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Military Blended Retirement System Spreadsheet

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A lot has been written about how to decide if the new Blended Retirement System (BRS) is better than the US military’s old retirement system. Most calculators, however are overly dependent on the service member forward projecting their:

Overly cautious or optimistic guesses can have huge consequences.

It is stone cold obvious, to me, that anyone who plans on never staying to 20 years should jump on board the new system. It gives you access to a TSP match, continuation pay, and transferable benefits.

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What does a member stand to gain from the BRS, in real terms?

Some assumptions:

Doug Nordman gives us two ways to calculate a pension: Lump sum and TIPS

[Nords note from other reader comments:  I realize TIPS and I bonds aren’t exactly equivalent to a lifetime inflation-adjusted annuity, yet they’re close enough for these comparisons.  The following examples used an interest rate of 2.5% when this post was written, but pick your own rate for the date you’re reading this.]

2 ways to calculate

Lump = 3000/m *12*35

TIPS = (3000/m*12 )/ .025

2017 O-4  w/20 years pay = $7685 monthly defined benefit = Old $3842     BRS = 3073

2017 E-7 w/ 20 years pay = $4567 monthly defined benefit = Old $2284     BRS = 1827

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The resulting pension figures are fairly obvious. Using Doug’s calculation methods, we see the following:

Image of the lifetime value of a military pension for both officers and enlisted ranks | The-Military-Guide.com

How might our members’ TSP accounts grown, had they chosen the BRS?

Image of a spreadsheet showing the growth of a military Thrift Savings Plan account for officers and enlisted with the new Blended Retirement System | The-Military-Guide.com

Our colored cells highlight three common exit points in the military.

O-4

E-7

What do you think is the risk versus gain of jumping on the BRS? Might you make it to 20 years anyway? Will it add up in the end?

Here is the Google Sheets file so you can fill in your own numbers.
[Nords note:  Spreadsheet wizards should repeat the calculations for your expected years/ranks, and this time include the effect of investing the 12-year continuation bonus.]

Bio: I’m an active duty Coast Guard officer, currently stationed in Boston with my wife, dog, and our first child on the way. I’m chronicling our journey out of debt and into financial independence at http://www.militaryfire.com/

Disclaimer: I am not a licensed financial counselor of any sort. The opinions contained here are my own. Investing has implicit risk, past gains are no guarantee of future returns. You may lose money, including the principal. These opinions are my own, and are not endorsed by any of the armed services or the US Government.

Related articles:

The present value estimate of a military pension

The new military Blended Retirement System

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