On Nov. 25, 2015, the president signed the new Blended Retirement System into law as part of the National Defense Authorization Act. The new Blended Retirement System, which goes into effect on Jan. 1, 2018, calls for a 20 percent reduction in retirement pay in exchange for automatic and matching Thrift Savings Plan (TSP) contributions, a mid-career continuation pay bonus and options to receive a portion of retirement as a lump sum.
Proponents say the new structure will offer greater financial flexibility to young service members and point to the fact that a much higher percentage of service members will leave the military with at least some retirement savings. Look a bit deeper, though, and you’ll find that this enhanced flexibility comes at the cost of significantly less financial certainty for the next generation of retiring service members, whose success in the new system will depend – far more than ever before – on making prudent financial decisions at several key junctures of their careers.
The First Command Financial Behaviors Index® reveals two out of five career service members want to opt in to the military’s new Blended Retirement System
Amid growing demand for professional advice on the government’s new military retirement system, First Command Financial Services, Inc. is rolling out a new planning tool designed to help current active-duty families decide between opting in to the new, blended retirement plan and sticking with their traditional pension.
Service members who expect to make a career out of the military prefer to stick with a traditional pension rather than opt for the newly-approved retirement reforms in the 2016 National Defense Authorization Act, reinforcing the value of guarantees in ensuring lifetime financial security.
Career military families who work with a financial advisor are more likely to participate in the federal government’s Thrift Savings Plan (TSP), reinforcing the value of professional guidance in amassing retirement assets.
To read more, visit the First Command News & Media page.
“Military retirement is about to get more complicated and less guaranteed.”
Interested in comparing the value of your benefits in the current retirement plan to the projected value of your benefits in the new Blended Retirement System? Our Advisors are armed with a powerful proprietary tool that can help you do exactly that. Schedule a complimentary consultation today.
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