Breaking Down the Blended Retirement System

Making Sense of Your Military Retirement Plan

According to our 2019Military Spouse and Family Survey, 75% of the respondents are concerned about long-term savings. This may be because one in three do not expect their spouse to still be serving in two years, leading to uncertainty about the future. In fact, the Department of Defense (DoD) estimates that 81% of service members exit the military before they reach the 20-year prerequisite for career retirement.

Under the previous retirement system, anyone who left before the 20-year mark would receive no government retirement benefits at all. However, that all changed when the government launched the Blended Retirement System (BRS), which is much more flexible and can help younger service members get a strong start on retirement and long-term savings.


Blended is a fitting description. The new military retirement plan combines elements from the previous system to function more like a civilian 401(k) plan. The key difference is that the government now offers matching contributions, which was not the case in the older system.

As of January, 2018, any new service member who joins the military is automatically enrolled in the Thrift Savings Plan (TSP). By default, they contribute 3% of their base pay. After 60 days of service, the DoD automatically matches 1% of base pay into their TSP. This plan offers a golden opportunity to build toward retirement with minimal effort.

After two years, the maximum matching contribution climbs to 5%. So if you contribute 5%, the government also contributes 5%. Likewise, all service members who complete two years of service are considered fully vested, meaning they have ownership of their retirement portfolio, entitled to the contributions and earnings in full.

After 12 years, you may receive two and a half times your monthly basic pay as a lump sum, called Continuation Pay, in exchange for an agreement to perform additional obligated service. Treat this like a bonus and put as much into savings as you can afford.

Those who stay in service for 20 or more years will also receive an annuity similar to the legacy system. Check out this fact sheet for details about how annuity payments are calculated in the Blended Retirement System.


If you have at least two years of service, you should consider contributing 5% to earn the maximum contribution possible. This is absolutely vital to a healthy retirement plan, and you are costing yourself free money if you don’t contribute at least that much. You can easily adjust this in myPay on the DFAS website. 


It’s never too early to start planning for life after the military. Once you depart, you’ll need to decide what to do with your TSP account. There are five options:

  • Leave it alone
  • Roll it into an IRA
  • Roll into a 401(k)
  • Withdraw your assets in a lump sum
  • Transfer into a qualified annuity

You can learn more about these options and what they mean in this informative article from The Military Wallet.


You’re not going to accomplish your long-term goals for saving money unless you first address your short-term goals. Every dollar counts, so remember to start small and think big. For more financial education, tips, and resources, check out our Military Money Smarts learning center.


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