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The military's Blended Retirement System (BRS), which provides a portable employer's retirement account for servicemembers who don't serve until retirement eligibility, is in full effect.
Until Dec. 31, 2018, about 1.6 million servicemembers were eligible to switch from the traditional retirement system to the BRS. That window is closed, and all incoming servicemembers already are automatically enrolled in the BRS; they won't be part of the legacy system and its 20-year-benchmark pension.
“It's not too early to start thinking of your future,” said Lt. Col. Shane Ostrom, USAF (Ret), CFP, program director for finance benefits information at MOAA. “The sooner you start retirement investing, the more wealth you create for your 40 years of unemployment (retirement).”
DoD has provided multiple education resources, including a calculator that will help estimate earning's growth under the BRS. MOAA's BRS guide, which was first published in the member-exclusive Military Officer magazine, is available here.
If you're in the BRS system, how do you maximize your earnings? Ostrom offered some basic guidance for those getting started:
Plan for the Future: Focus some of your efforts to long-term financial goals. Ostrom said he knows junior members are not usually thinking about retirement, but the earlier you start saving, the more money will accumulate for your retirement. “You're thinking about paying off student loans and climbing the career ladder,” he said. “But be ready to plan for retirement when you're 25. Time is your greatest asset; procrastinators will come up short at retirement.”
Don't Leave Money on the Table: Contribute to your plan to maximize the match as soon as you can. If possible, at a minimum contribute the maximum allowable 5 percent to obtain the DoD's 5 percent match. “It will take at least a 10 percent to 15 percent of income contribution over your working life to accumulate the wealth needed for a long retirement,” Ostrom said.
Educate Yourself: Understand investment strategy and read about dollar-cost averaging. “That's where MOAA comes in,” Ostrom said. “We're the best counselors to help. We're unbiased counselors that can teach you how to be a good consumer in the financial world.”