The Blended Retirement System (BRS) is a military retirement system that combines elements of the legacy retirement system with benefits similar to many civilian 401(k) plans. It was designed to provide retirement benefits to a greater number of service members, as opposed to the traditional system which heavily favored those who served for 20 years or more.
BRS incorporates three main components: a defined benefit (pension), a defined contribution (Thrift Savings Plan), and continuation pay, which is a mid-career bonus payment.
The BRS Opt-In Course is an educational program designed to provide eligible service members with the knowledge and tools necessary to make an informed decision about their retirement options.
The course delves into the mechanics of the BRS, contrasts it with the legacy retirement system, and provides a comprehensive understanding of the benefits and potential drawbacks of each system. The ultimate goal is to empower service members to make an educated choice about their financial future.
The BRS Opt-In Course is primarily designed for active duty and Reserve service members who entered the service between January 1, 2006, and December 31, 2017. These service members are eligible to choose between the BRS and the traditional, or legacy, retirement system.
Additionally, the course is also useful for new service members who joined after January 1, 2018, and are automatically enrolled in BRS, as it provides valuable insights into managing and maximizing the benefits of the system.
Blended Retirement System Opt-In Course Answers
BRS Opt-In Course Pre-test Answers
| Question | Answer |
|---|---|
| The Blended Retirement System (BRS) and the legacy “High-3” retirement system both require _____ Years of Service (YOS) in order to qualify for monthly retired pay. | 20 |
| A pension is _____. | a retirement system in which an employee continues receiving regular income after he/she retires |
| Before making a final decision on a Uniformed Services retirement plan, Service members need to consider _____. | all of the above |
| The legacy “High-3” retirement system for the Uniformed Services requires Service members to serve _____ years of active duty, or qualifying Years of Service for the Reserve Component, in order to qualify to receive the defined-benefit retired pay. | 20 |
| _____, is an incentive designed to encourage members to continue serving at critical points in their career and may be provided to you mid-career for your commitment to at least 3 additional years of service. | Continuation Pay |
| The BRS calculator enables you to _____. | estimate your potential retirement savings and income |
| The following individuals can make the final BRS opt-in decision for you: | Only you can make this decision. |
| Money that is vested in a retirement account is _____. | the employee’s to keep along with all interest earned and employer-matching contributions |
| The addition of interest added to the principal in a retirement account over time is called _____. | compounding |
| Service member decisions to opt into the Blended Retirement System (BRS) _____. | cannot be reversed at any time once made |
| Which of the following are advantages to Service members who participate in the Blended Retirement System with respect to the Thrift Savings Plan? | Government-automatic [1%] contributions and Government-matching contributions up to an additional 4% of basic pay |
| You have the opportunity to opt into the BRS because you are either an Active Component (AC) member who will have completed fewer than _____ or a Reserve Component (RC) member who will have fewer than _____ as of December 31, 2017. | 12 YOS, 4,320 retirement points |
| Under the BRS, the basic components of your retirement plan are: (Select all that apply): | ~Eligibility for a Lump Sum payment option ~Monthly retired pay at 40% in return for at least 20 Years of Service ~Automatic 1% Government contribution to a Thrift Savings Plan account ~Up to an additional 4% Government-matching contributions to a TSP account based on Service member contribution rates |
| Financial experts advise you will need approximately _____ of your pre-retirement income in order to maintain your standard of living after you retire. | 80% |
BRS Opt-In Course Post-Test
| Question | Answer |
|---|---|
| The Opt-In Election Period begins ____. | January 1, 2018 |
| As of December 31, 2017, Reserve Component (RC) Service members with fewer than 4.320 retirement points will be ____. | Grandfathered into the legacy “High-3” retirement system and are eligible to opt into the BRS. |
| Which of the answers shows the correct retired pay formula for active duty Service members under the legacy “high-3” retirement system? | 2.5% X YOS X average of the highest 36 mo. of basic pay |
