USAA And The Final Month To Opt In To The Military Blended Retirement System


Here’s the latest information and tools to make your military Blended Retirement System decision– and a new way to think about your career and your choices.

[Note: I’m participating in Kate Horrell’s #BRSBlitz initiative. I’m not compensated by USAA for this campaign and you won’t see any FTC disclosures like “#USAAPartner”, “#ad”, or “#sponsored” in my social media.

It’s far more personal than my money: my daughter and my son-in-law were among the very first to opt in to the BRS on 1 January 2018, and by December they’d already earned 11 months of 5% matching TSP contributions. They’re going to stay in uniform as long as they’re feeling challenged & fulfilled, but they’ll also reach financial independence on their own high savings rate– even without a military pension.]

The latest Dept of Defense press conference

Image of the USAA infographic explaining the military Blended Retirement System changes to the legacy High Three military pension. | The-Military-Guide.com

(Click the image for a larger version.)

For those of you just joining us (or only now hearing it from your servicemember), in January 2018 the legacy High Three military retirement system changed to a Blended Retirement System.

The BRS comes with a smaller military pension and adds a matching and vesting schedule to the Thrift Savings Plan. The change impacts those who joined the service between 2006 and 2017 or have fewer than 4320 Reserve retirement points. The details and exceptions (and the federal laws) are covered in paragraphs 6.b.(2)-(6) of the DoD implementation policy guidance.

If you’re eligible to opt in to the BRS, you have to make your choice before 31 December 2018.

Last week DoD held a press conference with an update on the BRS numbers. You can read the details on this post, but here are the high points:

 

1. About 25% of the eligible active-duty servicemembers have opted in to the BRS. That’s 1 in 4.

2. The Marines have a higher opt-in rate than any other uniformed service. They’re lookin’ pretty prescient right now, both for their BRS training and their initiative.

DoD also said that they will not ask Congress for an extension on the opt-in window. It’s going to close forever on 31 December, and this time they really mean it.

In other words, 75% of you think that you’ll be the 15% who serve at least 20 years in the military to cliff-vest for a pension. 3 out of 4 of you think that you’ll be the 1 out of 6 who will receive more money from the High Three pension plan than from the Blended Retirement System. Doing the math, 9 of 12 of you think that you’ll be the 2 out of 12.

Seven of you in that 12– nearly 60%– are still going to turn out to be wrong about making it to a military retirement. Maybe it makes sense to have more BRS matching TSP contributions in your account.

The BRS office also released the new document “Blended Retirement System Myths“. Click on that link to open a PDF which addresses the following financial urban legends:

  • “BRS is a bad choice and I should not opt in.”
  • “I walk away with less money than if I remain with the legacy “High-3” system.”
  • “The only reason government wants me to opt in is just because it saves them money.”
  • “I can’t afford to contribute to my retirement.”

You don’t need a doctorate in probabilities & statistics to make this choice. You just have to be as smart as a Marine.

Are you as smart as a Marine?

Don’t answer that yet.

If you’re all about the money:

Over four years ago, tens of thousands of military families told the Military Compensation and Retirement Modernization Commission that they wanted matching contributions in their TSP accounts. They wanted more money now because they knew that most of them weren’t going to make it to 20.

The BRS has distracted hundreds of thousands of servicemembers (and their families) with the math. Everyone wants to know which system will give them more money.

We generally agree that newer servicemembers should opt in to the BRS, because they’ll have more matching TSP contributions compounding for longer.

Does it make sense for servicemembers to opt in later in their careers? How late? Eight years of service? Nine years and four months? Eleven years and 364 days? Surely there has to be a discrete answer to a simple math question!

USAA’s Military Retirement Comparison Tool has been up and running for over 20 months, even longer than the DoD BRS calculator. (We posted about that back in March 2017.) It helps you compare the legacy High Three with the BRS. The calculator is free and available to everyone. You don’t have to be a USAA member and you’re not going to get spammed or upsold. This is just a free education & advice tool to help military servicemembers, especially if they could also someday be USAA members for life.

If you’re a USAA member then you can even ask questions of one of their financial advisors. For free.

The BRS calculator is at this link, but the USAA calculator is a valuable second check on the math– and a lot easier to use. Airmen MilDollar has done many many runs of the DoD BRS calculator. If you’re not sure about the numbers used by DoD or USAA, then Airmen MilDollar also has some impressive logic on the concept of estimating future investment returns.

Keep in mind that the numbers are lifetime results. If a calculator says that one system gives you $100,000 more, that’s spread out over a life expectancy of 40 years. (Hopefully, you can beat that longevity!) In other words, the difference is only $2500/year ($208/month) for the rest of your life.  That’s a couple of first-class airline tickets a year– and you can travel-hack your way to that.

