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Military Unveils New Retirement System

The United States Armed forces will unveil its new retirement planning system January 1, 2018. The new Blended Retirement System, or BRS for short, has so far drawn mixed reviews from those that understand it and puzzled looks by the many that do not. The changes to the system are discussed below and will hopefully bring greater understanding where needed.

BRS Overview

The concept behind the BRS is the blending of two income sources for retiring personnel. The current system contains an annuity provision that provides money for retiring military personnel with over 20 years of service. The BRS will add to the mix the Thrifty Savings Plan, a 401K program managed by the government that will allow members to invest their own money in stocks or securities while enjoying a contribution from their employer. 

The Formula

The annuity formula currently in use will be utilized by the BRS. With this formula, an average of a service member’s highest 36 months of pay is determined and then multiplied by 2.5% of the members years of service. The BRS will reduce this from 2.5% to 2.0%.

The reduction in the annuity formula will be offset by the government’s contribution to a member’s TSP. Once reaching 60 days of service, a member is automatically enrolled in TSP. Once this happens 3% of the members base pay will go to the TSP each month along with a 1% contribution from the government. Once reaching 2 years of service the government will offer an exact match of contributions a member makes to the TSP up to 5%.

Benefit to Short Term Personnel

The addition of the TSP is of great benefit to members who are not planning to serve long enough to retire from service. Under the old system, members that served less than 20 years received nothing toward their retirement income. By contributing to TSP, members can receive the money deposited into their TSP account regardless of when they choose to discontinue their military service.

Members With Decisions To Make

BRS guidelines mandate that all members joining before 2006 are automatically grandfathered into the old system. Likewise, all service members to join after Jan 1, 2018, will be under the BRS. What this leaves is a group of service members with 1 to 12 years of service that must decide between the pros and cons of the two systems. These members will have 1 year to make a decision on this matter. Over 1 million United States service members are included in this group. 

Payment Options When Retiring

When a member retires he will have options as to how his money is to be distributed to him. A member can choose to take a lump sum and receive all funds at once. Or, a member can opt for a reduced lump sum of 25% or 50% followed by a reduced monthly annuity until the member reaches the age of 67. Once reaching 67, the amount of the monthly annuity will be the full amount.

Journey Through the 6 Stages of Retirement

Most major life-changing events, such as marriage or divorce, involve an ongoing process of emotional adjustment. Retirement is no exception. Marriage, divorce and other family-related issues have been the focus of decades of research and analysis by both clinical therapists and religious institutions.

Unfortunately, the emotional and psychological frontier of retirement has remained virtually unexplored until recently. However, while research on this subject has barely begun, it is clear that the psychological process of retirement process follows a pattern similar in nature to the emotional phases accompanying other areas of transition. Read on to discover the six stages of retirement and what you can do to prepare for this important life transition.

12 Reasons You Will Go Broke In Retirement

12 Reasons You Will Go Broke In Retirement

Stacy Rapacon, Online Editor for Kiplinger

Note: I have edited this article for length. I believe that a well-designed retirement plan can help offset most of these obstacles to retirement success. It is certainly preferable to have a plan that has been constructed with some of these challenges in mind.

Sometimes It’s Just Plain Hard

Today is election day, and while we are waiting for the results to see who will lead this country for at least 4 years, I wanted to copy you on a blog I read often from Dave Moenning, a money manager who writes prolifically almost every day about what’s going on in the market. I have highlighted some paragraphs that I think make a lot of sense. Hopefully you will as well. I don’t necessarily agree with his conclusion about no recession in sight or inflation, but we’ll leave that for another day.

Here you go:

While we wait, I want to expend my pixels on a discussion of the recent performance in the markets. Let’s start with stocks. In looking at a chart of the S&P 500 prior to Monday’s blast, it is interesting to note that the venerable index was sitting below where it was at the end of May. Same thing for bonds (as measured by the AGG – iShares US Aggregate Bond ETF). And the commodities index. And gold.

Real estate (as measured by the IYR – iShares U.S. Real Estate ETF) actually closed Friday about where it stood back at the end of February. Same thing for the EAFE index (a proxy for foreign stocks).

Investing Without Fear Or Regret

Stocks have reacted favorably to the recent election results, deemed by some to be the “Trump Effect”. Optimism is up, people are feeling better about the economy. But what does this really mean? Emotional investing tends to get us in trouble, so the question I wanted to answer for myself is what time horizon should the average investor have prior to investing a dollar into stocks, whether funds or individual securities.

When is a Good Time to Get a Reverse Mortgage

When is a Good Time to Get a Reverse Mortgage

 

“To ignore the real advantage of home equity in retirement planning is like having a winning lottery ticket and never claiming your money.”

“Retirees simply cannot continue to ignore home equity as an income source and still meet their income goals.”  Jamie Hopkins,  Retirement income program co-director of The American College of Financial Services

Executive summary: Every homeowner over 62 should look at the advantages of including a HECM (reverse mortgage) in their retirement plan, and now is the time to do it. A window of opportunity exists now that will soon begin to close. 

Have you ever said to yourself “I wish I had done that years ago!”  or “If only I had done such and such back then, things would be different now.”  I know I have. As they say, hindsight is 20/20.

This is a time like that. As it says in the Book “Now is the acceptable time.”

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