Does anyone know of any resources to advise active service members on the new retirement system?

2017-01-01T19:45:53-05:00

I thought because of my prior service I was automatically enrolled under the old system, but I got a letter recently saying otherwise. I think it may be a mistake, but it's hard to tell with all of the Reserve years and my break in service included. With some good investing I might be able to make more money under the new system.

Response by SFC Joe S. Davis Jr., MSM, DSL made Jan 1 at 2017 7:50 PM

2017-01-01T19:50:42-05:00

CPT Private RallyPoint Member here is a read that might shed some light on the issue.

http://www.militarytimes.com/story/military/benefits/retirement/2015/05/31/retirement-reform-chiefs/28088495/

http://www.militarytimes.com/story/military/benefits/retirement/2015/04/27/retirement-overhaul-concerns/26244915/

retirement-reform-chiefs

The effort to overhaul the military retirement system is entering its final phase after the Pentagon's top brass have offered a detailed critique of

Response by Capt Jimmy Santos made Jan 1 at 2017 7:51 PM

2017-01-01T19:51:01-05:00

http://militarypay.defense.gov/BlendedRetirement/

Blended Retirement

Information on the U.S. Department of Defense Blended Retirement System.

Response by SFC Joe S. Davis Jr., MSM, DSL made Jan 1 at 2017 7:54 PM

2017-01-01T19:54:54-05:00

CPT Private RallyPoint Member here is another read.

http://www.militarytimes.com/articles/military-retirement-pension-thrift-savings-plan

New in 2017: Huge changes ahead for military retirement

A big decision looms for many service members: preserve a place in the military pension system or opt into its new blended benefits package.

Response by CAPT Kevin B. made Jan 1 at 2017 8:43 PM

2017-01-01T20:43:10-05:00

OK, there's a lot of presumptive whining out there on how screwed you'll be under the new system. However, if you are prepared to invest in yourself, the numbers can work out better. The before picture is 50% of base for 20 years. The after is 40% of base for 20 years. But that's not the whole story. The real number crunching is with TSP. You have to figure out where your TSP and any matching will put you when you punch out. Running some rough numbers, it hinges on how much you're willing to invest in yourself. You're looking to make up or do better than the 10% of your base delta pay when you hit retirement. For the most part, if you don't invest in yourself, the old way is probably better. However, consider drooling over the new where you can (should) take 5% of your pay which gets 100% profit each payday you put in, tax free. Then it grows larger continually as you build it up with a return based on how much risk you choose. It really is a great time to get with a reputable financial adviser and start crunching your opportunity numbers. The new system will be much like the CS FERS system. I had to go that route when I came in CS. It was a no brainer for me to buy 10 years of retirement credit for my active up to that point and I always went 10% with the first 5% matched.

When you talk to a financial advisor, you better recognize that you'll want more than either result, which means a career after your career. So if you have two decent retirements and the TSP, that's a good place to be. Let's put it this way. If you pay yourself forward, you'll wind up in my position. When you turn 60, you can have a monthly pay raise by simply quitting everything. Not a bad deal. Don't settle for the "pay off your loans and plan to live off 40%" dinosaur rhetoric of the past. You'll live longer and healthier and will want to cash to enjoy it. Results will vary. That's why you must crunch the numbers to see what gets you to your goal.

Oh, BTW you'll want the heck out of TSP when you hit 59 1/2. TSP has around 35 mix/match options and commercial sector has thousands. Same risk, more earning. I tracked my delta since 2013 and have been doing about 2-3% better than the TSP outputs with little to no risk.

Response by CPT Private RallyPoint Member made Jan 1 at 2017 8:45 PM

2017-01-01T20:45:31-05:00

From what I can gather people who entered active service before Dec 31 2005 are automatically enrolled in the old system. Here's where it gets tricky...

-I was a enlisted reservist from Aug 99-May 05, but I have 1 yr 10 months of active service time in that span.
-In May 05 I entered active service and did that for 9 years. According to my DD 214 I had a total of 10 yrs 10 months and 15 days of active service plus another 3 years 10 months and 28 days of reserve time.
-I had a break in service from May 14 to Sept 16
-I direct commissioned in Sept 16 and reentered active service.

If I fall into the "gray area" category where folks can choose their plan I must make the cutoff by mere days. I have a little over a 7 year obligation for the grad school program I entered through the Army which places me right around my 20 year active mark. In order to retire as an officer I need 10 years commissioned service which would put me around 22-23 active service and 26ish total years. I know a lot can change and the Army might start cutting folks again (although none of my AOC had to cut anyone from what I gather).

As you can see my situation is a bit complicated. I looked around a bit more and according to the blended retirement site financial advisors were supposed to start being training last fall on the new system. What I'm trying to figure out is whether I could actually make out better in the long run if I contributed the max 5% to my TSP.

Response by ENS Private RallyPoint Member made Jan 1 at 2017 8:57 PM

2017-01-01T20:57:40-05:00

If you were active duty prior to January 1st, 2017 you must opt-in to BRS. You cannot opt-out once you opt-in.

BRS explained in 3 steps.

1. If you do not plan on retiring from the DoD, you should opt-in to BRS. BRS essentially gives service members a 1-5% pay raise every year, where it has the opportunity to accrue interest while in TSP.

2. If you plan on retiring from the Dod, but do not plan on maxing out your TSP contributions ($18,000 a year // $1,500 a month), you should still opt-into BRS. BRS will lower your pension 10-15% depending on your length of service; however, the additional 5% interest in TSP mathematically should lead to a much higher payout by the time you collect at 59 or 69 than you would have received with the additional 10-15% pension (at least up to the O6 level).

3. If you plan on retiring from the DoD and are already maxing out your TSP contributions (or plan to start maxing them out in the near future), do NOT opt-in to BRS. With your TSP contributions maxed out, you should reap the additional 10-15% pension under the traditional system.

As I fall into #3, I am sticking with the traditional retirement system and staying away from the blended retirement system. BRS is an outstanding program for most DoD employees. I highly suggest that you encourage your troops to read into it. BRS training is mandatory for all personnel (please see the notes in your LES). However, most service members are just clicking through it.

Response by ENS Private RallyPoint Member made Jan 1 at 2017 9:06 PM

2017-01-01T21:06:54-05:00

THE FIRST IN A SERIES OF BLENDED RETIREMENT
SYSTEM (BRS) COURSES IS NOW AVAILABLE: LEADER
TRAINING TO INTRODUCE BRS FOR THE UNIFORMED
SERVICES (.5 HOUR), COURSE NUMBER: J3OP-1330
VIA JOINT KNOWLEDGE ONLINE (JKO) LOCATED AT
HTTPS://JKODIRECT.JTEN.MIL/. ANY INTERESTED
MILITARY OR FAMILY MEMBER CAN ALSO TAKE THE
COURSE VIA MILITARYONESOURCE AT
HTTP://WWW.MILITARYONESOURCE.MIL/

JKO LCMS

-The USG routinely intercepts and monitors communications on this IS for purposes including, but not limited to, penetration testing, COMSEC monitoring, network operations and defense, personnel misconduct (PM), law enforcement (LE), and counterintelligence (CI) investigations.

Response by ENS Private RallyPoint Member made Jan 1 at 2017 9:07 PM

2017-01-01T21:07:03-05:00

JKO LCMS