Posted on Nov 22, 2017
Mark Overberg, Director of Army Retirement Services, here to talk about the new blended retirement system. What questions do you have?
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Mark enlisted as an All-Source Intelligence Analyst in 1985, he served two years in the 82nd Airborne Division. He then attended the Officer Candidate School and the Armor Officer Basic Course in 1988 before being assigned to the 1st Squadron, 1st Cavalry Regiment, 1st Armored Division in Germany. During his tour there, Overberg patrolled the East German and Czechoslovakian borders and served as a Cavalry Troop Executive Officer during Operation Desert Storm. After three years as a cavalry officer, the Army transferred him to the Ordnance Corps. His first logistics assignment was to the 194th Separate Armored Brigade, Ft. Knox, KY, where he deployed to South Florida for recovery operations after Hurricane Andrew in 1992 and to Haiti as the Logistics Support Team Commander for the multinational Caribbean Command Battalion during Operation Uphold Democracy in 1994. After a tour as a training advisor with the 218th Heavy Separate Brigade (South Carolina Army National Guard), Overberg attended the Command and General Staff Course, and then was assigned to Fort Bragg. While serving as the Support Operations Officer for the 530th Supply and Service Battalion (Airborne), he deployed to Uzbekistan in early November 2001. Overberg further deployed into Northern Afghanistan in January 2002 where he commanded Task Force MeS and supported the French and Jordanian Armed Forces and US Special Forces. In 2004, Overberg was assigned to the Army G-1 as the Executive Officer for the Director, Human Resources Policy and later as the Chief, Drug Testing Branch, Army Center for Substance Abuse Programs, where he was responsible for the Army’s military and civilian drug testing policy and programs. He retired on 1 November 2007. Overberg was awarded the Legion of Merit, the Bronze Star Medal (with oak leaf cluster), the Meritorious Service Medal (with three oak leaf clusters), the Army Commendation Medal (with four oak leaf clusters), the Army Achievement Medal (with five oak leaf clusters), the Valorous Unit Award, the Joint Meritorious Unit Award, the Army Staff Identification Badge, and American and German Parachutist Badges. In March 2010, after 2 ½ years as the Deputy Director, Personnel and Administrative Support Center, Office of Disaster Assistance, US Small Business Administration, Overberg became the Deputy Chief, Army Retirement Services within the Office of the Deputy Chief of Staff, G-1. In June 2016, Overberg was promoted to Director, Army Retirement Services. Working out of Arlington, VA, Overberg is responsible for all Army retirement services policy and oversight of the program’s delivery to Soldiers, Retired Soldiers, and surviving spouses of all three Army Components, as well as strategic level program communications. Overberg received a Bachelor of Science Degree in Industrial Management from the University of Akron and a Master of Business Administration degree from Webster University.
Q&A
Benefits
Government Administration
Director
82nd ABN
Edited >1 y ago
Posted >1 y ago
Responses: 40
If this system is so damn great, give it to Congress and the Senate and tell them.to quit fucking with ours.
SGT Christopher Combs
I agree our pay is a rollercoaster every year because they cannot decide on how little of a pay raise they want to give each year.
After reviewing the new system thoroughly, I have come to some conclusions:
1. If you are planning on getting out after the current term, switch to BRS. You will at least leave with some retirement savings, albeit small.
2. If you are a mid-term Soldier, you need to consider if the continuation pay is enough to get you to stay for another term, but not until 20 years.
3. If you are anywhere over 5 years in service and planning to stay for 20 years, in almost every case it is a fool's choice to go to the BRS. Without getting too wonky, it takes more compounding than historical returns would give you to come out ahead. And it isn't a small difference, either. Smart people might disagree on this, but unless you think you are a smarter investor than the market will return, don't do it.
4. If you do opt in, do it on a Roth option. This is a complete no-brainer.
5. The up-front option in exchange for reduced retirement is a sucker bet, unless you plan on investing that money in a business. Even then, the tax implications are significant (pending legislation currently under consideration). You are also giving up the cost-of-living adjustments on the amount you receive up front, and that is a lot of money for someone getting out at age 40 or so.
6. If you do opt in, take every bit of that TSP match that you can get. It is the only part of your investment that is guaranteed. Do not leave free money on the table, ever when it comes to investing.
As an aside, I find it interesting that this change was pushed through with minimal controversy, considering that it is nearly an exact duplicate of the partial privatization of Social Security that was floated back in 2004. That plan was demagogued; this one is touted as great.
