Does the new Blended Retirement System change who we consider Retired?

CPT Private RallyPoint Member — Sun, 12 Jun 2016 01:36:52 -0400

Interesting new and informative video came out from the DoD, which I encourage everyone to watch.

However, it got me thinking... does this change who we consider retired? Normally, that moniker is reserved for those who served 20 years of active service.

Does this change anything?

http://www.militarytimes.com/story/military/benefits/retirement/2016/06/11/military-retirement-plan-explainer-video/85747308/

The Pentagon created this 3-minute overview of its new military retirement plan

The Defense Department created an explainer video to help military personnel and their families understand its new retirement system.

Response by SGM Steve Wettstein made Jun 12 at 2016 1:54 AM

SGM Steve Wettstein — Sun, 12 Jun 2016 01:54:05 -0400

If you don't get a Blue DoD ID Card at the end of your service you are not retired military. With the new system, SMs might be getting money from their TSP but they won't be "Retired Military".

Response by LTC Private RallyPoint Member made Jun 12 at 2016 2:19 AM

LTC Private RallyPoint Member — Sun, 12 Jun 2016 02:19:24 -0400

expensive on buggy F-35 jet yet cheap on the service members! If I was joining again as a 31 year old in 2018, I would have had way less incentive to stay for 20 years. False economy planting the seeds for a retention crisis.

Response by ENS Private RallyPoint Member made Jun 12 at 2016 2:31 AM

ENS Private RallyPoint Member — Sun, 12 Jun 2016 02:31:33 -0400

NEW Military Retirement Plan - Simplified:
1. Those with less than 12 years of service by January 1st, 2018 will be eligible to "opt in" to the new retirement system or remain "grandfathered" under the current system. Those with more than 12 years will remain under the current system. Those who enter the service after December 31st, 2017 will fall under the new system.
2. The new system automatically contributes an additional 1% pay (in relation to paygrade) into the service members TSP. The military will match up to 5% (4% match + 1% auto) of the service members (base pay) TSP contribution.
3. Service members who serve 20 years under the new retirement system will receive a retirement check of 40% of their base pay. Service members who serve 30 years will receive a retirement check of 60% of their base pay (the cap). This is a loss of 10-15% when compared to the current system.
4. A bonus equal to 2.5 months base pay will be paid to service members at their 12 year mark *assuming they agree to remain on active duty for 4 more years). This bonus comes out to be about $9,500 - $12,500 for enlisted (E7 - E9) and $15,000 for Officers (O4).
5. If a service member is planning on separating from the military prior to retirement, the new system is a fantastic option. Essentially, service members receive up to a 5% bonus a year (base on their paygrade/rank at the time) which may gain interest and can be transferred into a civilian retirement account.
6. If a service member is planning on serving through retirement, the new retirement system may not be the best choice. Though 5% more pay a year sounds enticing at first, there are many factors to consider.
.....6.1 - The 5% bonus is applied to the service member's current paygrade/rank. This must be taken into consideration as it is not the same when compared to 5% of a service member's "highest 3".
.....6.2 - The 5% bonus goes directly into TSP. The stock market is unpredictable and alone has many factors in and of itself.
..........6.2.1 - What is the total amount of money in the account? (Big difference in growing interest between $1,000 and $10,000).
..........6.2.2 - What funds are contributions being placed in? (G fund at a safe 2% growth or C fund at a risk 10%-30% growth).
..........6.2.3 - What happens if the market crashes as seen in 2008 & 2013? (The 5% contributed over a career can be lost overnight.)
..........6.2.4 - How much are you currently contributing? (5% + 5% is not a very large contribution - a low TSP account will not see the same type of growth seen with larger contributions).
.....6.3 - Does the 5% a year bonus (which is based on fluctuating paygrade/rank and stock market factors) make up for a loss of 10-15% in retirement pay which is based on the service members "highest paid 3"?
**In my opinion, the military isn't just going to give everyone in the service an additional 5% pay for the heck of it...they are doing it because they have figured it will SAVE the military money in the long run... paying an up front 5% a year to everyone now will save billions when you realize you don't have to pay the 10-15% more applied to a retiree's highest 3.

What are your opinions? Am I wrong? Did I miss anything? Let me know.

Response by SGM Erik Marquez made Jun 12 at 2016 7:53 AM

SGM Erik Marquez — Sun, 12 Jun 2016 07:53:28 -0400

I understand your question and it's validity
Personally I just like the word retired at all in regards to a 20 year pension in the military

I have no data to back it up but my perception is very few military personnel actually retire after getting out of the service
My perception is most start a second career or at least continue to work in some sort of fashion

My background and upbringing presented me a different definition of retired
Thus after 28 years of military service I got out but I am anything but retired
So if the term mean something new yet again with this new system that affect me not the least

Response by COL Vincent Stoneking made Jun 12 at 2016 8:22 AM

COL Vincent Stoneking — Sun, 12 Jun 2016 08:22:47 -0400

The new system still has a defined benefit retirement component the kicks in at 20 years of active service. See ENS Private RallyPoint Member's summary. If you don't make 20 years, you don't get a retirement. If you do, you do.

Retirement is still at 20 years. The primary changes are:
1. It is a SMALLER retirement
2. TSP is more important.
3. The .gov does TSP matching.

Whether I like the changes or not (I don't), it isn't throwing the old system away as many seem to think. Retirement pay still happens at 20 years. You can still tap into your TSP at the age specified by federal law.

More interesting to me, and I haven't seen it addressed, is what does this mean for Reserve retirements - where the pay doesn't start until 60. Will they also be reduced? Very luckily, I am grandfathered into the pre-"reform" system.

Response by CPT Joseph K Murdock made Jun 12 at 2016 1:56 PM

CPT Joseph K Murdock — Sun, 12 Jun 2016 13:56:42 -0400

Who gets up when the bell is rung? - Wed do. Who answers the bell for AD and Veteran Benefits in the government? The don't.

Response by SFC Pete Kain made Sep 14 at 2016 4:38 PM

SFC Pete Kain — Wed, 14 Sep 2016 16:38:03 -0400

I am old school, 20 years or med problems for retirement. If the rules change I hope I get a memo.

Response by LTC Stephen B. made Sep 28 at 2016 9:16 AM

LTC Stephen B. — Wed, 28 Sep 2016 09:16:44 -0400

ASD M&RA will hold a DoD level webinar with Q&A session tomorrow: https://www.facebook.com/asdmra/events

Assistant Secretary of Defense - Manpower & Reserve Affairs Todd A. Weiler - Events | Facebook

Assistant Secretary of Defense - Manpower & Reserve Affairs Todd A. Weiler, Washington, DC. 7,070 likes · 592 talking about this. Welcome to the official...

Response by LTC Stephen B. made Sep 28 at 2016 9:25 AM

LTC Stephen B. — Wed, 28 Sep 2016 09:25:35 -0400

Q&A tommorrow

Response by LTC Mark Overberg made Nov 18 at 2018 4:42 PM

LTC Mark Overberg — Sun, 18 Nov 2018 16:42:40 -0500

No. It only changes how the military calculates your retired pay. 20 years is still required.

Response by SFC Michael Hasbun made Oct 27 at 2021 9:35 AM

SFC Michael Hasbun — Wed, 27 Oct 2021 09:35:50 -0400

No, the Federal laws and DOD regulations that determine who and who are not considered retired military have not changed as a result of the BRS.