3 myths about the new military retirement system
You’ve probably heard that currently serving military members and their families soon will have to choose whether to switch to the new military retirement system or stick with the old one.
But retirement options and savings choices can be confusing. How can troops know which to pick?
Military leaders want families who are thinking through the choice to be armed with as much information as possible, said Lt. Col. Steven Hanson, who heads the Army‘s compensation and entitlements office.
He discussed three military retirement myths at a recent Association of the United States Army conference.
Myth 1: You’ll be forced into the new military retirement system.
That’s false, Hanson said.
Everyone who joins the military after Jan. 1, 2018, will be a part of the new system whether they like it or not. But those who are currently serving at that time will have to make a choice: Keep the old system or opt into the new one.
“One of the big misconceptions about this is that people will be forced into the new system and that is simply not the case,” he said. “Nobody will be moved into the blended system unless they actively choose to do so.”‘
The current retirement program is based on a pension system. Under that plan, if a military member serves 20 years, is medically retired or is forced out and qualifies for early retirement, he’ll be able to walk away with a pension based off his rank at retirement.
But most troops don’t retire out of the military — they simply leave the service. And thanks to the way the current system is set up, that means they walk away empty-handed.
That’s a problem the new “blended” retirement system is designed to fix. Instead of retirement or nothing, it gives service members a savings that is closer to what’s used by employers in the civilian sector.
Under it, troops can contribute money to their Thrift Savings Plans (TSP), and the Defense Department will match it up to a certain percent, much like a 401(k) plan. Even if a service member opts to put nothing in his TSP, the DoD will still contribute an amount equal to one percent of his base pay to the account each month.
And service members who stay in long enough to become retirees will still get a version of the pension system in the new military retirement plan as well, although payments will be based on a lower amount than they are today.
Myth 2: It’s easy to tell which plan you should use.
False. While it would be nice to know if the new system is the right choice for you simply based on how many years you’ve been in, that’s not the case. Whether the new system is right for any given service member is going to be based on a whole slew of information specific to that person and his or her family, Hanson said.
“There’s no cookie-cutter answer. Every service member is going to have different circumstances,” he said. “Everyone should do what’s best for their personal circumstances.”
Myth 3: You’re going to have to figure out which plan is best for you on your own.
Mostly false. While the final choice ultimately will be up to each individual service member, the law that required the retirement plan change also requires the Defense Department to provide a lot of education about what the change means — and how service members can pick which plan is right for them.
“We need to make sure that they have the tools, the skills and the knowledge to make an informed decision,” Hanson said. “We are putting together a training and education plan to make sure service members understand the old system versus the new system so they can make an informed choice.”
- 'Drunk On Power': Did Marine Drill Instructor Torment Muslim Recruits?
- Navy Sailor Charged with Second-Degree Murder in Norfolk
- Pilot Who Ejected in April Hornet Mishap Was Senior Navy Officer
- Air Force: Racial Slurs Written by Black Cadet Candidate
- General Mistreated Congressional Staffer, Army Finds
- Bin Laden Files Back Up US Claims on Iran Ties to Al-Qaida
Follow @Militarydotcom on Twitter .
SpaceX launching a third top-secret satellite
SpaceX is launching a secretive mission this month. The mission, shrouded in secrecy, has some considering it may be for the CIA or the NSA.
This is how the Air Force will use prop planes on high-tech battlefields
The Air Force is looking toward a light-attack aircraft program, known as OA-X, to produce a plane that meets its needs and gets the job done.
A retired SEAL commander on how to stop thinking and 'get after it' every day
This former Navy commander has some excellent advice on how to jump start your day, and "get some" in order to make it as productive as possible.
Marines return to battle in 'old stomping grounds'
The Marines recall their "old stomping grounds" as they return to Fallujah and the surround areas of Al Anbar Province to battle a new enemy.
How Chinese drones are set to swarm the global market
China has stepped up it's drone game, and even though United States technology can still compete, China's drones are kind of really in demand.
That time two countries' Special Forces squared off in combat
In an area the size of the Falkland Islands, British and Argentine special operators were bound to run into each other at some point – a lot.
5 times pilots got in trouble for having fun in the sky
When pilots decide to do some fancy flying in their high-performance fighters, it can land them in trouble once they're back on the ground.
This is why Nazis dubbed these paratroopers 'devils in baggy pants'
"American paratroopers – devils in baggy pants – are less than 100 meters from my outpost line. I can’t sleep at night," wrote one German commander.
9 ISIS weapon fails that you have to see to believe
Many bad guys just want record themselves laying rounds down range for social media purposes — and we're glad they did. Laugh away, America!