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Retirement Foundations

You can start planning and saving for retirement now. Here's how to get started.

No matter what point you're at in your military career, it's never too early to start planning and saving for retirement, and it's never too late to learn how to make the most of the available benefits. The best way to ensure your future security is to educate yourself and make informed decisions. Whether you decide to stay in the military for decades or move on to a career in the civilian world, explore every opportunity to be well-prepared for retirement when the time comes.

Service member saluting, calendar with number symbol icons
Blended Retirement System logo, shield and money stack icons

How Does Retirement Work in the Military?

The Department of Defense offers service members a program called the Blended Retirement System (BRS). BRS combines two types of retirement plans.

  • Defined benefit: This is similar to a traditional pension program. After 20 qualifying years of service, you are eligible for pensions equal to 2% times your years of service, multiplied by the average of your highest three years of basic pay. You may also be eligible for mid-career continuation pay, which is a one-time bonus payment in exchange for an additional, obligated service period.
  • Defined contribution: This is similar to a 401(k) retirement plan. After 60 days of service, the Department of Defense (DoD) automatically contributes 1% of your basic pay to a Thrift Savings Plan (TSP). You can also contribute a percentage of your basic pay to this fund. After two years, the DoD matches a percentage of your contributions.

Does Retirement Planning Apply to Me?

Yes — the earlier you start planning and investing in the Thrift Savings Plan (TSP), the more time you have to build your nest egg. Thanks to compounded interest, your daily investment of $3.25 can become more than $30,000 after 20 years, for example.

Thrift Savings Plan logo
Piggy bank, coins and financial institution icon

What Should I Do Now?

Invest as much money as you can in your TSP. The Internal Revenue Service (IRS) sets the maximum pretax contribution each year; 2024's max is $23,000. The government invests 1% of your base pay automatically after 60 days and matches up to 4% after two years, but you can invest more. Your options include:

  • A variety of TSP funds from government securities to stocks, even mutual funds, if you meet certain eligibility criteria.
  • A series of lifecycle funds that keep the guesswork out of investing. Just select the fund that most closely matches your situation. The fund will balance your investments to ensure the largest return for the level of risk appropriate for your timeline.
  • TSP's Roth option, which allows you to make contributions after paying taxes. That means you pay taxes on your investments at your current tax rate, not at your tax rate in 30 or 40 years when you're retired.

Can I Afford This if I'm Barely Breaking Even?

You might be surprised at how little your take home pay changes. You will lower your taxable income — and may even lower your tax bracket — by contributing to your TSP. This means that if you're contributing, say, $150 a paycheck, your net pay might reduce by only $50 or $75. Don't forget: If you've served for more than two years and don't contribute at least 5% of your annual base pay, you're giving up the full government match.

Shield with 2 years service and money bags
Suit and conversation bubble with money symbol icon

Who Can I Talk To About Investing for Retirement?

A trusted personal financial manager or counselor can help you establish retirement goals and create a plan to fund them. Reach out to your nearest installation and make an appointment with an expert.