With six years in the Navy under his belt, Yeoman 1st Class Eric Driest is squarely in the middle of the 1.6 million service members who are eligible to opt in to the new Blended Retirement System.
“I don’t know if it’s financially in my favor” to opt in, said Driest, 30, who hopes to retire from the Navy.
He echoed the questions of thousands of others in that window of eligibility: active-duty troops with less than 12 years of service, reserve-component members with fewer than 4,320 retirement points.
Military Times hooked Driest up with Bob Bieri, senior presenter for Navy Mutual, who has been providing briefings to service members about the BRS and other aspects of financial literacy.
Driest said he hasn’t made a final decision, but the questions they considered have made things clearer.
“I’m still in the middle,” he said, adding that he’ll need to go over all the details with his wife. “It comes down to whether I will absolutely retire or get out prior to that.”
Driest is going to school at night and plans to apply to Officer Candidate School. His wife works part-time; they have a 4-year-old child and a baby due in April.
But the most important question he is considering is the “all or nothing” one, he said.
“If I stay with the current system, and don’t retire, I’ll be left with nothing. If I go with the BRS and don’t retire, at least I’ll leave with something.”
While he fully intends to retire from the Navy, he understands that decision is not always up to the service member, as the needs of the service fluctuate and other factors come into play.
If Driest moves to the BRS and makes the 20-year mark, he’ll still get monthly retirement pay, but it will be 20 percent less than the current system.
Bieri ran the numbers for Driest under the old and new systems using the Defense Department’s BRS comparison calculator. He made some assumptions: Driest would retire as a chief (E-7) in 20 years, would contribute 5 percent to his Thrift Savings Plan (to maximize his DoD matching contribution), would get a 7 percent return on his investments, and would contribute half of his continuation pay (a BRS-only bonus at 12 years of service) to his TSP.
The findings: Retirement pay when Driest reaches 20 years would be about $39,000 per year under the legacy system and about $31,000 a year under BRS. Both go up over time thanks to cost-of-living increases.
Driest’s TSP DoD match, including investment returns, would be nearly $171,000 under BRS by the time it’s eligible for withdrawal, when Driest turns 59½. He’d get no matching DoD funds under the legacy system.
His own TSP contributions would be worth about $198,000 under BRS by the time they could be withdrawn. That exceeds the DoD figure (both are 5 percent contributions) because it also includes the contribution of half of his expected continuation pay bonus, plus investment returns on that money. (His continuation pay at his 12th year of service is projected at $10,639; half of that is $5,320.)
Bieri noted that Driest is already contributing to his TSP, which shows he has discipline. The sailor now contributes 1 percent of his basic pay to his TSP, and has gone as high as 8 percent, he said.
“I can go up to 5 percent” to get the full DoD match under BRS, he said. “I was thinking of upping it anyway the next calendar year.”
With Bieri’s help, Driest said, he understands how valuable the matching funds could be in adding to his retirement.
“This is probably the biggest financial decision you and your spouse will make. It will affect the rest of your life,” Bieri said. “Look at where you are now in your finances. Use this as a wonderful time to sit down and discuss your financial future.”
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.