There's a lot to know about the Blended Retirement System (BRS), and I've been trying to give it to you in bite-sized chunks. Today, I want to talk about an important feature of Thrift Savings Plan (TSP) balances vs. military retirement pay: TSP balances can be left to your survivors when you die.
As we all know, military retirement pay ends with the death of the military retiree. In some sense, this makes military retirement a financial gamble. I know folks who have died within a few years of retirement, and I know people who have lived for 50 years post retirement. In order to mitigate the risk of the service member dying much before his or her survivors, the Department of Defense offers the Survivor Benefit Plan (SBP), an insurance-type product that provides income for survivors after that military retirement pay ends.
With the implementation of the military's new Blended Retirement System (BRS), many people have to chose whether to opt-in to the BRS or remain in the military's old, legacy retirement system. Smart folks are considering every aspect of the two plans in order to work out which one is right for them. As you should know by now, the legacy retirement plan includes larger military retirement pay, and the BRS has a 20% smaller military retirement pay calculation but also adds in government contributions to the service member's TSP plan.
Considering the inheritability of TSP balances may be the deciding factor between the legacy retirement system and BRS, particularly for families who don't find SBP to be a good fit for their particular needs.
By now, military members should have received the in-person briefs and online training about the BRS. If you haven't, take some time to learn this information. The online training is available through Joint Knowledge Online, your base has Personal Financial Counselors/Personal Financial Specialists, and blogs just like this have been dissecting the topic for months.
For more information about the Blended Retirement System, see