RAMSTEIN AIR BASE, Germany -- Retirement is something every service member will think about, whether it be tomorrow or 20 years from now. But, do Airmen within the Kaiserslautern Military Community know what their retirement options are?
The Thrift Savings Plan is a Federal Government-sponsored retirement savings and investment plan. The TSP offers the same type of investment savings and tax benefits that many private corporations offer their employees under 401(K) plans.
The retirement income service members receive from their TSP account will depend on how much they have contributed to their account during working years and the earnings on those contributions, according to the Department of Defense.
Beginning in 2018, service members can get automatic and matching Thrift Savings Plan contributions and mid-career compensation incentives in addition to a monthly annuity for life.
Members entering service after Jan. 1, 2018, will be automatically enrolled into the new Blended Retirement System, while current members may opt into the new BRS if they choose.
“The blended retirement system is a new system developed for everyone instead of a certain group of people,” said Megan Lefevre, Airman & Family Readiness Center financial counselor. “The old retirement system was meant for people who are staying in a long time, whereas the new system addresses the fact some people are joining the service for a short time. So if you joined the military to fund your education and then get out, the old retirement system really didn’t affect you at all.”
In this new system, there is something a service member can gain, no matter how long their service. At least one percent of a member’s base pay will automatically be deposited to the TSP, however, members may elect to contribute up to five percent which will be matched by the government.
“It comes down to how you can optimize the amount of money you get,” Lefevre said. “For people staying in 19 years and 364 days, the new system is better because you’d leave with nothing in the old system.”
At 20 years, it becomes unclear as to what is better for the service member.
Under the old system, when the member dies, their pension stops. With TSP, even if a member dies and they haven't used all the funds, those funds can be given to whoever inherits their estate.
“The new Blended Retirement System gives members that don't know if they want to stay in for 20 years a chance to receive the benefit of compensation for time served,” said Airman 1st Class Vincent Conley, 86th Medical Operations Squadron mental health technician. “This new system also sways members to set up their TSP, which is also, in my opinion, beneficial as military members.”
There are endless scenarios that could apply, but it is important members understand every individual’s situation is different, and it’s highly recommended they make an appointment with an A&FRC financial counselor to ensure they are making the right choice for their future.
Financial counselors from the A&FRC also teach a class every other week on the BRS, which is very similar to the online training members are required to take before they are able to opt-in.
Once members officially choose to opt-in, the action is irrevocable.
For more information on BRS and how to opt-in or to make an appointment with an A&FRC financial counselor, please contact the A&FRC at DSN 480-5100 or 480-7185, or commercially at 06371-47-5100 or 06371-47-7185.