joined before 2006, you'd remain in the regular system, while those who join after, but before Jan. 1, 2018, have the choice to stick with the old or opt into the BRS. For those who enter on or after Jan. 1, 2018, they'll be automatically enrolled.  

The BRS has three parts:

  • Thrift Savings Plan (TSP). A government managed 401 (k)-like retirement account that lets military personnel invest their cash into stocks or government securities. After their first 60 days of service, all service members will automatically be enrolled in TSP and will receive a government contribution of one percent of their basic pay right away. They’ll also be eligible to contribute three percent of their salary to the TSP each month going forward. After two years, they’ll be fully “vested,” which mean they’ll have full ownership—if you leave, the money goes with you.  
  • Continuation Pay. If, after 12 years of service you re-enlist for at least four more, you’ll receive a cash bonus that will be two-and-a-half months of basic pay for active duty and half a month’s pay for reservists. 
  • Monthly Annuity. Anyone who retires after 20 years will get their monthly paycheck, albeit a reduced amount. The formula is 2 percent times the number of years served times the highest three years of basic pay earned.  

But what if you opt-into the BRS and retire after 20? You’ll still get a monthly retirement paycheck, but it’ll be calculated with a 2 percent multiplier. 

Still unsure what to do? Well, you’re probably not alone. That’s why the Defense Department offers a course covering the BRS more thoroughly and provides a BRS comparison calculator to compare the old system with the new. 

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