JOINT BASE MCGUIRE-DIX-LAKEHURST -- It’s never too early to start thinking about retirement.
This is common advice in many different occupations and our occupation of arms is no different.
Mark Miller, financial counselor with the Military and Family Support Center, Joint Base McGuire-Dix-Lakehurst, N.J., provided a financial lunch and learn where he explained different avenues for retirement including the Blended Retirement System (BRS), Thrift Savings Plan (TSP) and qualified retirement plans, Oct. 13, 2018, here.
“Reserve Component members with less than 4,320 retirement points as of Dec. 31, 2017, have the choice of opting into the BRS, or remaining in the legacy or ‘High-3’ retirement system,” said Miller. “Members who entered the military on or after Jan. 1, 2018 are automatically enrolled in the BRS.”
Members who qualify to choose their retirement system begin with the legacy retirement system and have until Dec. 31, 2018, should they desire to switch to the BRS if they have not done so already.
Should they desire to switch systems, members can do so through myPay via the Air Force Portal. Should they want to remain in the legacy retirement system, no action is needed.
While both retirement plans have their benefits, members will need to decide which plan might better fit their military career aspirations.
The most significant difference lies in the members’ ability to obtain some type of retirement pay through the BRS, should the member decide to serve less than 20 years in service.
“The BRS goes hand-in-hand with the TSP,” said Miller. “Through effectively utilizing the two, members can earn a true pension.”
Through the BRS, the Department of Defense automatically contributes one percent of the member’s base pay to their TSP after 60 days of service.
In addition to the one percent automatic contribution, the BRS allows members to receive matching contributions up to four percent by the DoD via the TSP at the start of three years through the completion of 26 years of service.
Through the TSP, members can choose from a variety of funds that will allocate their contributions to different investments including government, corporate, and mortgage-backed bonds as well as domestic and international stocks.
Alternatively, Airmen can choose a Lifecycle Fund based on their expected year of retirement. Through this Fund, professionally determined investment allocations are made to optimize investments over time. As a member approaches their expected retirement date, the Fund adjusts to become less risky.
“Putting the money in is one facet, but what you do with it is the other,” said Miller. “Lifecycle Funds can be an easy way to manage money long-term.”
Should a member want even more diversity with investing toward a retirement fund, they can generally contribute a maximum of $18,500 of their income across all qualified retirement plans, such as a TSP or a 401K.
While savings accounts have their place in one’s financial success, a benefit of investing in a retirement plan also comes with income tax breaks.
With any retirement plan, success comes from contributing a percent of one’s income toward investment funds and allowing the contribution to grow over time.
With so many retirement investment options, planning for the future can seem like a daunting task. Airmen at JBMDL should utilize resources such as the financial lunch and learns as well as many other resources available at the Military and Family Support Center here.