TINKER AIR FORCE BASE, Okla. -- One of the ways Andrea Perkins emphasizes how important it is to think about and plan for military retirement ASAP is by handing out tape measures.
Ms. Perkins, the lead community readiness consultant with the Airman and Family Readiness Center, recently used the exercise in two Tinker AFB town hall meetings about the military’s new Blended Retirement System and the retirement-oriented Thrift Savings Plan.
First, Ms. Perkins asks participants to cut off the tape measure from zero to their present age. Those years for saving for retirement are gone, she says.
Then she asks them to roughly estimate their life expectancy. Participants can then cut off all the “years” past that date.
The final cut is the age that the person wants to retire. Perhaps 50, 55, 65... That leaves two lengths of tape measure: one showing how many years the person will be working and saving for retirement versus how long they may live after retirement.
With life spans expected to rise in the future, those years of retirement could extend into a person’s 90s or more, Ms. Perkins says. The visual is usually pretty striking for people who try it.
“So you have that little bitty tape in which you’ll be making income to support the rest of your life for when you will not be working, and a potentially big piece of tape showing your retirement years,” Ms. Perkins said. “So the moral of the story is to be really intentional, regardless if you choose the Blended Retirement System or the legacy military system.
“It’s a visual way for people to realize that in your life span, since we’re living longer, you don’t have a whole lot of time that you’re going to be making money if you want to enjoy those long years of retirement.”
The tape measure test is one way to emphasize the importance of a one-time retirement choice for military members and spouses as the military transitions to the Blended Retirement System.
The Blended Retirement System will begin early next year, so military base counselors worldwide are focusing this year on getting word out about the details of the BRS.
The decision-making process involves learning about the military’s current retirement system, the new BRS, deadlines, retirement savings calculators and more.
Service members with less than 12 years of total service as of Dec. 31, 2017, will need to choose between staying in the current retirement system or moving to the Blended Retirement System.
The A&FRC has been holding education classes across the base where units are located and others classes designed for anyone to attend. Military members and spouses can set up individual meetings with readiness counselors to learn and talk about this one-time retirement choice. Call 739-2747 to set up an appointment.
The DOD points out that service members typically have had to serve 20 years before becoming eligible for monthly retirement pay. Due to that policy, about 80 percent of military personnel leave service without any retirement benefit.
The Blended Retirement System gives personnel a new option. They can contribute to retirement savings and get an automatic 1 percent contribution match from the DOD, which can climb to 4 percent under different scenarios.
Military leaders are forecasting that up to 85 percent of service members will leave with some form of government retirement benefit under the new system.
The legacy retirement system allows 20-year veterans to receive 50 percent of their base pay after retirement. The new system reduces that benefit to 40 percent, among other changes, but military members can boost retirement savings through the Thrift Savings Plan, which remains the member’s private savings even if their service is less than 20 years.
Affected service members can opt into the BRS anytime from Jan. 1, 2018, to Dec. 31 of that year. Holding off until the final date, however, means missing almost a year of DOD contributions that can start on New Year’s Day next year. If a service member makes no choice by Dec. 31, 2018, he or she will be automatically remain in the legacy retirement system.
As of Jan. 1, 2018, new military members will be automatically enrolled in the Blended Retirement System.