If someone were to offer me the opportunity to invest my payroll taxes, I would take it in a heartbeat. The current SS system is the equivalent of putting all of your money in the G fund.
1. If you are planning on getting out after the current term, switch to BRS. You will at least leave with some retirement savings, albeit small.
2. If you are a mid-term Soldier, you need to consider if the continuation pay is enough to get you to stay for another term, but not until 20 years.
3. If you are anywhere over 5 years in service and planning to stay for 20 years, in almost every case it is a fool's choice to go to the BRS. Without getting too wonky, it takes more compounding than historical returns would give you to come out ahead. And it isn't a small difference, either. Smart people might disagree on this, but unless you think you are a smarter investor than the market will return, don't do it.
4. If you do opt in, do it on a Roth option. This is a complete no-brainer.
5. The up-front option in exchange for reduced retirement is a sucker bet, unless you plan on investing that money in a business. Even then, the tax implications are significant (pending legislation currently under consideration). You are also giving up the cost-of-living adjustments on the amount you receive up front, and that is a lot of money for someone getting out at age 40 or so.
6. If you do opt in, take every bit of that TSP match that you can get. It is the only part of your investment that is guaranteed. Do not leave free money on the table, ever when it comes to investing.
As an aside, I find it interesting that this change was pushed through with minimal controversy, considering that it is nearly an exact duplicate of the partial privatization of Social Security that was floated back in 2004. That plan was demagogued; this one is touted as great.
If someone were to offer me the opportunity to invest my payroll taxes, I would take it in a heartbeat. The current SS system is the equivalent of putting all of your money in the G fund.
1SG (Join to see)
1SG (Join to see) Similar situation here. Hitting 18 years next month with over 3000 points (mostly ARNG but with 4 years Active and 2 deployments). This time last year the projection (retiring in two years with 20 total years in service) was $1340 a month at 58 years of age. I'm neither looking to lose money or push the envelope to 58 for 28 years of service, but like you said...time will tell.
PO1 (Join to see)
I'm glad I don't have to navigate this current minefield. I have a twinge of regret for taking the CSB back in 07-08.
LTC Mark Overberg
It looks like you’ve put a lot of thought into the options and financial variables, and know a great deal about investing, 1SG (Join to see). When you retire, you might want to consider applying to become a DOD Personal Financial Counselor or Personal Financial Manager working on a military installation or spread out among the Reserve Component units away from installations. Those are the financial experts that the Department of Defense is referring Service members to who need budgeting or financial advice. They have specialized BRS training and financial accreditations. On Army installations, you can find them in Army Community Service and the Family Life Centers. Another good resource is the MyArmyBenefits BRS calculator at http://myarmybenefits.us.army.mil/Home/Benefit_Calculators/Retirement.html . It compares BRS to the High 3 Retired Pay Plan for Soldiers trying to make a decision about which plan is better for them.
I really don't see the good in BRS.
It looks like a self building retirement plan.
The 401K, it's not a retirement plan. It's a tax law that allows you to take pretaxed income and invest it into the stock market. The only good parts is the thrift savings plan the IRA option and availability to draw from it if you don't do 20 yrs of service.
Soldiers are risking their lives already
Why doesn't the government say that they are fazing out the retirement system
It looks like a self building retirement plan.
The 401K, it's not a retirement plan. It's a tax law that allows you to take pretaxed income and invest it into the stock market. The only good parts is the thrift savings plan the IRA option and availability to draw from it if you don't do 20 yrs of service.
Soldiers are risking their lives already
Why doesn't the government say that they are fazing out the retirement system
LTC Mark Overberg
Hi MSgt (Join to see) - Under BRS, the government does offer a pension plan – we refer to it as a defined benefit – and it’s calculated just like the current High 3 Retired Pay Plan except it uses a 2.0% multiplier instead of the 2.5% under the High 3. Under BRS, no matter what the Service member does, the government will automatically put 1% of the member’s base pay into the member’s TSP account. Members can contribute to their TSP and after two years of service, the government will match the member’s contribution up to a point. For example, if a member puts in 5% of her base pay, the government will match with 4% plus the automatic 1% and the member will get a total of 10% of her base pay added to her TSP account. The matching offered to Service members under BRS is the same as federal civilian employees receive under the Federal Employees Retirement System, which started in 1984. So Service members will now be doing what other Federal employees have long been doing.
