Blended Retirement System: Is it the choice for you?

by MC2 Matthew Duncker
NAF Atsugi

It is said that the only guarantees in life are death and taxes. No one knows for certain what will happen in the future. While it’s good to hope for the best both in the immediate and far off months and years ahead, it’s also best to prepare for the worst, especially with financial security.

On January 1st, 2018, the Department of Defense (DOD) will officially change over from its legacy retirement system, commonly known as the “high three”, to the Blended Retirement System (BRS).

Fleet and Family Service Center Atsugi’s Personal Financial Manager Oral MacDonald, from Kingston, Jamaica, said the BRS was created after the DOD realized that service members were separating early with little to no money saved for retirement.

“This (BRS) was created to reduce the number of retirees and those who separate early without any savings for the future,” said MacDonald. “While Sailors who have served over 12 years are exempt from the new system, service members under 12 years do have a choice between which system would suit them better, depending on how long or short they are considering staying in.”

“BRS is a modernized retirement plan built for retirement savings,” said Navy C ounselor 1st Class David Pruitt, from Grants Pass, Ore., Naval Air Facility (NAF) Atsugi’s command financial counselor.

“Beginning in 2018, service members can get automatic and matching Thrift Savings Plan (TSP) contributions, as well as midcareer compensation incentives, in addition to monthly retired pay for life.”

BRS works on a sliding timeline. From a Sailor’s first 60 days of contributing to their TSP, the DOD will match up to 20 years in service until retirement. The BRS combines features of the legacy retirement system, the high three, with the TSP contributions a Sailor has made throughout their career. Instead of the 2.5% multiplied by years served at the highest three years of base pay, the BRSISITTHECHO will be 2.0% but will also add automatic and matching contributions to a service members TSP account.

“About 85% of Service members will receive some form of government retirement benefit,” said Pruitt.

“They will receive an automatic 1% DOD and up to 4% DOD matching contribution to their Thrift Savings Plan. Service members can also elect 25% or 50% lump-sum of their discounted retired pay in exchange for reduced monthly retired pay at retirement.”

Notwithstanding, MacDonald said that a certain amount of forethought from service members is needed when planning whether or not to opt into the BRS. Those choosing to opt in need to think about what they see their retirement life looking like, how much money do they need to retire with and what sort of lifestyle after the military do they see themselves in.

“Is it going to be worth it to lose that half percent multiplier factor in the legacy retirement system depending on how much time in service a Sailor has and if they can catch up to where they need to be financially?” said MacDonald. “If we end up doing the numbers and it doesn’t meet their retirement goal and having to work a job post-service may be a contributing factor to which system they choose to stay under.”

In addition, Pruitt advised Sailors to carefully research the benefits of BRS for their future retirement needs and decide if those benefits and options of BRS fit their retirement goals. While the legacy retirement system and BRS have similarities, they also have their own stark differences. Both systems are there to benefit and aid service members’ postmilitary life but only one is in place for those not looking to complete a full 20 year career in service. While the choice will ultimately come down to individual Sailors and where they see themselves in the future, they will have the option to be better equipped than they were before.

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