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Frequently Asked Questions Regarding the Blended Retirement System

A: Under the traditional system, only those who serve 20 years receive a retirement benefit. That means about 81 percent of service members leave with no benefit. Under the Blended Retirement System, about 85 percent of service members will receive a retirement benefit, even if they don’t qualify for full retirement.

A: Service members who joined the service before 2006 will remain in the legacy retirement system, but those who joined after 2006 but before Jan. 1, 2018 had the choice to stay with the legacy system or opt into the Blended Retirement System. Those who joined starting on or after Jan. 1, 2018 will be automatically enrolled into the Blended Retirement System. To learn more about the Blended Retirement System, take the training at Joint Knowledge Online.

A: The Blended Retirement System has three parts: a Thrift Savings Plan, or TSP, which is like a civilian 401(k) retirement savings plan; a “continuation pay” bonus after 12 years of service if you choose to re-enlist; and an annuity payment.

A: Blended retirement enrolls all service members who joined beginning January 2018 into the Thrift Savings Plan, with automatic and matching Department of Defense contributions. After completion of two years of service, you are “vested,” having full ownership, and that money belongs to you. If you leave, it goes with you.

A: All service members who joined beginning in January 2018 are enrolled into the Thrift Savings Plan, or TSP. Upon 60 days of you entering service, the government contributes 1 percent of your base pay to your TSP. You can contribute another 4 percent of your base pay to get a 5 percent total contribution.

After completion of two years of service, you become vested, so if you leave the military, your entire Thrift Savings Plan account goes with you. While the Thrift Savings Plan is also available for service members not enrolled in the Blended Retirement System, the department does not contribute to those plans.

A: After 12 years of service, you receive a cash payment if you opt to stay in for four more years. The payment will be two-and-a-half months of basic pay for the active component member and half a month’s basic pay for the reserve component member.

A: The third part of the Blended Retirement System is a monthly annuity, similar to the 20-year retirement system now in place. Members who retire will still get their monthly annuity pay but at a reduced amount. The annuity’s formula is 2 percent times years served times the “high 3” or the average of the highest 36 months of basic pay received. The Blended Retirement System annuity is close to the legacy retirement formula, which uses 2.5 percent as the multiplier. Find out more about the calculations behind the annuity-based payment.

A: Yes, for those who retire after at least 20 years of service, the retirement remains predominantly a defined benefit in which you will get monthly retired pay. Instead of being calculated at 2.5 percent times the average of your highest 36 months of basic pay, (or your last month of basic pay, if you are under the older, final-pay system), your monthly retired pay will be calculated with a 2 percent multiplier.

A: The Department of Defense offers a Blended Retirement System Opt-In Course to help service members understand the advantages of the new system, as well as a Blended Retirement System comparison calculator to compare the legacy retirement system with the new option.

A: While all service members now enjoy access to the Thrift Savings Plan, those who stay with the legacy retirement system do not receive automatic or matching contributions by the Department of Defense. And, while their annuity payments will generally be larger than those calculated under the Blended Retirement System, those in the legacy system must serve for at least 20 years to receive a retirement benefit, or they risk receiving nothing when they leave.

A: Many more service members will be started earlier in their long-term retirement savings. From a readiness point of view, the department now has a 401(k)-like component to the retirement system, which increases our appeal to potential recruits.

Do you have questions about retirement? Contact Military OneSource at 800-342-9647 or start a live chat to schedule an appointment with a financial counselor. OCONUS/International? Click here for calling options.

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