Blended Retirement System

Beta Test of the DoD’s Blended Retirement System Calculator

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Here is a link to the beta test of the Department of Defense Blended Retirement System Comparison Calculator:

Blended Retirement System Comparison Calculator – Beta Version

Blended Retirement System Opt-in Course Now On-Line

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By Chief of Naval Personnel Public Affairs
WASHINGTON (NNS) — Tuesday, the Navy released NAVADMIN 020/17 announcing the release and availability of the Blended Retirement System (BRS) Opt-In course.

The decision to stay in the current retirement system or opt-in to BRS is an important and irrevocable decision that eligible Sailors must make based on their own individual circumstances. This course aims to help eligible service members make that decision.

All service members who are opt-in eligible must complete the Blended Retirement System training, now available on Joint Knowledge Online (JKO) at: http://jkodirect.jten.mil/html/COI.xhtml?course_prefix=J3O&course_number=P-US1332 (course #: J3O P-US1332). The training will be available soon on Navy e-Learning.

Active Component (AC) members are eligible to opt-in if they entered military service on or before Dec. 31, 2017, and have less than 12 years of service.

Reserve Component (RC) members, including Full Time Support (FTS) members, can opt-in if they entered military service on or before Dec. 31, 2017, and they have accumulated fewer than 4,320 retirement points as of Dec. 31, 2017.

United States Naval Academy and Reserve Officer Training Corps Midshipmen as well as Delayed Entry Program service members are opt-in eligible if they entered the military on or before Dec. 31, 2017.

Eligible Sailors should have received notification of their opt-in eligibility via email (sent to the email address registered to an individual’s Navy Standard Integrated Personnel System (NSIPS) account). Command administration departments must contact their personnel support divisions to access a list of all opt-in eligible members within their command and then notify all opt-in eligible members within their units.

In order to ensure opt-in eligible Sailors are making the most informed decision possible, a few additional tools have been developed for use. Additionally, an on-line calculator is expected to be released in March to aid eligible members in their decision making process.

The Navy has also developed the Navy Financial Literacy app that is designed to provide Sailors with access to both training and resources, which is especially critical during the transition to BRS. The free app is available for download now at the Google Play and iTunes app stores. To find the app, search “Navy Financial Literacy” in the app stores or in your web browser.

For the most up-to-date information on BRS and links to training go to the Uniform Services Blended Retirement web page at http://militarypay.defense.gov/BlendedRetirement/.

For complete information on BRS opt-in training requirements and availability see NAVADMIN 020/16 at http://www.npc.navy.mil.

For more information, visit www.navy.mil, www.facebook.com/usnavy, or www.twitter.com/usnavy.

For more news from Chief of Naval Personnel, visit www.navy.mil/local/cnp/.

The New Blended Retirement System

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There has been a lot of recent activity surrounding the new Blended Retirement System (BRS), and I don’t intend to reinvent the wheel and explain the whole system to you when there are some nice resources that already exist:

DoD BRS 1 Page PDF Summary

BRS NAVADMIN

DoD BRS Article and Video

Military OneSource BRS Frequently Asked Questions

What I intend to do is give you a bottom line recommendation if you have a choice about using the current retirement system or going with the BRS.

If you know you are going to resign before you are eligible for retirement, you should select the BRS.  Under the current system, you would get no retirement benefit, so that is a no-brainer.

If you are not sure how long you are going to stay in the Navy, you’ll have a tough decision to make.  I’d read the above resources but also check out this article that discusses how flawed the BRS is:

New Military Retirement System Has Major Flaw

If you know you are going to stick around long enough to be eligible for retirement, my personal opinion is that you should choose to stay with the current retirement system.  There are a few reasons for this:

  1. The BRS shifts risk from the government to you.  We buy insurance when there is a risk that we can’t bear ourselves.  People buy health insurance because a huge hospital bill could financially ruin them.  We buy life and disability insurance because if a breadwinner died or was disabled in our household we wouldn’t have enough money to continue our desired lifestyle.  The current government pension system is like retirement insurance. When it comes to retirement, the largest financial risk you run is that you outlive your financial assets.  Social security insures against that, but so does your military pension, which regular readers know I highly value.  Although the BRS has a pension as well, it is reduced, shifting more of this risk to you.
  2. Shifting risk to yourself is fine if you invest diligently and aggressively and the market earns a decent return.  The problem is that most people don’t invest diligently or aggressively and no one knows what the market return will be over the next 10, 20, or 30 years.  There are many people who lack the financial education they need (go here or here to get it) and invest in the Thrift Savings Plan but keep their money in the default option when you sign up, the G Fund.  There is nothing wrong with the G Fund and I have some of my own retirement assets invested in it, but it is not designed to earn a high return.  It is designed to not lose money and beat inflation.  In order to benefit from the extra TSP money that comes with the BRS, you have to earn a high return and will need to be smart enough to invest in something more aggressive than the G Fund.
  3. If you control your spending, live in a reasonable house, and drive a reasonable car, you can enjoy the higher pension of the old retirement system and fill up your TSP every year, enjoying the benefit of both worlds.  We have routinely saved 30% of our pre-tax income for retirement during nearly our entire Navy career, invested aggressively, and reaped the benefits.  And I have a retirement pension on top of that?!?!  It doesn’t get any better than that.