You should also focus on the downside. If you do not reach retirement, how much do you gain for “almost” making it to 20? Hint: legacy High Three gives you nothing. Are you willing to make that bet? Or would you rather have more career flexibility and more money in your pocket no matter which choice you make?

By the way, DoD has deliberately avoided advising you about retirement financial planning and estate planning. DoD won’t tell you about the tax advantages of the BRS, or how you can reduce your Survivor Benefit Plan premiums with the BRS, or how you can pass on generational wealth with the BRS. But I will. You can also debunk all of your DoD conspiracy theories here.

Go ahead. Knock yourself out on the calculators and the spreadsheets and the sensitivity analysis. Make sure you include the Continuation Pay contract for your service, because that commitment can be served concurrently with every other commitment that allows it.

If you think you’ll end up with more from the BRS then stop reading and opt in now!

I’m not going to spend more time on the math, because every other military personal finance blogger (including me) has already beaten that into the ground. Next, I’m going to take a different approach.

It’s not about the money

Once you’ve worn yourself out on the math then you might be ready for true BRS enlightenment: it’s about the process, not about the goal. It’s about the lifestyle and flexibility, not the money.

Yeah, I know, “There he goes again, we just read this last month.” Well, I have a new perspective and perhaps a better explanation.

No math required. Strap in and hang on.

This epiphany came to me on the treadmill as I was reading Jeff Bercovici’s “Play On: The New Science of Elite Performance at Any Age”. I can read on my treadmill because it’s set at 3.5 MPH for a brisk walking heart rate of 125 beats per minute, my Maffetone optimal heart rate for training without injury.

Much to my surprise, by age 58 a human’s cardiac tissue is a lot stiffer. In my 20s I used to routinely hit a max heartrate of 190 BPM during workouts (and submarine casualties), but now I’m lucky to get above 160 without abruptly ending at zero. (Unfortunately, some of my shipmates have already tested that limit.) My aging body also no longer repairs itself as well as it used to. That’s an issue when you have knee injuries edging into osteoarthritis.

I’m running out of ways to build things up, and I’m keenly focused on preserving what’s left.

I share this information because in my 20s I was sublimely confident that I’d be running 10Ks and marathons well into my 60s… along with earning my 4th dan black belt in taekwondo and masters-swimming an ocean mile a day. Morally, mentally, and physically: all it takes is motivation, training, and persistence, right? Military servicemembers & veterans have dumpsters full of those qualities.

Welp, life happened. Somehow I mangled my knees in the line of duty, not due to my own misconduct. Maybe it’s genetic, or maybe it’s a career of standing on steel decks in bad Bates Corfams. I certainly never saw it coming, but I’m feelin’ it now.

Today I’d trade in every bit of my 30% VA disability rating (and the compensation) for the privilege of standing firmly yet comfortably on a stand-up paddleboard.  The wary surfers within 50 feet of me wish I could do that too.

Bercovici is also an aging athlete, and he has a very poignant interview about goal-setting with military veteran Eric Potterat. Dr. Potterat spent 10 years as the head psychologist for the Navy SEALs. (You can also thank him for designing the aviation community’s SERE school.) He’s learned a few things about human performance and resilience and he’s now directing the sports psychology of the LA Dodgers.

Potterat’s developed the “Circle Of Control” metaphor for factors that you control in your career: your attitude, your effort, and your actions. He trains warriors (and athletes) to focus on the process instead of the result.

The problem with focusing on an outcome is that you’re not fully in control on the factors impacting that outcome. If you focus on the process, then you can recover from unexpected setbacks– and maybe even still push through to the goal. Anticipate and react to the uncontrollable factors so that you won’t fail (or die trying) for a goal that unexpectedly needs a new plan.

I no longer have my youthful ambition of running marathons. My geezer goal is to surf as well as I can for as long as I’m able to stand on a SUP. I can control my exercise, my sleep, and my diet. I can’t control the waves– but I can learn to surf them. My process is to be as stable and as flexible as I can so that I’m resilient with a rogue wave, not rigid or brittle.

It’s about the process, not the outcome.

In the same metaphor, you can’t control the 20 years of your military career. You can’t say “I’m gonna go for 20 because I’m motivated, trained, and persistent.”

You can’t even say “I’m gonna go to 20 because I’m already halfway.” All that reflects is survivor bias. Just being in a community where 80% of the servicemembers reach retirement does not raise your personal likelihood that you’re going to be among them. (It only boosts your promotion rate.) Just making it to 10 years does not equip you with more skills or experience points to make it to 20.

In fact, the second decade of everybody’s military career is completely different than the first decade. As you approach the top of the billet pyramid, you’re much more likely to run out of good jobs and might even fail to promote.

