NewMilitaryRetirement.com

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Comparing the Current Military Retirement Plan with the New Military Retirement Plan

Specifics about the new military retirement plan are scarce, so will do our best to compare the current military retirement plan with the new military retirement plan based on information obtained through news sources and briefings.  If you know of something that we can add to the comparison chart below, let us know about it.  We hope that this continues to be a growing resource comparing the two plans so we can all learn more.

The current plan is listed on the left and is compared with the new plan listed on the right.  To the best of our knowledge the information below is accurate.  If you know something needs to be edited, let us know

 

Current Military Retirement Plan New Military Retirement Plan
- According to recent news reports, over time you earn more with the current military retirement plan versus the new military retirement Plan.  If the reverse was true, they would not be looking at changing it. - Will likely earn less money during retirement than the plan currently in place.
Once you hit 20 years of service, you are eligible to retire and receive lifetime benefits equaling the average of the last 36 months of pay. - Whether you serve 5 or 25, you will not be eligible to draw retirement until you are 60-65 years of age, but you can take your money with you to keep investing.  You will be able to withdraw money in the form of a loan for healthcare, home buying and specified emergencies.
- The current military retirement plan was designed when many personnel left Military Service and did not seek, or in some cases, did not have the skills to get post-military retirement employment (second career) - Getting into a second career is more common now and the new military retirement plan would allow personnel to leave service even before the 20 year mark for another career and continue to build the retirement savings they started to accrue while serving.
- The current military retirement plan was designed at a time when military pay was not necessarily competitive with the private sector. - The new military retirement plan is being designed in a time when military pay is in the top 25% of pay for high school Graduates (Enlisted) and College Graduates (Officers)
- If you leave service prior to hitting the 20 year mark, you receive none of the retirement money that you have "earned" over the course of your time in service - If you leave service prior to the 20 year mark, you will get to take the retirement money that you earned with you.
- You have less of a chance of your retirement money earning more money through investing - You will be able to choose the how you would like to invest your money through TSP on a yearly basis
- Participation in the Thrift Savings Plan (TSP) is an optional way to invest some additional money towards your future through the U.S. Military's version of the 401k style account - Participation in the Thrift Savings Plan will be mandatory and the Government will contribute a defined contribution into your account.  Current estimates are that the contribution may be 16.5% of base pay.
- Retirement benefits are not greater for personnel serving in high risk jobs, on combat deployments or hardship tours.  Whether you sit behind a desk for 20 years or you clear routes of IEDs for 20 years, both would get the same retirement. - Contributions into TSP by the Government may be increased for personnel deployed to combat zones, on hardship tours or possibly with higher risk jobs. 
- Knowing that you will receive 50% of your pay when you retire with at least 20 years of Service may be a benefit to serving in the military longer. - There is no benefit to staying in 20 years other than additional contributions by the Government into your TSP account.
 - lifetime benefit of 50% of your last three years of base pay is something that can be counted on.  - With your retirement money being invested in bonds, mutual funds, etc., there would be no extra protection against market fluctuations meaning that you could make money or just as easily, lose money.
   

 

Please check back for any updates that we may add to this comparison list.