Did you opt in to BRS?

They offer a calculator for you to see which would be more beneficial to you in the long run. If you're staying in for 20, high 3 is a clear cut better deal.

 

The new BRS is actually a much better system, i wish i came up under it.

Let's say you retire as an E-7. Under the current retirement system (50% pension), E-7 high-3 would be $4,625.10 per month (or $55,501.20 per year). So they would get $2,312.55 per month (or $27,750.60 per year) for retirement.

Under BRS (40% pension), an E-7 high-3 would receive $1,850.04 per month (or $22,200.48 per year). A loss of $462.51 per month (or $5,550.12 per year) compared to 50% pension.

You should more than be able to make up the loss of $462.51 by putting in 5% TSP and receiving 5% matching. Compound interest over 35+ years in TSP, even at a moderate 5% return rate should put any person at nearly $400,000 in your TSP by the age you can begin collecting it.

 

The biggest variable is the money lost from high-3 @ 50% vs 40% over the lifetime of receiving it.

When I did the calculator I added in all the kickers for specific MOS retainers, and did the max TSP matching, and I still came in around 40k shorter than the legacy high-3 would give me.

 

The problem with that is the average EM can't even spell TSP or investing, and if they can spell it a lot of them are so fiscally and socially irresponsible that saving even 5% is often a bridge too far for even senior EMs.

 

Seems everyone has a grasp on it now, but it really comes down to what you're comfortable doing. I'm at 6yrs AD right now and intend to stay high 3 at 20. Have been contributing 10% into a TSP mix, and the extra 5% matching didn't come close to making up for the 50% -> 40% drop. The whole MOS mid career bump is a gimmick, and I imagine they won't go much higher than the +2mo basic pay.

 

I agree that the services will probably never offer the 13x bonus authorized by law. For people not intending to stay 20 years BRS is great. For those who are unsure if they will it offers a nice combination of increased retirement investments they keep if leaving service prior to 20 and guaranteed pension if they stay.

 

Just didn't make sense for me to switch at 7 years active when it opened up for me to do so.

 

Opting in mainly because I'm getting out anyway, its better for the guys that don't plan on sticking around for the long haul.

 

Gladly denied that program. been in for 11 and plan on doing over 20 yrs. and I have not played enough with it from the beginning. I do it is a great program for anyone doing a short term, but just not for me.

 

I don’t recommend it for anyone who has more than 8 years of service but I personally opted into it. I have 18 months of service and will reap the benefits of the matching for my entire career if I stay and will have a nice nest egg if I leave early.

Also, food for thought, to the guys who say the legacy system comes out better, don’t forget that your pension is tied to how long you live. In the unlikely event that you die in your 40s or 50s, you’ll have gotten almost nothing from your pension, but could have had a fat nest egg to leave to your heirs. Eventually, yeah you will outpace the BRS retirement, but that’s assuming you live until you’re 70+. Which is likely, but you never know.

 

While i get what you're saying, there is nothing preventing the legacy people from contributing to the TSP, an IRA, and taxable investments and leaving said nest egg to heirs. Between the TSP and an IRA a person can put 24K in tax advantaged accounts in 2018(either after or pre tax). Once the plan to fill the tax advantaged space is complete, you put it in taxable.

While the match on the BRS is nice(and it's about time), it does not make a huge difference in tax advantaged savings.

 

You’re right in that regard, but the potential gains from compound interest are multiplied by them doubling your contributions if you do the full 5%.

 

If you want to see serious results from your tsp, you need to front load as much as possible. 5% is nice, but you should be shooting for 10-15% total, more if you can afford it. Whenever I deploy or am in a situation (like stationed in Hawaii) where I have tons of disposable income I put in 15-20% or more. My TSP is about 100k now and I'm 30yrs old. My return on investment over a 35yr horizon will keep me quite happy in my old age esp. if I continue to contribute. But my nest egg is big enough now that residual income from my high 3 + social security should keep me fairly well situated.

 

I have about 12 years in with 4 being active and 8 being reserves. I did not opt in.

 

I did not opt in. I crunched the numbers carefully, and figured this: You are choosing between the pension percentage you give up (50% vs 40%) and the POTENTIAL benefit of that 5% matching. I roughly calculated that your overall rate of return under BRS would need to be at least 9% or more for it to be worth it.

In addition, the max pension percentage under BRS is 60%, compared to 75% under the high-3. I'll take my guaranteed money over the gamble any day. I do not expect a 9% rate of return on my TSP...

 

It’s only guaranteed money if you stay, BRS is guaranteed money no matter what.

 

True, if I did not plan to work towards a 20+ year retirement, I may have given BRS another look. Glad I had a choice though.

 

I opted into BRS. My ADSC for pilot training is ten years, at which point I'll have 12 years active service. However, I am on the fence of whether I am going to stay in or not. Made it an easy decision, rather leave with something rather than nothing, and the BRS really isn't a bad system, especcially maxing out the agency match. Dont' want my decision to stay in, or get out to be tied completely too if I chose to switch to blended or not, so I just switched.