| Opt-in eligible Service members who elect to remain in the legacy “High-3” retirement system are ____. | * Eligible to participate in the Thrift Savings Plan (TSP) * Not eligible to receive matching contributions from the Government for their TSP contributions. |
| Active Component (AC) Service members who do not choose to opt into the BRS by December 31, 2018 will be ____. | Choosing to remain in the legacy “High-3” retirement system |
| As of December 31, 2017, Active Component (AC) Service members with fewer than 12 complete Years of Service (YOS) will be ____. | Grandfathered into the legacy “High-3” retirement system and are eligible to opt into the BRS. |
| Which of the options listed pertain to the Blended Retirement System, but not the legacy “High-3” retirement system? | * Automatic Government TSP contribution of 1% of a Service member’s basic pay * Eligible for Government-matching TSP contributions of up to 4% of a Service member’s basic pay |
| The effective date for the BRS is ____. | January 1, 2018 |
| On average, the largest portion of the cost of living during retirement goes to ____. | Housing |
| The primary sources of income in retirement include: | * Earned income * Personal savings and investments * Social Security retirement benefits * Employer-provided pensions |
| Vesting is defined as ____. | The right an employee has to keep the money, and interest earned on that money, their employer contributed to their retirement account. |
| ____ allows you to not only make money on your contributions to your TSP account, along with any Government-automatic and matching contributions, but also on the money earned by those contributions. | Compound interest |
| Service members who elect to opt into the Blended Retirement System must serve ____ complete years in order to keep the Government-automatic (1 percent) contributions. | 2 (years) |
| Service members may receive Continuation Pay ____, based on the needs of their Service, in return for their commitment to serve at least 3 more years. | Mid-career (8-12 YOS) |
| Which of the following is NOT a retirement benefit under the Blended Retirement System. | Monthly retired pay in return for at least 20 Years of Service |
| The Uniformed Services pension plans are based on ____. | The average of the highest 3 years of basic pay |
| A “working-age retiree” from the Uniformed Services is ____. | Someone who retires from the services, but continues to work after separating. |
| Which of the following financial counselors are authorized to make your retirement plan decision for you? | None |
| The BRS calculator enables Service members to ____. | Compare potential retirement savings and income for different retirement system options, projected career progression, and TSP contribution rates. |
| Service members who take 25% to 50% Lump Sum Option will receive ____ than they would have gotten if their retirement benefits were spread out over normal monthly payments. | Less in overall benefits |
The BRS Opt-In Course
The primary objective of the BRS Opt-In Course is to enable eligible service members to make informed decisions about their retirement options. The course aims to:
- Provide a thorough understanding of both the traditional retirement system and the Blended Retirement System.
- Explain the mechanics of how BRS works, including the defined benefit, defined contribution through Thrift Savings Plan (TSP), continuation pay, and lump sum payments.
- Help service members assess the benefits and potential disadvantages of each system based on their personal circumstances and career plans.
- Equip participants with the knowledge to effectively manage their TSP contributions under the BRS.
- Promote financial literacy, emphasizing the importance of retirement planning and long-term financial stability.
Structure of the Course
The BRS Opt-In Course is structured into several modules, each focusing on a key aspect of the BRS. These include:
- An overview of BRS and its components.
- A comparison of the BRS and the traditional retirement system.
- Detailed discussions on TSP, continuation pay, and lump sum payments.
- Decision-making strategies for choosing between BRS and the traditional system.
- Tips and guidance on managing TSP investments.
- Practical scenarios for calculating potential retirement benefits under each system.
Each module consists of an instructional segment, followed by quizzes or activities to reinforce understanding of the material.
What to Expect
Participants of the BRS Opt-In Course should expect to gain an in-depth understanding of the BRS and its potential impact on their retirement benefits. Through engaging content and interactive activities, service members will learn to navigate the complexities of military retirement systems, and apply this knowledge to their unique situations.
