As we celebrate our nation’s independence this July, it’s an opportune time for our esteemed veterans to reflect on their own personal freedom, particularly in terms of financial security.
After dedicating years of service to our country, military personnel deserve a comfortable retirement. In this article, we’ll explore the various military retirement options available, empowering our veterans to make informed decisions and enjoy the financial freedom they’ve earned.
- Traditional Legacy Retirement System — For service members who joined before January 1, 2018, the Legacy Retirement System provides a defined benefit pension after 20 years of qualifying service. This system offers a reliable monthly income, ensuring a stable financial future for retirees. The pension is calculated based on the service member’s highest 36 months of basic pay and years of service.
- Blended Retirement System (BRS) — Introduced in 2018, the BRS combines a reduced pension with a Thrift Savings Plan (TSP) that includes government contributions. This hybrid approach offers more flexibility and portability, allowing service members to build wealth through investment choices. The BRS also provides a continuation pay bonus after 12 years of service, further enhancing financial stability.
- Thrift Savings Plan (TSP) — The TSP is a retirement savings plan similar to a 401(k), offering low-cost investment options. Both Legacy and BRS participants can contribute to their TSP, with the latter receiving matching contributions from the government. Maximizing TSP contributions is a smart way to secure financial freedom in retirement. The TSP offers a variety of investment funds, including lifecycle funds that automatically adjust asset allocation based on the target retirement date.
- Survivor Benefit Plan (SBP) — The SBP provides a portion of the retiree’s pension to their surviving spouse or other eligible beneficiaries. Enrolling in the SBP ensures that loved ones are financially protected, granting peace of mind to retirees. The SBP offers several coverage options, allowing retirees to choose the level of protection that best suits their family’s needs.
- Disability Compensation — Veterans with service-connected disabilities may be eligible for disability compensation from the Department of Veterans Affairs (VA). This tax-free benefit can provide additional financial support during retirement. The VA also offers a variety of other benefits, such as healthcare, education assistance, and home loan guarantees, which can further contribute to a veteran’s financial well-being.
- Retirement Planning Resources — The Department of Defense and the VA offer numerous resources to help veterans navigate their retirement options. From financial education workshops to online calculators, these tools empower service members to make well-informed decisions about their future. Additionally, seeking the guidance of a financial professional who specializes in military benefits can be invaluable.
As we commemorate our nation’s freedom this July, it’s crucial for veterans to take control of their financial freedom. By understanding the available military retirement options, making strategic choices, and partnering with a trusted financial advisors, veterans can secure a stable and prosperous future. Remember, the sacrifices made in service to our country deserve to be rewarded with the financial security and independence that every veteran has rightfully earned.
EDITOR’S NOTE: Sara Bachelder is a retirement planning specialist trained under Shirley Luu, a nationally recognized expert in financial planning. Sara provides personalized guidance on maximizing military retirement benefits, optimizing TSP investments, and integrating other sources of retirement income. Her goal is to empower veterans with the knowledge and strategies necessary to achieve true financial freedom.