Stephen Hall
hallsc7
I wrote this on my linkedin account but I just copied it here. You can find it at this link on linkedin if you want also.
https://www.linkedin.com/pulse/new-...ght-you-stephen-hall?trk=pulse_spock-articles
The new guidelines for the Blended Retirement System are now in place after the FY16 National Defense Authorization Act was signed into law. This brings with it an important financial planning decision for any service member who is planning to do a 20 year career. This decision is not an easy one. Each service member who joined the Armed Services after January 1st, 2006 but before January 1st, 2018 must decide if he or she will select the Blended Retirement System or stay with the current Legacy System.
At first glance many people may assume the Legacy System is superior, after all the purpose of this New System is to save taxpayer dollars, right? However, after some careful analysis some service members may decide that the new Blended Retirement System is in fact in their best financial interest.
Some characteristics of a career that will lean towards the new Blended Retirement System being more favorable include:
Notice that whichever graph is above the other will indicate which system works better for you. The location on the graph where the lines cross (if applicable) indicates the future point in time where both retirement systems are considered equal in value for your situation.
Beneath the graph you will find helpful tables to compare the retirement pay (gross and with investment returns) for both the Legacy and the new Blended Retirement System.
I hope this helps all service members make informed decisions about their retirement choices.
Note: You must download the spreadsheet to your computer and open it with a "Macro Enabled" version of Excel 2010 or later. Select "Enable Editing" and "Enable Content" when prompted.
https://app.box.com/s/1n03qfbeuc6jtmqiygarphhpfgwvp68o
https://www.linkedin.com/pulse/new-...ght-you-stephen-hall?trk=pulse_spock-articles
The new guidelines for the Blended Retirement System are now in place after the FY16 National Defense Authorization Act was signed into law. This brings with it an important financial planning decision for any service member who is planning to do a 20 year career. This decision is not an easy one. Each service member who joined the Armed Services after January 1st, 2006 but before January 1st, 2018 must decide if he or she will select the Blended Retirement System or stay with the current Legacy System.
At first glance many people may assume the Legacy System is superior, after all the purpose of this New System is to save taxpayer dollars, right? However, after some careful analysis some service members may decide that the new Blended Retirement System is in fact in their best financial interest.
Some characteristics of a career that will lean towards the new Blended Retirement System being more favorable include:
- Contributes at least 5% to TSP to receive the maximum match available
- Invests all of the 12 year cash continuation bonus (2.5X Base Pay after completing 12 years) in TSP
- Accepts a higher risk tolerance for TSP investments (yields higher returns)
- Joined Armed Forces later in life (closer to today than 2006)
Notice that whichever graph is above the other will indicate which system works better for you. The location on the graph where the lines cross (if applicable) indicates the future point in time where both retirement systems are considered equal in value for your situation.
Beneath the graph you will find helpful tables to compare the retirement pay (gross and with investment returns) for both the Legacy and the new Blended Retirement System.
I hope this helps all service members make informed decisions about their retirement choices.
Note: You must download the spreadsheet to your computer and open it with a "Macro Enabled" version of Excel 2010 or later. Select "Enable Editing" and "Enable Content" when prompted.
https://app.box.com/s/1n03qfbeuc6jtmqiygarphhpfgwvp68o