GOODFELLOW AIR FORCE BASE, Texas -- The Uniformed Services Blended Retirement System took effect on Jan. 1, 2018. Since then service members have the option to opt into the new retirement system. Those who have not decided yet have until Dec. 31, 2018 to make their final decision or remain in the legacy retirement system.
With only two months left, the big question for some people might be, “Is it best for me to opt in or not?” For me, that answer came fairly easy. For others, it might be more complicated. The answer truly depends on a number of different factors and personal life decisions.
First off, you need to know if you are even eligible to opt into the BRS. This is based off your Date of Initial Entry into Military Service, or the date you contracted with the military. You are only eligible to opt into the BRS if your DIEMS is after Dec. 31, 2005 but before Jan. 1, 2018. If you joined the service prior to 2006 or after the start of 2018, you do not have a choice to opt in or not. Those who joined prior to 2006 are grandfathered into the legacy system, while those who joined after Jan. 1, 2018 are automatically enrolled in the BRS.
While a hard question, the next step is to ask yourself how long you plan on staying in the military. Whether you want to simply finish your commitment and get out or if you’re gung-ho about serving a full 20 years, this can be a deciding factor if the BRS or legacy retirement system are better for you.
If you are unsure or even positive that you will not be serving a full career in the military, then the BRS might be your best option. According to Military One Source, approximately 81 percent of military members leave the service with no retirement benefit under the legacy system. Under the BRS, however, about 85 percent of service members would receive some kind of a retirement benefit, even if it is not a full retirement. The way this works is under the BRS, all members will be automatically enrolled after 60 days in a Thrift Savings Plan and receive an automatic government contribution of 1 percent of basic pay into their account each month. After two years of service, members can get up to a 5 percent matching contribution on top of what they contribute each month. So with a 5 percent contribution, the total contribution to the TSP will be 10 percent of their basic pay. Regardless if you stay in for two or 20 years, that TSP contribution is yours to keep after you leave the service.
If you are committed to serving for 20-30 years, then you have more to consider. Under the BRS, the military will pay 2 percent times the number of years of service of your final base pay if you stay in at least 20 years. For instance, if you retire after 20 years, you will receive 40 percent of your final base pay. In comparison to the legacy system, members receive 50 percent of their final base pay if they retire at 20 years and 75 percent if they retire at 30 years. That is a huge difference if you are confident you will be serving for at least 20 years, so keep that in mind.
There are a few other things to consider even if you want to serve 20 years. For instance, if an injury or unexpected situation arises that causes you to be discharged from the service before you complete 20 years, you still keep that matching 5% contribution to your TSP under the BRS, versus only having what you contributed yourself under the legacy system. Also under the BRS, when a service member reaches eight to 12 years of service, they will be eligible for a cash incentive of 2.5 to 13 times their monthly basic pay, or 0.5 to 6 times for Guard and Reserve, in return for a commitment of at least three more years of service. This value is determined annually based on the needs of the Air Force.
Now why did I opt into the BRS? Where I stand currently, I do not plan to serve a 20-year career. With that in mind, I would rather receive a smaller retirement than no retirement at all. Note that if you change your mind and end up staying the full 20 years after opting into the BRS, there’s no turning back. Be sure to think carefully about this huge decision over the next two months while considering the factors I mentioned. You want to make the best possible choice that will undoubtedly impact your future.
See the flow chart to assist in making your decision. For more information on the Blended Retirement System, visit http://militarypay.defense.gov/BlendedRetirement or contact Personal Financial Counselor, Jim Garrett, with the Airman and Family Readiness Center at 325-514-6239.