Statistically, as we all know from investing, past performance is not an indicator of future results.  That’s true of military careers too.  Some of my readers insist that the BRS calculator is too optimistic. They claim that the last 50 years of investment returns (and inflation) don’t guarantee any calculator’s lifetime assumptions. Yet many of these people try to simultaneously maintain the cognitive dissonance that they’re going to gut it out to 20.

You can’t reach a goal just by persistence while hoping that nothing goes wrong. You have to assume adversity, and you have to make contingency plans.

The best you can do is to stay in your Potterat circle of attitude, effort and actions. Focus on the process, not the outcome. You can’t control everything about your career, but you can control your reactions and decide (in advance) what actions you might take.

Stay on active duty as long as you’re feeling challenged & fulfilled. When the fun stops, consider moving to the Reserves or National Guard– and then think about going full civilian.

While you’re doing that, don’t set the arbitrary goal of gutting it out to 20 and cliff-vesting a pension. When you encounter the factors outside of your control, the Blended Retirement System will give you more money in your TSP to handle life’s unpleasant surprises.

For those of you in your 20s, I appreciate your perspective. As I wrap up my sixth decade of life, I’ve discovered a few things which seemed ludicrous in my 20s. Everybody leaves the military someday.  Everybody eventually fails to promote to the next rank.  Everyone retires someday. You’d like to do it on your terms, but it’s nice to have the career flexibility and some matching contributions in your TSP.

Your quality of life skyrockets when you don’t have to gut it out to 20. You’re not risking your physical, emotional, or mental health. You have much less stress and you’re a lot more fun to be around.

Sure, make a big bet on the legacy High Three if you want, even though the downside is “zero”. But do you really want to lock yourself into a huge commitment for some money? BRS may not seem to be worth it, but you have far more human capital than simply working for a large corporation which still cliff-vests a pension at 20. You’ll have to be thoroughly fulfilled by the military to pass up a civilian bridge career– and the final few years of those decades in uniform can seem like a very long time.

Your call to action

Now let’s get back to those Marines and their high opt-in rate.  As of 26 November 2018, over 46% of the eligible active-duty Marines have opted in to the BRS.

First, Marines are all about the process. They know from hard-won experience that everything is going to go wrong. They relentlessly plan and train for it.

Second, the Marine leadership has required every one of their BRS-eligible Marines to state their choice. They can choose to stick with the legacy High Three pension plan if they want, but they have to record that decision with their chain of command.

They’re not forced to choose the BRS, but they’re forced to analyze the situation and affirm their choice. Fortunately they spend a lot of time training on Potterat circles.

What’s your choice? Can you do better than a Marine?

You can opt in to the BRS here, or with the Marines here, or with the Coast Guard and NOAA here.

If you have questions then please post a comment, or use the private “Contact me” form below, or e-mail NordsNords at Gmail.

Act now. Those BRS servers are going to be very busy at the end of December.

Related articles:
(Please read the comments in these posts, too. They offer more personal examples and counterpoint– and they’re certainly entertaining.)
Your Military Blended Retirement System: It’s Not About The Money.
USAA’s Military Retirement Comparison Tool And The Blended Retirement System
Military Spouses: What You Should Know About The New Blended Retirement System
How to Maximize the BRS If You Decide to Opt-In
DoD’s FAQ Page About The Blended Retirement System
Tricky Details Of The Military Blended Retirement System (What DoD Won’t Tell You!)
The announcements of your service’s Continuation Pay rates
32 Other Posts About The Blended Retirement System By Military Bloggers
Many Sample Runs Of The DoD BRS Calculator (so that you don’t have to)
“Should I Opt-In To The Military’s Blended Retirement System?”
9 Things To Consider Before You Choose The Military’s New Blended Retirement System
Thrift Savings Plan:  Q&A About Opting Into The Blended Retirement System
Maximizing Your Thrift Savings Plan Contributions In A Combat Zone

For visual learners:
The Robyn Videos: All About The BRS In Two-Minute Episodes
Thrift Savings Plan:  Opting Into the Blended Retirement System

The Military Guide to Financial Independence and Retirement Price: By Doug Nordman: This book provides servicemembers, veterans, and their families with a critical roadmap for becoming financially independent. The Military Guide to Financial Independence and Retirement All Author royalties donated to military charities. Last Updated: 10/10/2018

Contact Doug Nordman directly:



WHAT I DO: I help you reach financial independence. For free. I retired in 2002 after 20 years in the Navy's submarine force. I wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

2 Comments
  1. Reply
    dan@keepinvestingsimplestupid.com December 7, 2018 at 6:55 AM

    Great article! I was just going through the BRS with a couple people today who are deciding to opt-in at the 12th hour! Missed a year of matches and it’s still the right decision for them. Most of their reasons were the points made in this article. Purely based off total dollar package the Legacy may win out by 5-10%, but add in the flexibility, options available and the BRS is extremely competitive. Great article on the “other” reasons why opting in makes sense!

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