I feel like this retirement system has actually been discussed a lot lately on the active duty side but many spouses still don’t know about. I hope this article clarifies some concepts.
How does it works?
Your service member will get 40% of their base pay. The rest of their retirement is based on what they put into Thrift Savings Plan (TSP) which the military and DOD will match. So even if they put nothing into TSP, the DOD will put 1% of their base pay into the G fund of traditional TSP. However, they can maximize their TSP if they put 5% as the DOD and military will match that 5%, they’re actually getting 10%! A full break down of how it works in the the chart below which is a great resource from Military Compensation.
Note that the match is great and all but if you can’t for some reason make the match or have developed a savings habit you might not be able to maximize this account. The nice thing is your spouse can leave with the TSP match once they leave the military and they have met their time commitment.
Who has this type of retirement?
If your service member join after January 1, 2018 they are in this BRS system. They had the option to this retirement or the High 3 Retirement if they had less than 12 years of service on December 31, 2017. If they had over 12 years of service on this date they had to stay with the old High 3 Retirement system.
What does it include?
This includes a monthly paycheck from the government that is 40% of your spouse’s base pay at the rank they held the last 3 years they were in AND their TSP account including their own contributions or the government matching.
It does NOT include your BAS, BAH, or COLA. If you’re not sure what these are please read this.
How it’s different from High 3
One of the key differences between BRS and Legacy is that your spouse can leave the military after just 2 years of service with their TSP contributions AND the contributions from the DOD and military. Granted it is still sitting in a retirement account so it’s in your family’s best interest to put it into another retirement account or keep it in TSP. If you take it out for that dream cruise there are all kinds of taxes and penalties that you can receive. This money is meant to use after 59 1/2 to use on you and the grand kids taking a cruise.
When does it start?
They start collecting this the month after their military retirement date, if they are staying until that time. This means if they retire June 1 they won’t get paid until July 1.
Who collects it?
This is your service-members retirement and they ultimately collect it. If something happens to them, you can get Survivor Benefit Plan (SBP), if your spouse signs up for this program when retiring from the military. This is a fee based program through the military that allows you to get half of their retirement(remember that’s about 22% of their base pay) if they passed away.
Below are some resources and calculators to start having conversations with your spouse. What do you think of this retirement system? Do you like the flexibly of having your spouse be able to take something if they leave the military before retirement or dislike that it now takes into account TSP? Please share your thoughts below.
A guide to the Uniformed Services BRS: https://militarypay.defense.gov/Portals/3/Documents/BlendedRetirementDocuments/A%20Guide%20to%20the%20Uniformed%20Services%20BRS%20December%202017.pdf?ver=2017-12-18-140805-343
BRS for Military Spouses: https://militarypay.defense.gov/LinkClick.aspx?fileticket=wpOYF2q9GOI%3d&portalid=3