MSgt (Join to see)
Yes sir I understand how it works similar to a 401k. Do you think this really makes sense for a reservist though? The math does not add up for a reservist given that the monthly contributions will be extremely low. Just saying. Do the math fellow reservists. I max out my civilian 401k and even putting in much more than my total monthly drill pay and earning over 6% ROI this year it still doesn’t add up as fast as you think.
LTC Stephen B.
MSgt (Join to see) - "Why didn't they mess with the pension plans of the normal government workers first?" But they did, when they switched to FERS from CSRS several years (decades?) ago. This makes the military retirement very close to the FERS system. Some annuity combined with a joint contributions from the member and the government.
Maj (Join to see)
Bottom line, this program is a very good deal for those who serve in the military and do not reach 20 years. The old system left them with nothing but the money they put into TSP or personal retirement savings. The new system at least provides a match for that TSP money.
This program is NOT as good for those who eventually reach retirement. It shifts the risk from the government to the retiree.
But, here is the thing. There were two goals. 1) Save the government money (which this does) and 2) Provide some retirement money to the majority of military veterans who separate before retirement (which this does, to the extent that the member takes advantage of it).
It was not meant to benefit the eventual military retiree other than to help assure that the government will be able to afford to continue to pay their pension in perpetuity.
It has the potential to positively impact FAR more veterans than it negatively impacts, though.
I am fortunate that I am ineligible to even make the decision. But, I have still made the effort to learn about it because my Airmen are eligible.
This program is NOT as good for those who eventually reach retirement. It shifts the risk from the government to the retiree.
But, here is the thing. There were two goals. 1) Save the government money (which this does) and 2) Provide some retirement money to the majority of military veterans who separate before retirement (which this does, to the extent that the member takes advantage of it).
It was not meant to benefit the eventual military retiree other than to help assure that the government will be able to afford to continue to pay their pension in perpetuity.
It has the potential to positively impact FAR more veterans than it negatively impacts, though.
I am fortunate that I am ineligible to even make the decision. But, I have still made the effort to learn about it because my Airmen are eligible.
The BLUF that has been passed around the water cooler thus far is that the new system will benefit those at the beginning of their careers, while the traditional retirement is the best return for those that are in striking distance of their retirement. Has a theoretical line been drawn as to where the line of diminishing returns (tipping point) is? I realize that everyone's situation is slightly different but some generalizations should be able to be made towards the ends of the spectrum.
1SG (Join to see)
1SG (Join to see), it will come down to investment choices and how the market performs, but if you take a historical rate of return, you compound every seven years. If you were to invest the 5% in order to secure the full rate of return, it would take about 28 years (or four flops) for a 20 year man to reach break even. This is backward planned from full retirement age of 67. So, based on return of investment, that means age 39. But, since your contributing days as a 20-year guy are over at age 39, you have to figure it a little differently.
By my math, I got age 25 as the tipping point. That assumes dollar cost averaging for an E-4 that progresses normally through the ranks.
So if you are over that rank at age 25, you can come out ahead a bit later. Less rank, a little earlier.
By my math, I got age 25 as the tipping point. That assumes dollar cost averaging for an E-4 that progresses normally through the ranks.
So if you are over that rank at age 25, you can come out ahead a bit later. Less rank, a little earlier.
LTC Mark Overberg
Great question 1SG (Join to see)! The longer a member contributes to the TSP before retiring and the more they contribute each month, the greater chance they will do better under BRS than the High 3 Plan. But we don’t have to be theoretical about this and neither do Service members. Soldiers can use the MyArmyBenefits BRS retirement calculator at http://myarmybenefits.us.army.mil/Home/Benefit_Calculators/Retirement.html . This calculator uses the Soldier’s CAC to pull in their personal data from Army systems (including Guard and Reserve retirement points) and compare BRS to the High 3 Plan for them. And it allows them to change 14 variables (contribution rate, rate of return, promotion rate, etc.) to see how that will affect their decision. Sailors, Marines, and Airmen can’t use this calculator, but DOD has one at http://militarypay.defense.gov/Calculators/BRS/ they can use. They have to know all their personal data and it has fewer variables, but will work without a CAC.
LTC Mark Overberg
Thanks, 1SG (Join to see). There are many, many variables to consider when making this decision -- like investing your Continuation Pay (under BRS) in your TSP, the age at which you’ll start withdrawing from your TSP, and how long you’ll live after you start withdrawing from your TSP. Each one can change the “tipping point.” The MyArmyBenefits BRS calculator at http://myarmybenefits.us.army.mil/Home/Benefit_Calculators/Retirement.html has 14 different variables you can change or you can accept the default variables like the rate of return on TSP investments. Every Soldier can tailor the calculation to his own situation. It eliminates the guesswork!
