Blended Retirement System (BRS): Complete Optimization Guide

Bottom Line Up Front: BRS gives you TSP match (5% of base pay = $40,000-$200,000 lifetime value) + smaller pension (2% per year vs. 2.5% under Legacy High-3). To maximize BRS: Contribute 5%+ to TSP from day one, stay 20+ years for pension, invest TSP aggressively (C Fund), understand Continuation Pay at 12 years. BRS is better if you serve <20 years. Legacy is better if you retire at exactly 20.

BRS vs. Legacy High-3 (Quick Comparison)

| Feature | BRS (Blended Retirement System) | Legacy High-3 | |------------|-------------------------------------|-------------------| | Who it applies to | Joined after 2018 OR opted in before 2018 | Joined before 2006, OR 2006-2017 and didn't opt into BRS | | Pension multiplier | 2% per year of service | 2.5% per year | | TSP match | 5% match (automatic 1% + match 4%) | No match | | Continuation Pay | Lump sum at 12 years (2.5x-13x monthly base pay) | No continuation pay | | Best for | Those who might not do 20 years | Those staying exactly 20 years |

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BRS Components

1. TSP Matching (The Big Benefit)

How it works:

• Automatic 1%: Military contributes 1% of your base pay even if you contribute $0
• Match up to 4%: If you contribute 5%, military matches 4% (total: 5% match)
• Vesting: After 2 years of service, match is YOURS forever

Lifetime value of 5% match:

Example: E-5 over 20-year career

• Average base pay: $3,500/month
• 5% match: $175/month
• Over 20 years: $42,000 contributed by military
• At 7% growth: $87,000 value by retirement

Example: O-3 over 20-year career

• Average base pay: $6,000/month
• 5% match: $300/month
• Over 20 years: $72,000 contributed by military
• At 7% growth: $149,000 value by retirement

2. Pension (Reduced Multiplier)

Formula:

BRS Pension = Final Base Pay × Years of Service × 2%

Example: E-7 retiring at 20 years

• Final base pay: $5,200/month
• Years: 20
• Pension: $5,200 × 20 × 2% = $2,080/month

Compare to Legacy High-3:

• Same E-7
• Pension under High-3: $5,200 × 20 × 2.5% = $2,600/month
• Difference: $520/month less under BRS

But don't forget TSP match! BRS has $87,000 in TSP that Legacy doesn't.

3. Continuation Pay (Lump Sum at 12 Years)

What it is:

• One-time lump sum payment if you commit to 4 more years (to 16 years total)
• Paid around year 12 mark
• Amount varies by branch and career field

Multiplier:

• Active duty: 2.5x - 13x monthly base pay (depending on branch/job)
• Reserve: 0.5x - 6x monthly base pay

Example: E-6 at 12 years

• Base pay: $4,000/month
• Continuation Pay: 2.5x = $10,000 (typical for most non-critical jobs)
• Must serve to 16 years

Example: Pilot (critical field)

• Base pay: $7,000/month
• Continuation Pay: 13x = $91,000
• Must serve to 16 years

Tax: Continuation Pay is taxable income (25% withheld usually)

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BRS Optimization Strategy

Strategy #1: Contribute 5% from Day One

Why:

• Maximize TSP match
• $175-$300/month in free money
• Compounds over 20 years = $80,000-$150,000

How:

• Log into myPay
• Set TSP contribution to 5% (or more)
• Never drop below 5%

Strategy #2: Invest TSP in C Fund (100% Stocks)

Why:

• BRS relies more on TSP growth than Legacy
• C Fund averages 10-11% annually (vs. G Fund's 2-3%)
• You have 20-40 years for compounding

Example:

• $300/month for 20 years at 10% = $228,000
• Same at 2% (G Fund) = $88,000
• Difference: $140,000

Strategy #3: Take Continuation Pay, Stay to 20

Why:

• Get lump sum at 12 years ($10,000-$91,000)
• Serve to 20 for pension
• Total value: Pension + TSP + Continuation Pay

Example: E-7, 20 years, BRS

• Pension: $2,080/month = $24,960/year
• TSP (with match): $150,000 at retirement
• Continuation Pay: $10,000 at year 12
• Total retirement value: $174,960 + pension for life

Strategy #4: If Separating Before 20, BRS Is Better

Why:

• Legacy gives you $0 if you separate before 20 years
• BRS gives you TSP match (vested after 2 years)

Example: Serving 8 years, then separate

• BRS: Keep $35,000 TSP match + your contributions
• Legacy: Get $0 retirement benefit
• BRS wins

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BRS vs. Legacy High-3 (Which Is Better?)

