Note: Whether it’s health care, retirement benefits, family support and child care, VA benefits or other programs, getting smart about the rewards you have earned is worth your time. Although it is not yet clear to what extent federal cuts will affect DOD programs — including quality-of-life initiatives — these benefits were in place as of this writing.
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All service members entering the military are automatically enrolled in the Blended Retirement System, or BRS. Only those who served before 2018 remain in the legacy, all-or-nothing 20-year pension plan.
BRS combines the traditional monthly retirement checks of the legacy system with new features that let military members take some government benefits with them, even if they don’t serve for 20 years to qualify for a pension. Historically, only 19% of active duty troops and 14% of Guardsmen and reservists in the legacy system stayed in uniform long enough to earn retirement benefits.
More than 400,000 eligible service members opted into the new BRS in 2018, out of the 1.6 million current active duty and Reserve troops who were eligible to choose between the legacy system and the new option.
Whether opting into the BRS or automatically enrolled, it’s important to pay attention to the key elements of the BRS — a critical part of your financial future.
Retirement pay
Under the BRS, you’ll get the traditional monthly retirement pay for life if you serve for at least 20 years to earn a full retirement from the military. But monthly payments under the BRS are 20% smaller than in the legacy system.
For BRS participants who retire after 20 years of active duty service, retirement pay is tallied by averaging the 36 highest months of active duty pay received while in uniform, then calculating 40% of that average.
That percentage increases by 2% for each additional year of service. (The legacy benefit provided 50% of the highest 36 months of pay.)
Retirement pay also includes an annual cost-of-living adjustment.
Thrift Savings Plan
The Thrift Savings Plan, or TSP, is like a private-sector 401(k) retirement savings account. The government began matching user contributions in 2018. While troops always have ownership of the money they put toward a TSP, they can’t access the funds contributed by DOD until they’ve served for at least two years.
Here’s how it works: A TSP account will be created after you have served for 60 days, and 3% of your basic pay is automatically deducted from each paycheck to fund it. You can change that amount, but by law, you will be reenrolled at 3% each year.
The Defense Department will automatically match 1% of that base pay, but can kick in as much as 5%. To make the most of your benefits, make sure you’re contributing at least 5% to your TSP to get the matching federal contribution of 5% as well. Why turn down free money?
If preferred, troops can contribute more than 5%, up to a limit of $23,000 in tax year 2024. For those with civilian retirement accounts such as a 401(k), as well as a TSP, contribution limits apply to the combined amounts.
Continuation pay
When troops hit 12 years of service, they qualify for another source of money: Continuation pay.
To receive that one-time payout, which is similar to a retention bonus, a person must commit to stay in their service branch for four more years.
Here’s what that means for active duty, Guard and reserve troops in each service in 2025:
- Air Force and Space Force: Continuation pay rates had not been released by publication date.
- Navy: Continuation pay equals 2.5 times the monthly basic pay an active duty sailor earned on the first day of their 12th year of service; Navy Reservists earn half of their monthly pay.
- Marine Corps: Active duty Marines receive five times their monthly basic pay; reservists earn a full month’s pay.
- Army: Active duty soldiers receive 2.5 times their monthly basic pay; reservists also receive 2.5 times their monthly basic pay.
It’s each service’s prerogative to adjust that multiplier to meet retention needs and other requirements.
Continuation pay is taxable. You can receive it in a lump sum or, to help reduce the tax burden, in four equal installments over four years. You can also contribute all or part of it to your TSP.
Lump sum retirement pay option
When you leave military service under the Blended Retirement System, you can ask for the retirement pay you’d earn until you reach full Social Security retirement age — for most people, that’s 67 — as a lump sum.
Here’s how the lump sum is calculated: First, the federal government takes the full monthly pay available to a retiree and reduces it by a percentage that changes yearly. For 2025, it’s a 6.33% cut. Then retirees can take either 25% or 50% of that smaller pot as a single installment; the rest would stay as monthly paychecks.
For instance, if someone retires at age 40, their lump sum would equal one-quarter or half of that reduced amount of total retirement pay they would otherwise receive monthly between ages 40-67.
They would receive that lump sum in addition to smaller monthly payouts. Then their retirement checks would return to their full monthly amount starting at age 67.
The lump sum is taxable; retirees can choose to receive the money in up to four installments over four years to reduce the tax burden.
Find more information about BRS via the Defense Department.
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book “A Battle Plan for Supporting Military Families.” She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.
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