Blended Retirement System

[Segs]

Do you think it is worth switching to the blended retirement system? After graduating from flight school, most will have 8-13 years of required service. The blended retirement system creates a lesser need to stay in for 20, but the required service seems like it pilots are in a special category when it comes to deciding to switch or not.

 

[FormerRecruitingGuru]

Do you think it is worth switching to the blended retirement system? After graduating from flight school, most will have 8-13 years of required service. The blended retirement system creates a lesser need to stay in for 20, but the required service seems like it pilots are in a special category when it comes to deciding to switch or not.

That's a difficult question to ask anyone but yourself. Do you plan on serving 20 years? If so, I would stay with the legacy system. If not, go with the blended system. If uncertain, I would stay legacy but invest in TSP as a backup.

My two cents, many others can join.

 

[BACONATOR]

I think the nerds who crunched the excel spreadsheets determined that, generally, if you started out in the blended system and contributed from day 1, it's better to go that route. But for dudes at 10+ years, or even less time already invested, the traditional retirement system pays more in the long run.

 

[Pags]

Need to consider promotion percentages in your calculus as well. If you can't make it to 20 but selected traditional then you're going to end up wishing you had gone blended. To me blended seems less risky.

 

[sickboy]

Nothing's stopping you from packing your TSP now. If I understand it correctly, the only benefit is the government will match a small portion of your contribution. I don't see much advantage if you're already maxing out contributions.

 

[Segs]

Need to consider promotion percentages in your calculus as well. If you can't make it to 20 but selected traditional then you're going to end up wishing you had gone blended. To me blended seems less risky.

I definitely agree but having 13 years of guaranteed service definitely favors not going to the blended system and staying in for 7 more years whether you are passed over or not.

 

[Flash]

Nothing's stopping you from packing your TSP now. If I understand it correctly, the only benefit is the government will match a small portion of your contribution. I don't see much advantage if you're already maxing out contributions.

They match up to 5% of your salary if you contribute that much.

 

[Segs]

USAA has a pretty good calculator from what I've seen that takes current rank and future promotion into account.

 

[HAL Pilot]

I definitely agree but having 13 years of guaranteed service definitely favors not going to the blended system and staying in for 7 more years whether you are passed over or not.

The naivety of youth...

If I had a nickel for everyone at your stage who said they were staying for 20 and then bolted at the end of their obligated service, I wouldn't need to save for retirement. I'd be Bill Gates rich.

 

[nugget81]

I definitely agree but having 13 years of guaranteed service definitely favors not going to the blended system and staying in for 7 more years whether you are passed over or not.

You must have less than 12 years of service on 1 Jan 2018 to be eligible to switch to the blended system. To echo above, the more time you have in, the less value the system gives you. I personally would not recommend this to any of my sailors who have more than 5-7 years of service unless they have been maxing out TSP already.

 

[Sonog]

If there's any chance you're not going to stay in for 20 years, a free 5% (you should be contributing at least 5% anyways) every month for 5-10 years, which is then compounded at 8% market growth for 30-40 years is a lot of money.

 

[Randy Daytona]

If there's any chance you're not going to stay in for 20 years, a free 5% (you should be contributing at least 5% anyways) every month for 5-10 years, which is then compounded at 8% market growth for 30-40 years is a lot of money.

Standard blurb not to forget about the reserves. You will already have 10+ good years after finishing your commitment - not that hard to do the other 10 in SelRes or IRR for the pension, medical, life insurance + extra income in the event something unplanned happens in your civilian job.

 

[Pags]

Standard blurb not to forget about the reserves. You will already have 10+ good years after finishing your commitment - not that hard to do the other 10 in SelRes or IRR for the pension, medical, life insurance + extra income in the event something unplanned happens in your civilian job.

Don't forget the risk that the reserves may add to your civilian career. Yes there are lots of legal protections for reservesists but that doesn't change the perception that your civilian job leadership may have of your reserve obligations and how that might factor in to your promotion potential.

 

[azguy]

I definitely agree but having 13 years of guaranteed service definitely favors not going to the blended system and staying in for 7 more years whether you are passed over or not.

Since you're an ENS, you're still in a pretty good position to capitalize on the matching of BRS if that's what you choose. If you stay through 20, the legacy system is a way better deal (IIRC, to the tune of 25% more $$ in retirement than BRS). But obviously BRS is a much safer bet if you're not 100% sold on staying for 20. Also, as some have mentioned, making O-4 isn't necessarily a sure thing, even if you're a die-hard career guy.

Many people think it's an easy decision for those of us that have a choice. I don't, especially for people on their first enlistment (or < 5 YCS for Os).

 

[Segs]

Since you're an ENS, you're still in a pretty good position to capitalize on the matching of BRS if that's what you choose. If you stay through 20, the legacy system is a way better deal (IIRC, to the tune of 25% more $$ in retirement than BRS). But obviously BRS is a much safer bet if you're not 100% sold on staying for 20. Also, as some have mentioned, making O-4 isn't necessarily a sure thing, even if you're a die-hard career guy.

Many people think it's an easy decision for those of us that have a choice. I don't, especially for people on their first enlistment (or < 5 YCS for Os).

Thanks for the input. I'm in that 4-5 year category as a newly minted LT, which is the reason why I'm on the fence about switching or not.