BRS Is Better If:

• ✅ You're unsure if you'll do 20 years
• ✅ You're disciplined with TSP investing (5%+, C Fund)
• ✅ You want flexibility (TSP is portable, pension isn't)
• ✅ You value lump sum continuation pay

Legacy High-3 Is Better If:

• ✅ You're 100% certain you'll retire at exactly 20 years
• ✅ You want higher guaranteed pension ($520/month more for E-7)
• ✅ You're risk-averse (prefer guaranteed pension over TSP)

Break-Even Analysis

At 20 years:

• BRS pension: $24,960/year
• Legacy pension: $31,200/year
• Difference: $6,240/year in favor of Legacy

But BRS has:

• TSP match: $87,000-$150,000
• Continuation Pay: $10,000-$91,000

To break even:

• If you live 14-24 years in retirement, Legacy catches up in total value
• But if you invest TSP well, BRS can still win

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Common BRS Mistakes

❌ Mistake #1: Not Contributing 5% to TSP

Reality: You contribute 0%. You lose $175-$300/month in free match = $87,000-$150,000 over career.

Fix: Contribute AT LEAST 5%. Ideally 10-15%.

❌ Mistake #2: Putting TSP in G Fund

Reality: You put TSP in "safe" G Fund (2.4% return). You lose $140,000 in growth vs. C Fund.

Fix: Put TSP in C Fund (or L Fund if you want autopilot).

❌ Mistake #3: Separating Before 2 Years (Lose TSP Match)

Reality: You separate at 18 months. TSP match isn't vested. Government takes back $3,000.

Fix: Serve at least 2 years to vest TSP match.

❌ Mistake #4: Declining Continuation Pay

Reality: You decline continuation pay at year 12. You leave $10,000-$91,000 on table.

Fix: Accept continuation pay IF you plan to serve to 16+ years anyway.

❌ Mistake #5: Thinking BRS = Less Money

Reality: "BRS gives smaller pension, so Legacy is better."

Truth: BRS pension is smaller, but TSP match + Continuation Pay often make up for it (and then some).

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Opt-In Decision (For Pre-2018 Service Members)

Who Had the Choice?

• Joined between 2006-2017
• Had option to opt into BRS in 2018

Most Chose to Stay in Legacy

Why:

• Already had 5-15 years served
• Closer to 20-year retirement
• Pension reduction hurt more than TSP match helped (for them)

If You Opted Into BRS

Make sure you:

• Contribute 5%+ to TSP immediately
• Invest in C Fund
• Take continuation pay at year 12

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Action Steps

If You're Under BRS:

1. ✅ Log into myPay, set TSP to 5%+ (do this TODAY)
2. ✅ Log into TSP.gov, change allocation to C Fund (or L 2060/2065)
3. ✅ Plan to take continuation pay at year 12

If You're Deciding BRS vs. Career Length:

1. ✅ Use BRS calculator (militarypay.defense.gov/calculators)
2. ✅ Compare scenarios (10 years vs. 20 years vs. 30 years)
3. ✅ Make informed decision about career length

Annually:

1. ✅ Check TSP balance
2. ✅ Verify 5% contributions still happening
3. ✅ Rebalance to C Fund if needed

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Verification & Sources

Official Sources:

• DoD BRS Calculator: militarypay.defense.gov/calculators
• DFAS BRS Information
• TSP.gov BRS guidance

Last Updated: October 31, 2025

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Related Guides

• TSP Fund Allocation by Career Stage
• TSP Roth vs Traditional
• Military Retirement: High-3 vs. BRS Complete Comparison

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Remember: BRS trades guaranteed pension for flexibility and portability. If you're disciplined with TSP (contribute 5%+, invest in stocks, stay 20+ years), BRS is fantastic. If you're 100% doing 20 years and want simplicity, Legacy High-3 gives higher pension. Either way, max that TSP match — it's free money.