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Should You Opt Into the Blended Retirement System? Make a Choice Before 31 December.

17 December 2018 by

Nearly 1.6 million members of the military community have an important decision to make before the end of this month: whether to opt into the Blended Retirement System (BRS). Kate Horrell, an expert on military personal finance issues, explains how the BRS differs from the old retirement system and why you need to make an informed decision about which retirement system you choose.

Being able to use Space-A travel benefits is awesome. If you plan to fly Space-A during your retirement, you’re going to need time to travel (because we all know that Space-A isn’t always the fastest way to get somewhere). Making time to travel is a lot easier if you’ve organized your retirement finances so that you aren’t tied to a full-time job to pay the monthly bills.

And that’s exactly why I’m writing this post about the military’s new Blended Retirement System (BRS) for a travel website.

Does BRS Affect You?

Let’s start by reviewing who isn’t affected by the changes to the military’s retirement system.

If you’re already retired, nothing is changing. If you had more than 12 years service (or 4320 reserve points) on 31 December 2017, nothing is changing. And if you’re brand-new to the military, joining since 1 January 2018, you’re automatically enrolled in the BRS.

That leaves us with a huge number of folks, approximately 1.6 million, who joined the military before 1 January 2018 but had less than 12 years of service (4320 reserve points). This group remains in the old legacy retirement system but has the option to choose BRS.

> > The window to switch retirement plans ends this month, on 31 December 2018.

If you fall into that group, you’ve got to find some time this busy month to learn everything you can about BRS and make a thoughtful, educated decision about which system is better for you. The decision is final. Unlike with health insurance, you do not have an annual window to change which retirement system you’re enrolled in.

The Three Main Ways BRS is Different

There are three important ways that BRS differs from the legacy retirement system: government contributions to your Thrift Savings Plan (TSP) account; a smaller military retirement paycheck; and mid-career continuation pay.

Government Contributions to TSP

Under the legacy retirement system, there is no government contribution to your TSP account.

The big draw of BRS is the government-provided retirement money (in the form of contributions to your TSP), whether you serve for one term or a full career.

There are two components to what the government gives you: automatic government contributions and government match of your TSP contributions.

The government contribution equals 1% of your base pay and is contributed beginning at 60 days of service. You get this money whether you contribute to TSP or not. This money is yours to take with you once you’ve served for 2 years.

The government matching is up to 4% for a 5% service member contribution to TSP. (The first three percent are matched at 100%, and the fourth and fifth percent are matched at 50%.) The government starts matching your TSP contributions after 24 months of service. Your contributions are always yours, and government matching funds are yours immediately.


About the Author:  Kate Horrell is a Navy spouse and personal financial educator who works with military and veteran families to make the most of their pay and benefits. You can find her at KateHorrell.com.

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