The Easy Blended Retirement System Guide for Military Spouses

On Jan. 1, 2018, the Pentagon launched its new retirement program, known as the Blended Retirement System.

If your service member joined after Jan. 1, 2006, or is Guard or Reserve and had fewer than 4,320 retirement points (here's how to figure that out) before Dec. 31, 2017, you qualify to opt-in.

What does that mean? Should you opt-in? How do you know what system is right for you? How does either system work, anyway?

There's nothing easy or simple about retirement and planning for your future. But with this guide, you'll be well on your way to understanding your options.

What Is the Current System?

The current military retirement system allows military members with 20 or more years of service to retire with a monthly pension check. How much that check is for, exactly, is based on a combination of factors and choices.

Troops choose between the "High-36" system or the Career Status Bonus/REDUX system (CSB). (Great names, huh?)

The High-36 system gives you retirement pay that is the average highest 36 months of base pay, multiplied by 2.5 percent for every year of active duty. That means if you retire at 20 years, you get 50 percent or half of the average of the highest three years of base pay. If you retire at 30 years, you get 75 percent. The CSB/REDUX system lets you score a $30,000 bonus when you hit 15 years. Yay! But it also reduces your retirement pay when you get out from 50 percent to 40 percent of the average of your highest three years.

In short, you get a bunch of money early, but then have less over time later. If you made it to 30 years under this system, you would still get 75 percent. (If you make it 30 years, you are braver than I.)

What Is the Blended Retirement System?

Instead of giving troops cash for retirement only if they make the long slog to 20 years, the Pentagon will now help them save money over time through a program similar to what private companies use through what's known as a 401(k).

But they didn't want to entirely do away with the reward for 20 years, so they kept that too.

That's why it's called "blended," because it combines that other pension system with something friendlier to folks who get out earlier.

Here's How the Blended Retirement System Works

First, it uses the Thrift Savings Plan. That investment plan allows troops to invest money directly from their paychecks to an investment account run by the government. Troops can decide to use it or ignore it.

For those in BRS, three percent of your base pay is automatically directed to your TSP, although you can elect to stop that or raise it higher. After two years of service (which most people opting in will already have under their belts), Uncle Sam will match whatever you put in there up to 5 percent.

That means if you put in 5 percent of your base pay, the government will contribute that same amount, dollar-for-dollar -- doubling your money. If you put in 6 percent, the match stays at 5 percent, since that's the limit.

Next, if and when you hit between 8 and 12 years of service and then commit to a new tour of service, you get a bonus that's equal to anywhere between 2.5 months to 13 months of your current basic pay. The individual services can control this amount, so we can't tell you exactly what it is.

For reservists, this amount can vary from half a month to six times your monthly basic pay.

Everyone will get a bonus, but the individual services can make the call on when you get it, how long you need to commit to, and how much you can get. This will probably be based on service-specific retention needs..

Finally, if you hit 20 years, you also can receive a pension. That amount is calculated in a very similar way to "High-36" in the old system, but with a slight difference: Instead of your pay being calculated based off the highest 36 months of base pay, multiplied by 2.5 percent for every year of active duty, it will be multiplied by 2 percent.

You will also have a few different payment options should you make it to 20 years, including lump-sum payment.

Should You Switch to the Blended Retirement System?

I hate to say this, but that really depends on a ton of different variables. Do yourself a favor, and consult a financial adviser who can go over your specific circumstances.

But here are some general thoughts:

• If you plan to stay in at least 20 years, financial advisers mostly agree that the current system is a better deal.
• If you've been in fewer than 10 years, many financial advisers suggest that opting in is the best option, especially if you can afford to contribute at least 5 percent of your base pay to your TSP.
• Even if you do plan to stay until 20 years, no one can predict what's going to happen tomorrow, much less 10 years down the line. Maybe you'll make it to 20, maybe you won't. But it could be a safer bet to plan on not getting there, just in case.
• What if you've been in about 10, plan to make it to 20, and just don't know what to do? It's definitely time to hit up that financial adviser for some number crunching.

You've Made Your Decision, Now What?

Opting-in is irrevocable, so don’t do it unless you’re completely sure that’s what you want.

If you've decided to stay in the old system, you don't have to do anything except not visit the section of MyPay that will irrevocably put you in the system.

Take our word for it, don't mess with it -- don't go there. Don't be the guy who accidentally opts-in. (Yes, that has happened.)

If you've decided you do want to switch, there is mandatory training you must take. (If you're a service member you probably already did the training. But we all know that "mandatory" doesn't mean it always actually happens.)

If you've done that training, you can simply visit your MyPay account where the very first link on the main page will walk you through the dangerously simple opt-in process.