Retirement can feel like a long way away, especially if you’ve only just started your military career. Still, what you save today will grow significantly by the time you’re ready to retire – even if it’s only a little bit each month.
Try using the Blended Retirement System’s official military pay calculator. You may be surprised at how fast tiny contributions today can grow into a fat nest egg of BRS lump-sum retirement payments or steady withdrawals from your Thrift Savings Plan, or TSP, over retirement.
How to fill out each section of the BRS calculator
You may need to make a lot of guesses about your future service career while you’re filling out the information for the BRS calculator, and you may not have all the answers. Don’t let that stop you. The calculator doesn’t give you a guaranteed amount – just an estimate. It can automatically fill in answers for you based on common situations for most service members. And, you can change your responses at any time.
If you’re using a computer or tablet to access the calculator, you can scroll your cursor over underlined phrases. A small window will appear with a definition and explanations for pre-filled responses. This is not available if you’re using a smartphone.
This step is the simplest – select “Active Duty,” then choose whether you expect to retire from active or reserve duty. For demonstration purposes, we’ll assume retirement straight from active duty.
Press “Continue” to proceed.
In this step, you’ll be asked: How many years do you think you’ll serve before you leave? You may not know now, so put in your best estimate. Remember, the longer you stay in, the longer you can contribute to your TSP account. And, you’ll only be eligible for a pension payment if you retire after serving 20 years on active duty.
In all, you’ll put in:
- Your birth date
- Your Pay Entry Base Date – basically, the month and year you first got paid by the military. This can be found on your Leave and Earnings Statement.
- Your current pay grade
- Your Active Service Date – the month and year you first went on active duty, which might be the same as your Pay Entry Base Date
- The number of years you’ll serve before you separate or retire. To show your future pension payment, make sure you put in at least 20 years.
Once you’ve put in your answers, press “Continue.”
For this step, you might not know the answers now. Many of these boxes are pre-filled with the most common responses. Try starting with the suggested common responses. You can always customize the responses through drop-down menus.
You’ll enter your:
- Life expectancy
- TSP withdrawal age – how old you’ll be when you decide to start withdrawing money from your Thrift Savings Plan account. This defaults to 67, BRS’s “Full Retirement Age,” but you can start withdrawing at 59½ years without paying extra income taxes. The longer you can wait to withdraw, the more money you’ll earn.
- TSP contribution rate – how much you think you’ll contribute to your TSP while you’re serving, as a percentage of your basic pay. This defaults to 5%, since that’s what’s needed for the government to contribute a max of 5% of your basic pay. However, you can increase or decrease this amount if you plan on deducting more or less money from your monthly pay.
- TSP rate of return – how much extra money you think your retirement account will make each year before you start withdrawing from it. This defaults to 7% average annual increase. You can decrease this percent for a more conservative estimate and a lower future TSP payment. Or, you can increase it if you think the market will perform better by the time you withdraw your funds.
- TSP rate of return after withdrawal – how much you think your account will make each year after you begin to withdraw. This defaults to 3%.
- Current TSP account balance – both what you’ve contributed so far and what the government has matched. You can find this information online at the official Thrift Savings Plan website.
After you have made your choices, click “Continue.”
How much you contribute to your retirement accounts will depend on how much your basic pay is. That amount increases with promotions and years of service. Therefore, the calculator asks what you think your pay grade will be every year to your projected separation year.
If you’re not sure, the system automatically fills in each year’s possible pay grade following a “typical military career progression.” You can simply continue from this step, or you can override the calculator’s suggestions with the drop-down menu.
During your career, you may receive large bonuses. One of these is called a “Continuation Pay,” which you’ll receive on agreeing to serve for at least three more years. This step will ask you for some basic information to determine how big a bonus you might receive – and how much you might put into your TSP retirement account.
Again, the calculator will automatically fill in this section for you, based on common scenarios for most service members, but you can customize it, too. Once you’re done, press “Continue” to see the results.
Understanding your projected military retirement income
Your retirement benefits – as estimated by the BRS retirement calculator – will be presented in four different tabs. Each of these tabs will contain different information, so make sure you browse through all four for a complete picture. Each of these sections will display total payment for the year, so divide by 12 for your estimated future monthly payments.
You can also choose to have the data show in “today’s” dollars or “future” amounts. Today’s dollars reflect what your benefits would be worth if they were paid out today. Future amounts try to show you the actual dollar amount you’ll likely receive when they’re paid out.
This first tab shows you how much the government will pay you every year, from now through retirement.
The first columns reflect the basic pay you receive until you leave the service – just like you do now. You might also see a “Continuation Pay” spike on top of your basic pay.
When you officially retire from military service with at least 20 years of active service, you’ll receive an annuity payment each month. This is the “BRS Pension” column series, which reflect your monthly payments until you reach the age at which you’ll start withdrawing from your TSP account, which defaults to 67 years old. Those withdrawals from your TSP account will be in addition to your BRS pension.
Remember that if you leave before 20 years, you will receive no pension payment – but you can receive withdrawals from your TSP account.
Remember, your TSP savings account is an actual account which uses your contributions to invest for your retirement. That means your TSP account has a real dollar amount, just like a checking or savings account. You just won’t access it before you turn 59½ unless you want to pay hefty tax penalties.
The TSP Summary tab shows you what that account will be worth each year, based on the estimates you input earlier. The chart divides itself into your personal contribution earnings and those from the government matching, but the total amount belongs to you.
Notice that your account is projected to continue growing, even after you stop contributing when you retire. That’s because the money you already put into the account will usually earn more every year through investments. The amount typically starts decreasing the year you start withdrawing from it.
The previous charts assume that you do not take a lump sum of the value of your future retirement pension. However, if you decide to take a lump sum of either 25% or 50% when you retire, this section shows you how your retirement annuity would change.
Notice how your pension returns to a “full payment” later in the chart. That’s because BRS pensions go back to full payment status once you turn 67 years old – the program’s “Full Retirement Age” – even if you took the lump sum back when you first retired from military service.
Tables beneath the main bar chart discuss the final dollar amounts in more detail. It will also show you how you end up with less money over the course of your lifetime if you choose to take the lump sum upfront, instead of waiting to receive the full pension payment each year.
If reading spreadsheets is more understandable to you than bar graphs, this is the tab designed for you. It will list the calendar year and all payments made to you over the course of your lifetime.
It will include:
- Annual basic pay calculated from your projected promotions and bonuses
- TSP contributions by both you and the government
- BRS pension payments once you retire
- The projected TSP payouts when you turn 67 years old
- Your total annual retirement payments
If you’d like to talk to someone who knows a ton about how to save for the future while still living in the here-and-now, Military OneSource offers free financial counseling for all active-duty service members and their immediate families. They can review the estimates provided by the calculator and tell you how to get the most for your retirement.
Check out these calculators if you’re in the legacy retirement system or a member of the National Guard or reserves trying to project your retirement pay.