The DoD Offers New Retirement Advice


The Department of Defense (DOD) recently unveiled a new Blended Retirement System (BRS) to take effect in 2018. This means that many service members will now have to choose between retiring under their current plan and switching to the newer one. To make the decision as easy as possible, the DOD is now offering a comparison calculator-here’s how it works.


Blended Retirement System:  An Overview

The new system combines the existing retirement pay for those with 20 or more years of service along with the Thrift Savings Plan or TSP, which is similar to a 401(k) plan. Currently, service members must voluntarily elect to enroll in and make contributions to TSP. Beginning January 1, 2018, all military members will automatically be enrolled. The minimum amount they must contribute will be 3% of their base pay.

While enrollment is automatic, participants may stop their contributions at any time. They may also make withdrawals or even obtain a loan against their existing TSP balance.


Current Members can Choose

Those who already have fewer than 12 years of active service on January 1, 2018 will have the option of remaining under the old program or switching to the new one. Likewise, Reserve and National Guard soldiers with fewer than 4,320 retirement points will also be eligible to choose. The election period runs throughout calendar year 2018. Any changes made are permanent, and may not be revoked.


Key Changes

The new retirement system also provides for other key changes, including:

  • The fact that retired pay will now be calculated at 2% times the number of years of service.  In other words, someone who retires after 20 years would receive 40% of their final base pay.
  • The ability to choose either a lump-sum benefit or receive full retirement pay. A lump sum payment will reduce your monthly retirement checks until age 67.
  • Automatic contributions of 1% to an individual’s TSP, with a matching contribution of 5% after two years of service.


Training Tools and Calculators

Deciding which plan to choose can be overwhelming for many. For this reason, the DOD is providing online training tools and comparison calculators to help facilitate the process. Using a Common Access Card (CAC), service members can log into Joint Knowledge Online (JKP) and take the online training course. That website also contains a comparison calculator that can help users determine which plan might be best for them. A separate training program and calculator is available for Reserve and National Guard members.

The Department of Defense does not recommend one particular plan over the other. Instead, they advise individuals to consult a financial planner or retirement specialist. Those on active duty may also obtain free advice from their installation’s Military and Family Support Center.

Many seeking military retirement will soon have some very important decisions to make. Fortunately, the Department of Defense has provided plenty of information in order to alleviate as much confusion about the new plan as possible. Those who must choose should start studying the new plan and weighing all of their options right now.