2022 AFBA Financial Planning Guide

beyond twenty, the CSB/REDUX retirement factor is 3.5% through year 30. Members who retire with over 30 years of service receive 2.5% for each year of additional service. While the annual percentage increase under the CSB/REDUX plan is higher, the plan’s lower percentage for twenty years of service results in members initially receiving less retirement income for each year before thirty years of service. Phase Three. At age 62 the retirement percentage factor that would have applied under the High–36 Formula is now applied to the CSB/REDUX retiree. This recomputation is commonly referred to as the Catch–Up aspect of the CSB/ REDUX system. If you retire with less than thirty years of service, the Catch–Up computation will increase your retired pay. However the new retirement factor is not retroactively applied to previous retirement payments. In summary, the computation of retired pay under the CSB/ REDUX system is a four step process: Step 1: Determine the retirement factor for years of service by referring to the “CSB/REDUX” column of the Retirement Factor Table. Step 2: Determine the average monthly base pay received during the highest paying 36 months of active duty (prorated for months of service). Step 3: Multiply the appropriate retirement factor (Step 1) by the average monthly base pay (Step 2) and round the amount down to the nearest whole dollar. Step 4: At age 62, recompute the entitlement using the retirement factor that would have applied under the High–36 system. While the $30,000 bonus that is included with the REDUX retirement plan may seem like a nice windfall five years before you reach the 20-year pension mark, it is important to understand the long-lasting effects that will impact your total retirement income. Ultimately each member must make their own decision based upon their personal preference and individual circumstances. To assist with the decision process, more information and retirement calculators are available at http://militarypay.defense.gov/retirement. BLENDED RETIREMENT SYSTEM (BRS) — Members with a DIEMS date on or after January 1, 2018. This military retirement system blends the traditional legacy retirement pension with a defined contribution to members’ Thrift Savings Plan account. Members who enter service on or after January 1, 2018 are automatically enrolled in the

BRS. Active members with fewer than 12 years of service and Reserve Component Service members who had accrued fewer than 4,320 retirement points as of December 31, 2017 had a one-time window to opt into the Blended Retirement System. The BRS contains both a Defined Contribution and a Defined Benefit (pension) component. Defined Contribution. This component incorporates the Thrift Savings Plan into the blended system by providing both automatic and matching contributions. For members under the BRS who began service on or after October 1, 2020, you were automatically enrolled at 5% of your basic salary. If you began service prior to September 30, 2020, you were automatically enrolled at 3%. These amount can be changed once enrolled. Visit www.tsp.gov for more information on the TSP. Your service will also automatically contribute an amount equal to 1% of your basic pay into your TSP account each month. The Service Automatic Contribution is not taken from your pay and is on a pretax basis. In addition, if you elect to contribute a portion of your own pay into your TSP account, your service will match up to an additional 4% of your basic pay. Your contribution is taken from your pay on a pretax basis. The table below outlines the contribution process. Contributions to Your TSP Account Service Contribution Your Contribution Automatic (1%) Service Matching Total Contribution 0% 1% 0% 1% 1% 1% 1% 3% 2% 1% 2% 5% 3% 1% 3% 7% 4% 1% 3.5% 8.5% 5% 1% 4% 10%

Your Contribution + 5%

More than 5%



For members who entered active service on or after January 1, 2018 the Automatic Contribution begins after 60 days of service and the Service Matching Contribution will begin after completing two years of service. For members who


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