What Every Service Member Should Know About the New Blended Retirement System

The Blended Retirement System (BRS), now the default retirement plan for all service members who joined after January 1, 2018, represents the most significant change to military compensation in decades. Understanding how it works is essential for making informed financial decisions throughout your military career.

Unlike the legacy High-3 system that required 20 years of service to receive any retirement benefits, the BRS provides retirement savings to all service members regardless of how long they serve. This is particularly important given that only about 17% of enlisted members and 19% of officers reach the 20-year mark.

How the BRS Works

The BRS combines a reduced pension with Thrift Savings Plan contributions. Service members receive automatic government contributions of 1% of basic pay to their TSP, plus matching contributions up to 4% additional. This means service members who contribute at least 5% of their pay receive a total government contribution of 5%.

For those who do serve 20 years or more, the pension multiplier is 2% per year of service rather than 2.5% under the legacy system. However, the TSP savings and matching contributions can help offset this difference.

The Continuation Pay Bonus

Between eight and twelve years of service, BRS participants receive continuation pay, a one-time bonus ranging from 2.5x to 13x monthly basic pay depending on service and component. This requires a commitment to serve an additional four years.

Making the Most of BRS

Financial advisors recommend that service members under BRS contribute at least 5% to their TSP to capture the full government match. Many suggest increasing contributions over time, especially after promotions when the impact on take-home pay is less noticeable.

Understanding the TSP fund options is also crucial. The Lifecycle funds automatically adjust investment mix based on target retirement date, while individual funds allow more control over asset allocation.

Resources for Financial Planning

Free financial counseling is available through Military OneSource and installation Financial Readiness Programs. The TSP website offers calculators and educational resources to help service members project their retirement savings. Taking advantage of these resources early in a military career can lead to significantly better financial outcomes regardless of how long you serve.