Podcast Episode 36 – Final Pay versus High-3 Pay



Agencies Reveal More Info on Military Blended Retirement Plan – by Erich Wagner (govexec.com)

Federal agencies released new information this week to help current military service members decide whether to opt into the new blended retirement program, which is slated to come online next year.

Service members with fewer than 12 years in the military by the end of this year must choose by the end of 2018 whether to stay with the current military retirement system, or move into the blended system. Officials with the Thrift Savings Plan, the government’s 401(k)-style retirement plan for federal employees, posted a fact sheet and video explaining the new system.

Under the new system, new troops would automatically be enrolled in the TSP and receive a matching contribution from the government—between 1 and 5 percent of their salaries, depending on what they choose to contribute themselves. The default is 3 percent of their paychecks, and the TSP account will begin 60 days into their service.

Those who stay in the military for 20 years, entitling them to a retirement pension, would receive a less generous calculation for their annuity.

TSP’s fact sheet spells out how the current military retirement system works, as well as how changing to the blended system would affect one’s defined benefit payments after 20 years of service. The two biggest factors in deciding between the systems, officials said, are whether a service member plans to stay a full 20 years to qualify for the defined benefit portion of the blended option, and how long one would be able to contribute through the TSP.

“How many years of making contributions and receiving service contributions will I have before retirement?” TSP officials wrote. “Is it likely that these contributions and their earnings—along with any benefit I might get from continuation pay or the lump sum option—will ultimately outweigh the amount I’d be giving up as a result of the reduced monthly annuity?”

To help answer to those questions, the Defense Department has launched an online calculator where service members can learn whether the current retirement system or the blended system is the better option financially.

Troops can plug in their age; when they began their military service and at what pay-grade; and when they plan to retire, as well as how much they would hypothetically contribute to the TSP, and the website will lay out how much they would earn under each retirement program option for easy comparison.

“We have designed an all-in-one calculator that is intuitive to use and takes into account the unique financial situations of our active duty, National Guard and Reserve service members,” said Tony Kurta, acting undersecretary of Defense for personnel and readiness. “The calculator presents to service members the information needed to make an effective comparison. The calculator will provide service members the ability to compare estimated benefits between their current retirement plan and BRS prior to making this important decision.”

TSP officials reported last week that more than 163,000 people have already signed up online for the blended retirement system.


June 7, 2017

http://www.govexec.com/pay-benefits/2017/06/agencies-reveal-more-info-military-blended-retirement-plan/138494/

 


Where Can I Find Other Training About the Blended Retirement System?

 

Rejoice, you have made it to the last article in my series on the Blended Retirement System (at least until new information comes along).  Let’s dive into those murky waters one more time.

 

RCRetirement.com, naturally, is not the only source of information about the Blended Retirement System. The Department of Defense (DOD) also wants all service members who are eligible to convert (those with fewer than 4,320 retirement points) to BRS to be able to make an informed decision.

 

The DOD as well as other agencies has developed numerous brochures, lists of frequently asked questions (FAQs), and video training for its members to learn about BRS.  Most of these resources are optional but a few of the web-based videos will be mandatory soon.

 

Military One Source, militarypay.defense.gov, and Joint Knowledge Online are the three primary sources of viable information about BRS.  Except for RCRetirement, of course, I would recommend not believing any information about BRS you see from other sources.  I refer you back to my article, “Myths about the Blended Retirement System,” as an example of some of the misinformation that is out there.

 

I will only talk about the three primary web-based training videos that out there in this article.  You can look at the ever-expanding list of references below for considerably more information.

 

There will be links to the three videos, as well.  There are two links for each video.  One requires a Common Access Card (CAC) to access and the other does not.  Which one you use is up to you.  Some branches of service may require that you take the CAC-enabled course so they can track who has and who has not completed it.  You can always preview the course by looking at the non-CAC version, of course.

 

I won’t go into specifics about the courses.  I recommend you take them for yourself.  Personally, I recommend all three courses so you can learn as much as possible.  At a minimum, take the opt-in course.  If you’ve read all of my articles about BRS, there is a high likelihood you’ve learned as much as the leader course offers at least.  The opt-in course or its classroom equivalent will be mandatory next year for all those who are eligible to convert to BRS.

 

The first iteration of the three videos is designed for leaders (E5 and above, typically) so they can assist in counseling their people.  It provides a general overview of BRS.

 

Next we have the course designed for financial counselors and class facilitators.  This course, along with a seventy-four page facilitator’s guide (link below) will assist with the development of separate classes about the BRS.  It will also be useful for financial counselors who consult service members on individual basis about their conversion options.

 

Finally, and most importantly for the individual service member, we have the individual opt-in course.  This course, in either the online or classroom version (based on the requirements of each service), will be required training for all eligible members.  This course must be completed before a member can choose to convert to the new plan.

