ROTC & Military Academy Graduation Planning

The Blended Retirement System (BRS) is the military retirement system which includes two components: A guaranteed lifelong pension for those who serve 20 years or more, and the opportunity to save, invest and receive government matching contributions through the Thrift Savings Plan. For those who transition from the military prior to 20 years of service, the BRS ensures that a service member can leave the military with retirement savings similar to those someone might accrue in the private sector.

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The Thrift Savings Plan (TSP) is a retirement savings and investment plan available to all members of the U.S. Armed Forces. It is designed to offer savings and tax benefits similar to those that corporations offer their employees under 401(k) plans. The TSP is known as a “defined contribution plan,” meaning that participants contribute designated amounts to the plan through payroll deductions.

Participation in the Thrift Savings Plan is an excellent opportunity to build wealth over time. We strongly recommend that all service members allocate at least five percent of their paychecks to their TSP accounts to maximize the matching government contributions.

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When it comes to finances, new second lieutenants and ensigns commissioning through service academies and ROTC scholarships generally have an advantage most American college students do not: they have relatively little student debt. What’s more, these new graduates have immediate employment.

Even with these advantages, some newly commissioned officers are tempted to accept military career starter loans. These personal loans may be helpful to consolidate debt or bridge the gap between graduation and the first paycheck, but they can also lead to unnecessary debt, bad credit and poor financial habits.

Before taking out a career starter loan, talk it through with a Financial Advisor to make sure it's necessary and there is a plan to pay it back. After all, financial literacy and long-term financial health begin with responsible debt management, budgeting and a disciplined approach to savings.

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Newly commissioned officers expect to be relocated to their first duty station. While much of this expense is covered by the military, there may be storage or travel costs incurred that must be paid out of pocket. A base representative or the Defense Travel Management Office can provide more details.

Over the course of their career, service members are likely to experience a Permanent Change of Station (PCS)
at least once every few years. While there are a number of PCS allowances, it’s a good idea to plan ahead for unexpected and unreimbursed expenses as well. Having a plan in place can ensure a smooth career transition and help to avoid financial pitfalls.

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