MOAA Post – Beware the Lump Sum: An Update on the New Blended Retirement

by | 25Jun2018 | Blended Retirement System | 0 comments

I’m going to try and kick it up a notch at Military Millions, not only creating our own valuable content but also pointing you toward other people’s content when it is quality and applicable to our audience. I want you to get something useful from us nearly every day (if not every day).

We’re going to start with a post from the Military Officers Association of America. I’m a lifetime member because they provide two things I highly value. First, they lobby for my interests in Washington DC. Second, they keep me up-to-date on what is happening with my career and benefits. I’d strongly encourage anyone who is eligible to look into joining.

Here is a good post from them that discusses the lump sum option in the new Blended Retirement System (BRS):

Beware the Lump Sum: An Update on the New Blended Retirement

Key points from the article include:

  • For active duty, DoD is assuming 5.2 percent of retiring officers and 22.8 percent of retiring enlisted will take the lump sum option (which is probably not a good idea).
  • For reserve personnel, they are assuming that 2 percent of retiring officers and 8.4 percent of retiring enlisted will take the lump-sum offer.
  • Last year’s valuation report on retirement plans projected $14 billion in future savings to the retirement fund related to the BRS. Actual savings are substantially lower because the increased costs of the Thrift Savings Plan matching and continuation bonuses are not included in this estimate.
  • Defense officials urged the lump sum feature not be included in the BRS as it moved toward final passage in January 2016. But during final negotiations with the House, members of the Senate Armed Services Committee insisted on it to hold down costs.

The article is worth a read in its entirety, especially for anyone who wants to get into the weeds about how many feel the DoD is using inappropriate discount rates to calculate the value of the lump sum.

For every resource I’ve ever seen about the BRS, check out our continuously updated BRS resource center.

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