By the end of the course, participants will be equipped with the necessary tools to make informed decisions about their retirement planning and to strategically manage their TSP investments under the BRS.
Calculating Your Retirement Pay under BRS
Your retirement pay under the Blended Retirement System (BRS) is influenced by several key factors:
- Service Years: The number of years you serve in the military directly impacts your defined benefit. Under BRS, you’ll receive 2% of your high-3 average basic pay for each year of service, as opposed to 2.5% in the legacy system.
- Rank and Pay: The amount of your basic pay, largely determined by your rank and time in service, also plays a significant role in calculating your pension benefit.
- TSP Contributions: Your defined contribution portion depends on how much you and the government contribute to your Thrift Savings Plan (TSP) account, as well as the return on those investments.
- Continuation Pay: This is a one-time bonus paid around mid-career (after 12 years of service) if you commit to at least four more years. The amount varies depending on the branch of service and other factors.
- Lump Sum Option: At retirement, BRS allows you to take a lump sum payment of up to 50% or 25% of your discounted retirement pay, which will lower your monthly retired pay until the age of 67.
Tools and Calculators
A variety of tools and calculators are available to help you estimate your retirement pay under BRS. These include:
- BRS Comparison Calculator: This tool, provided by the Department of Defense, allows you to compare estimated benefits under both the BRS and legacy retirement system.
- TSP calculators: Several online calculators can help you estimate future balances and potential income from your TSP account based on different contribution rates and investment returns.
- Military Pay Calculator: Various online resources provide calculators to help you estimate future military pay based on projected rank and years of service.
Remember, these tools provide estimates and should be used as part of a broader retirement planning strategy. It’s always a good idea to consult with a financial advisor to better understand your specific situation.
Personal Financial Management and BRS
The Thrift Savings Plan (TSP) plays a crucial role in the Blended Retirement System. It operates much like a civilian 401(k) plan, allowing service members to contribute a portion of their basic pay into a tax-advantaged investment account. Here are the key investment options you have under TSP:
- G Fund (Government Securities Investment Fund): This fund invests in short-term U.S. Treasury securities. It offers stability of principal and a reasonable rate of return.
- F Fund (Fixed Income Index Investment Fund): This fund offers a broad exposure to the U.S. bond market, which includes government, corporate, and mortgage-backed bonds.
- C Fund (Common Stock Index Investment Fund): The C Fund is designed to match the performance of the S&P 500 Index and is suitable for investors looking for long-term growth.
- S Fund (Small Cap Stock Index Investment Fund): This fund tracks an index representing the U.S. small to mid-size companies that are not included in the S&P 500.
- I Fund (International Stock Index Investment Fund): The I Fund provides exposure to international equity markets.
- Lifecycle (L) Funds: These are target-date funds that automatically adjust the investment mix over time according to a time horizon set by the participant.
Your investment choice should align with your financial goals, risk tolerance, and investment timeline. Consider diversifying your investments to reduce risk and enhance potential returns.
Managing Your Finances for Long-Term Success
Adopting a long-term view towards managing your finances is crucial for achieving financial success. Here are some strategies:
- Budgeting: Establish a budget that considers your income, living expenses, savings, and debt repayments.
- Saving and Investing: Regularly contribute to your TSP and take full advantage of matching contributions under BRS. Consider investing in an Individual Retirement Account (IRA) or other savings accounts for additional retirement security.
- Debt Management: Prioritize paying down high-interest debts. Always meet minimum payments to avoid late fees and credit score damage.
- Emergency Funds: Maintain an emergency fund equivalent to three to six months of living expenses to manage unexpected financial shocks.
- Insurance: Maintain appropriate insurance coverage, including life, health, and property insurance, to protect against potential risks.
- Professional Advice: Consider seeking advice from a certified financial planner or counselor to tailor a financial plan to your needs.
Remember, financial management is a lifelong process. Regular reviews and adjustments of your financial plan will ensure it continues to meet your changing needs and goals.