 

For your convenience, I have recorded all of these coursesand will be posting them on YouTube as a playlist no later than noon this Friday.  At the time of this writing, I’m still editing them to reduce the lag time from internet hiccups and loading screens.  I will place the link to the playlist in the show notes.  Please keep in mind that viewing the training in this manner is for informational purposes only and will not satisfy your service’s training requirements.  Think of this more as a readahead.

 

Take a look at the courses that interest you.  As I said, I think taking all of them would be beneficial.

 

If you have any questions about anything I’ve covered in this article, please post them in the comments section below.

 

Join me next week when I will talk about the likely method you will use to make the conversion to BRS.

 

Thanks for joining me today and, of course, thank you for your service.

 

D.J.

 

References:
Department of Defense BRS Education Strategy
Frequently Asked Questions Regarding the New Blended Retirement System
Blended Retirement System (MilitaryOneSource)
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
BRS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)
TSP Under the Blended Retirement System
Global Pay Self Service (Coast Guard)
MyPay
Thrift Savings Plan Website
BRS Opt-In Course Facilitator’s Guide
Blended Retirement System Leaders Course (CAC Only)
Blended Retirement System Leaders Course (Non-CAC)
Blended Retirement System Financial Counselors / Educators Course (CAC Only)
Blended Retirement System Financial Counselors / Educators Course (Non-CAC)
Blended Retirement System Opt-In (Individual) Course (CAC Only)
Blended Retirement System Opt-In (Individual) Course (Non-CAC)
Blended Retirement System Comparison Calculator

Related YouTube Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2
The Thrift Savings Plan Under the Blended Retirement System
What Other Effects Will the Blended Retirement System Have?
JKO BRS Training Videos Playlist (includes Leader Training, Financial Educator, and Opt-In Courses)

Related Podcast Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2
The Thrift Savings Plan Under the Blended Retirement System
What Other Effects Will the Blended Retirement System Have?

Related Articles:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2
The Thrift Savings Plan Under the Blended Retirement System
What Other Effects Will the Blended Retirement System Have?


Podcast Episode 0020 – Where Can I Find Other Training About the Blended Retirement System?

References:
Department of Defense BRS Education Strategy
Frequently Asked Questions Regarding the New Blended Retirement System
Blended Retirement System (MilitaryOneSource)
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
BRS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)
TSP Under the Blended Retirement System
Global Pay Self Service (Coast Guard)
MyPay
Thrift Savings Plan Website
BRS Opt-In Course Facilitator’s Guide
Blended Retirement System Leaders Course (CAC Only)
Blended Retirement System Leaders Course (Non-CAC)
Blended Retirement System Financial Counselors / Educators Course (CAC Only)
Blended Retirement System Financial Counselors / Educators Course (Non-CAC)
Blended Retirement System Opt-In (Individual) Course (CAC Only)
Blended Retirement System Opt-In (Individual) Course (Non-CAC)
Blended Retirement System Comparison Calculator

Related YouTube Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2
The Thrift Savings Plan Under the Blended Retirement System
What Other Effects Will the Blended Retirement System Have?
JKO BRS Training Videos Playlist (includes Leader Training, Financial Educator, and Opt-In Courses)

Related Podcast Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2
The Thrift Savings Plan Under the Blended Retirement System
What Other Effects Will the Blended Retirement System Have?

Related Articles:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2
The Thrift Savings Plan Under the Blended Retirement System
What Other Effects Will the Blended Retirement System Have?


YouTube Episode 0022 – Where Can I Find Other Training About the Blended Retirement System?

https://youtu.be/fgeq9ckVhiM

References:
Department of Defense BRS Education Strategy
Frequently Asked Questions Regarding the New Blended Retirement System
Blended Retirement System (MilitaryOneSource)
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
BRS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)
TSP Under the Blended Retirement System
Global Pay Self Service (Coast Guard)
MyPay
Thrift Savings Plan Website
BRS Opt-In Course Facilitator’s Guide
Blended Retirement System Leaders Course (CAC Only)
Blended Retirement System Leaders Course (Non-CAC)
Blended Retirement System Financial Counselors / Educators Course (CAC Only)
Blended Retirement System Financial Counselors / Educators Course (Non-CAC)
Blended Retirement System Opt-In (Individual) Course (CAC Only)
Blended Retirement System Opt-In (Individual) Course (Non-CAC)
Blended Retirement System Comparison Calculator

Related YouTube Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2
The Thrift Savings Plan Under the Blended Retirement System
What Other Effects Will the Blended Retirement System Have?
JKO BRS Training Videos Playlist (includes Leader Training, Financial Educator, and Opt-In Courses)

Related Podcast Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2
The Thrift Savings Plan Under the Blended Retirement System
What Other Effects Will the Blended Retirement System Have?

Related Articles:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2
The Thrift Savings Plan Under the Blended Retirement System
What Other Effects Will the Blended Retirement System Have?


What Other Effects Will the Blended Retirement System Have?

