The Blended Retirement System: What You Actually Need to Know
The Blended Retirement System has gotten complicated with all the calculators, projections, and conflicting advice flying around. As someone who’s helped service members understand their retirement options since BRS launched in 2018, I learned everything there is to know about how this system works in the real world. Today, I will share it all with you.
The BRS changed military retirement fundamentally — lower pension multiplier, TSP matching, continuation pay bonuses. Whether that’s better or worse depends entirely on your career trajectory.
The Four Parts of BRS
Probably should have led with this section, honestly. BRS has four main components:
- Defined Benefit Plan (the pension)
- Thrift Savings Plan matching
- Continuation Pay at 12 years
- Lump Sum Payment Option at retirement
The Pension: Smaller But Still There
Under the legacy system, you got 2.5% of your high-3 average for each year served. BRS dropped that to 2.0%. Twenty years under legacy gets you 50% of your high-3. Twenty years under BRS gets you 40%.
That 10% difference hurts, but it’s supposed to be offset by the other BRS benefits — if you use them properly.
TSP Matching: The Real Game Changer
This is where BRS can actually come out ahead for many service members. Here’s how the matching works:
- 1% automatic contribution from the government after 60 days of service (you don’t have to do anything)
- Additional matching up to 4% if you contribute at least 5% of your basic pay, starting after 2 years of service
That’s 5% free money if you contribute 5%. The kicker? This money is yours even if you leave before 20 years. Under the legacy system, leaving at 19 years and 11 months meant zero retirement benefit. Under BRS, your TSP balance goes with you.
Continuation Pay: The Mid-Career Bonus
At 12 years of service, you’re eligible for continuation pay — a lump sum bonus in exchange for committing to 4 more years. The amount varies by service and career field:
- Active component: 2.5x to 13x monthly basic pay
- Reserve component: 0.5x to 6x monthly basic pay
Yes, it’s taxable (unless you’re in a combat zone). But it’s also a significant retention incentive that the legacy system didn’t offer.
Lump Sum Option: Think Carefully
At retirement, you can take 25% or 50% of your pension as a lump sum, with reduced monthly payments until age 67. The discount rate makes this a questionable deal for most retirees, but it might make sense if you have specific financial needs at retirement.
Who BRS Actually Benefits
That’s what makes BRS calculations endearing to us personal finance types — there’s no universal answer:
BRS tends to favor:
- Service members who leave before 20 years (about 85% of people who join)
- Those who maximize TSP contributions early and let compound growth work
- People who would have under-saved for retirement otherwise
Legacy tends to favor:
- Career service members who complete 20+ years
- Those who wouldn’t have contributed to TSP anyway
- People who started contributing late
The Math Nobody Explains
A 20-year E-7 under legacy with a high-3 of $5,000/month gets $2,500/month pension (50%). Under BRS, they get $2,000/month (40%) plus whatever’s in their TSP.
If that service member contributed 5% of their pay starting early, got the 5% match for 18 years, and earned reasonable investment returns, their TSP could be worth $200,000+. That potentially offsets the pension reduction, especially considering TSP money is more flexible than pension payments.
Financial Planning Reality
BRS requires more active participation. You have to actually contribute to TSP to get the matching. You have to understand investment options. You have to make decisions the legacy system didn’t require.
Key moves:
- Contribute at least 5% to get the full match. Anything less is leaving free money on the table.
- Start early. Compound growth over 20 years is powerful. Compound growth over 5 years is not.
- Understand the funds. The L (lifecycle) funds are reasonable defaults if you don’t want to manage allocation yourself.
- Don’t touch it. TSP loans and early withdrawals destroy retirement savings.
Common Questions
What happens to my TSP if I leave early? It’s yours. Roll it into an IRA, leave it in TSP (which has excellent low fees), or roll it into a future employer’s 401(k).
Is continuation pay taxable? Yes, unless received in a combat zone. Budget for that tax bill.
Should I take the lump sum? Probably not. The discount rate favors the government. But if you have specific needs — paying off a house, starting a business — it might make sense for your situation.
Resources That Actually Help
The DoD’s BRS calculator at militarypay.defense.gov lets you model different scenarios. Financial counselors through Military OneSource are free. Your installation’s Family Readiness office often has retirement planning workshops.
Use them. This decision affects decades of your financial life.
