By Carla Olivo, PCSgrades Director of Strategic Communications

A major overhaul of the military retirement system goes into effect this year. With only a month to go, the new Blended Retirement System is raising a lot of questions and a few big concerns. Additionally, some are wondering how the new plan affects them. Others are asking if it’s really an improvement over the current system. Whether your military career will soon be ending or your journey has just begun, it’s never too early to start planning.

If you joined service before January 1, 2006, you’ll be grandfathered into the current retirement system. If you joined after December 31, 2005, but before January 1, 2018, you’ll have the choice to enroll in the new Blended Retirement System or remain in the current system. Anyone joining the service after December 31, 2017, will be automatically enrolled.

Understanding the Blended Retirement System and the Changes it brings

The Blended Retirement System retains the traditional pension but adjusts the years of service multiplier for calculating monthly retired pay from 2.5% down to 2.0%. Additionally, the Thrift Savings Plan (TSP) includes a 1% automatic government contribution and up to an additional 4% matching contribution. Also included is a continuation pay provision which is meant to encourage service members to serve beyond the mid-career point. Continuation pay is a direct cash payout in return for a commitment of four more years of service.

Under the current retirement system, just over 80% of those who join the military leave with no retirement benefit. Under the new system, it’s expected 85% of service members will receive a retirement benefit, even if they don’t qualify for a full monthly retirement pension.

Sharing Resources

PCSgrades is built on providing trusted resources to help our fellow military and veteran families achieve and maintain the highest levels of financial readiness. We’re glad to share a one-of-a-kind booklet from our friends at the Defense Credit Union Council. This informational booklet is aimed at educating our community on the important changes occurring with the DOD’s new Blended Retirement System.

We highly encourage you to download this incredible new booklet. Learn all you can about this critical topic for the security of your family’s long-term financial success! You can also access some great information on the changes from Military Finance Coach Kate Horrell. Time is running out! Educate yourself so you can make the best decision for yourself and your family.

PCSgrades is a free ratings and review platform created BY and FOR military and veteran families to help with must-solve relocation problems such as neighborhoods, base housing, realtors, mortgage lenders, schools, and more!

Carla Olivo has garnered numerous journalism awards including the Associated Press award for Spot News Reporting, News Writing, and Documentary Reporting.  She lives in Northern Virginia with her husband, a retired USMC Lt. Colonel and their two children.

Carla Olivo

Director Strategic Communications