Now that we’ve covered the three biggest effects of the Blended Retirement System will have, let’s talk about some of the other aspects of the plan.  There is a lot of room for misunderstanding with these particular features so I’m going to try to be very specific about them.

 

As we’ve all heard, part of the intent of the new plan is to provide a level of portability of some retirement benefits if you leave service with less than twenty qualifying years.  Now, let me be clear.  This portability is not the ability to take part of the retired pay you would have earned during those years (that is another of the big myths out there).  The portability aspect only refers to the Thrift Savings Plan contributions you have made as well as, if you are vested, the matching funds you have received. Being vested means you have at least two years of service.

 

Now, before you think you’ve been gypped by this feature, keep this in mind.  The twenty-year pension has always been an all-or-nothing feature of military retirement.  You either have twenty years of qualifying service or you don’t.  That has not changed.

 

The only exception for reservists has been medical disqualification for continued service.  In that situation, you are still able to receive retired pay if you have at least fifteen years of qualifying service, but I digress.  The eligibility for a military pension remains the same.  You can keep the Thrift Savings Plan money and either leave it in the TSP or roll it into another qualified plan.

 

The next major feature of BRS is the ability to opt for a lump sum payout of part of the total value of your retired pay.  You can choose to take a 25% or 50% lump sum or choose to take no lump sum at all.  No, this doesn’t mean you can take a lump sum payout as soon as you go to the Retired Reserve when you’re forty.  If you’re a reservist, you still must wait until your Retired Pay Eligibility Date (RPED) which is usually age sixty (unless it has been reduced by qualifying active duty service).

 

If you choose to take the lump sum option then you should know the effect this will have on your monthly pension.  Taking the lump sum will reduce the monthly amount of your pension by roughly the amount of the percentage of the payout you chose to take plus about ten percent.  The actual math (a formula called the discounted present value) is a bit more complicated so I won’t go into that in this article.

 

If you take the lump sum, the reduction in monthly retired pay will remain in effect until you reach full Social Security age which, for most of us these days, is age sixty-seven.  At this point, your monthly retired pay will be recalculated to pay the same amount as if you had not taken the lump sum.

 

Let’s look at a greatly simplified example.

 

Command Sergeant Major Cochran (an E9, for those of you in other services) can expect retired pay of about $2,069 per month.  He chooses to take 25% of the value of his retirement as a lump sum payout.  He receives a one-time payment of $18,612 (this is taxable, by the way, and will be offset by any VA compensation he receives).

 

As a result, his monthly retired pay is reduced to about $1,551.  His monthly pay will remain at this rate (adjusted by inflation, of course) until he reaches full Social Security age.  When he turns sixty-seven, his retired pay will be return to its original amount of $2,069 (this does not take annual cost of living allowances into account).

 

This is a lot of information to absorb all at once so take some time to review this article again for clarity.  I have found sometimes that reading it aloud helps.

 

If there are any questions or concerns about what I have said this week, please comment below and I will do my best to answer you.

 

Please join me next week when I will discuss where you can find other sources of information and video-based training about the Blended Retirement System.

 

Thanks for joining me today and, of course, thank you for your service.

 

D.J.

 

References:
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
BRS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)
TSP Under the Blended Retirement System
Global Pay Self Service (Coast Guard)
MyPay
Thrift Savings Plan Website

Related YouTube Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

The Thrift Savings Plan Under the Blended Retirement System


Related Podcast Episodes
:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

The Thrift Savings Plan Under the Blended Retirement System

Related Articles:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

The Thrift Savings Plan Under the Blended Retirement System


Podcast Episode 0019 – What Other Effects Will the Blended Retirement System Have?

 

References:
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
BRS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)
TSP Under the Blended Retirement System
Global Pay Self Service (Coast Guard)
MyPay
Thrift Savings Plan Website

Related YouTube Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

The Thrift Savings Plan Under the Blended Retirement System


Related Podcast Episodes
:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

The Thrift Savings Plan Under the Blended Retirement System

Related Articles:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

The Thrift Savings Plan Under the Blended Retirement System


Podcast Episode 0016 – What will the Blended Retirement System Do To My Pension?

 

References:
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
BRS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)

Related YouTube Episodes:
What is the Blended Retirement System?


Myths About the Blended Retirement System

Related Podcast Episodes:
What is the Blended Retirement System?
Myths About the Blended Retirement System

Related Articles:
What is the Blended Retirement System?
Myths About the Blended Retirement System


YouTube Episode 0018 – What will the Blended Retirement System Do To My Pension?

https://youtu.be/MqZRMNH5bQI

 

References:
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
BRS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)

Related YouTube Episodes:
What is the Blended Retirement System?
Myths About the Blended Retirement System

Related Podcast Episodes:
What is the Blended Retirement System?
Myths About the Blended Retirement System

Related Articles:
What is the Blended Retirement System?
Myths About the Blended Retirement System