A good resource is MyArmyBenefits, which has a retired pay comparison calculator to assist with the decision of whether to opt-in to BRS or stay with your current plan. http://myarmybenefits.us.army.mil/Home/Benefit_Calculators/Retirement.html
Thank you for the opportunity to talk today about the new military Blended Retirement System. Not only is it the first new military retired pay plan since 1986, it's the first time Service members will be asked to contribute a portion of their pay towards their own retirement. That's quite a culture change, but it's one everyday Americans and DOD civilian employees have been experiencing since the 1980s. I'm sure that Service members will adjust to this plan like they adjust to every other challenge that comes at them.
LTC Mark Overberg
I recently became a Grey area retiree as of Aug 7th and must wait for 6 more years prior to submitting paperwork to the Retired Reserve system for the 90 day qualifying periods and thousands of retirement points. The documentation puts the burden on the service member to prove service for both points & qualifying below age 60. I can recall from early in my career keeping documents to prove to the Army about my schools and service. I am working on my retirement packet now and after completion plan to set it aside for the six years before turning-in to HRC / Army Retirement Services. Bottom Line: Soldiers must do their part.
Questions:
Can I submit my retirement packet to have quality checked to ensure I did not miss critical item prior to the actual pay out period?
What planned improvements does the Army Retirement Services have on it's timeline to make it easier for service members to gain information about our own records, help us prove early reduction periods due to service on active duty on qualifying orders and ultimately to assist us in collecting retirement? Thank you for your service.
I recently became a Grey area retiree as of Aug 7th and must wait for 6 more years prior to submitting paperwork to the Retired Reserve system for the 90 day qualifying periods and thousands of retirement points. The documentation puts the burden on the service member to prove service for both points & qualifying below age 60. I can recall from early in my career keeping documents to prove to the Army about my schools and service. I am working on my retirement packet now and after completion plan to set it aside for the six years before turning-in to HRC / Army Retirement Services. Bottom Line: Soldiers must do their part.
Questions:
Can I submit my retirement packet to have quality checked to ensure I did not miss critical item prior to the actual pay out period?
What planned improvements does the Army Retirement Services have on it's timeline to make it easier for service members to gain information about our own records, help us prove early reduction periods due to service on active duty on qualifying orders and ultimately to assist us in collecting retirement? Thank you for your service.
LTC Mark Overberg
LTC John Shaw You cannot submit your packet to HRC this early, but if you have any questions or would like assistance, you can contact your nearest Retirement Services Officer (RSO). If you retired from the Army Reserve, contact your servicing Regional Support Command (directory at https://soldierforlife.army.mil/retirement/reservecomponent ). If you retired from the Army National Guard, contact your state RSO (see http://myarmybenefits.us.army.mil/Home/Benefit_Library/Resource_Locator.html )
Reserve Component Retirement Services
Army Reserve Retirement Points Information Guide - PDF - This information guide provides an overview and standard operating procedures for the Reserve Component Retirement Points Accounting System (RPAS); when, where, and how to contact Human Resources Command (HRC) for assistance and
LTC John Shaw
LTC Mark Overberg - I will do my best to make the RSO a busy man or woman. I appreciate you reaching out on the RP forum.
LTC Mark Overberg
Said they will accept applications 12 months out and review and let you know if there are any problems. They also have a new reduced age retirements calculator.
Thank you for joining us! You can find more information about Blended Retirement at http://militarypay.defense.gov/BlendedRetirement/ and https://myarmybenefits.us.army.mil/Home/Benefit_Calculators/Retirement.html . For more information about Soldier for Life, visit https://soldierforlife.army.mil/ .
Information on the U.S. Department of Defense Blended Retirement System.
Seriously! We tried this back in the mid 70s with the post VN war VEEP. It didn’t work. Anything other than the tried and true old retirement will not work.
The Blended Retirement System was created by Congress in the 2016 National Defense Authorization Act. The Department of Defense, all seven Uniformed Services, the Defense Finance and Accounting Service, and the Federal Retirement Thrift Investment Board are just a few of the agencies that have been developing the many policies and procedures necessary to implement this law. The BRS begins on Jan. 1, 2018 with a year-long opt in period for eligible Service members to decide if they want to stay with their current retired pay plan (the High 3 Plan) or opt in to the BRS. Also, any Service member who first joins the military on or after Jan. 1, 2018 will automatically have the BRS as their retired pay plan.
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