Retirement
Blended Retirement System: what you get at 20 and the lump sum choice
Pension of 40 percent of your high-36 at 20 years, plus TSP. The lump sum trades monthly pay for cash now.
Read before you choose the lump sum. DoD says the lump sum cuts your monthly retired pay to 75 or 50 percent until full Social Security age (67 for most people). Talk to a free counselor before you decide (numbers below).
What it is
The Blended Retirement System (BRS) has three parts: a monthly pension for life if you serve at least 20 years, government contributions to your Thrift Savings Plan (TSP), and a one-time mid-career bonus called continuation pay. At retirement you may also choose to take part of your pension as a lump sum.
Who is in BRS
People who entered military service for the first time on or after 1 January 2018 are enrolled automatically. People with fewer than 12 years of active duty on 31 December 2017 could choose BRS through 31 December 2018 (Army benefits site). If you are not sure which system you are in, ask your personnel office.
How much per month at 20 years
- The formula: years of creditable service x 2.0 percent x the average of your highest 36 months of basic pay (Army benefits site).
- At exactly 20 years that is 40 percent of your high-36 average.
- Your own number depends on your high-36 pay. Use the official DoD or Army calculators linked below, not a private website.
How much per month at 20 years
What you also get
- TSP: DoD adds 1 percent of basic pay automatically and matches up to 4 percent of what you put in, for a total of up to 5 percent. You are fully vested after two years of service.
- Continuation pay: a one-time mid-career bonus, available between the 7th and 12th year of service, in exchange for four more years of service.
TSP1 percent
Continuation pay7th and 12th year
The lump sum choice
- You may choose 25 percent or 50 percent of your monthly retired pay, discounted to present value using an annual DoD discount rate published in June.
- You can take one payment, or equal yearly payments for up to four years.
- Your monthly retired pay is then 75 or 50 percent of the full amount until full Social Security age, which for most people is 67. Then it goes back to full.
- The lump sum counts as earned income and can push you into a higher tax bracket.
- You must tell your HR servicing office at least 90 days before you retire (for Guard and Reserve, at least 90 days before you start receiving retired pay).
Traps
- The DoD calculator page says its results are approximations while the tool is in development. Treat any figure as an estimate.
- Ignore social media and vendor calculators that quote their own numbers. Use militarypay.defense.gov and myarmybenefits.us.army.mil.
Where to call and where to go
Phone
- 800-342-9647, Military OneSource, 24/7. Free financial counseling is listed on militaryonesource.mil.
Official pages
Sources
Next step: Plan Your Transition walks you through getting out in six steps.