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Service members and veterans get Blended Retirement System planning from First Command Financial Services that tests the pension, lump sum and TSP choices against a bad market year before any of them becomes permanent. Households receive a written plan after 2 video conversations. The one BRS choice that can't be reversed, a lump sum that cuts retired pay until age 67, gets its own page in it.
Most people look for this help with a date in hand. Your retirement ceremony is set, the lump sum election comes due before it, and once DFAS pays that money the choice is final. Miss the window to compare options, and you live with a smaller check for years.
BRS covers members who joined after it started, plus those who opted in during the one-time window, which is now closed. It pays retired pay at 2.0% of High-3 pay for each year of service instead of the legacy 2.5%. It adds up to 5% of basic pay in TSP government contributions, mid-career continuation pay and an optional lump sum at retirement.
Here's the catch. About a fifth of the lifetime pension was swapped for TSP money that can be sold in a slump, spent early or left to the wrong person. Part of a surviving spouse's protection now rests on behavior, not on a check DFAS mails every month.
The household hit hardest is a 20-year retiree with a working spouse and young kids, moving straight into a second career. Terrence and Ivy, in the example further down, are that household. The table below uses one assumption: a retiring member with 20 years of service under BRS.
| Account | How it is taxed | What to do with it |
|---|---|---|
| BRS retired pay | Ordinary income; state rules vary | Count it as the household base |
| BRS lump sum | Ordinary income when paid | Compare with pay lost until 67 |
| Traditional TSP with matching | Taxed when withdrawn | Name spouse on Form TSP-3 |
| Roth TSP | Qualified withdrawals tax-free | Spend last; keep invested for heirs |
| Continuation pay | Ordinary income when paid | Hold in cash or add to TSP |
First, you send your latest LES, your TSP statement, the Form TSP-3 beneficiary page and your planned retirement date. Second, we compute retired pay with the 2.0% formula and the survivor amount, which is 55% of the base you choose for the Survivor Benefit Plan.
Third, every choice gets sorted into permanent or reversible. The lump sum and the SBP election are permanent. TSP fund mix, withdrawal order and Roth versus traditional contributions at your next employer can all be changed later.
Fourth, we test 3 bad events: stocks down 30% in the first year after your last day, a health problem that ends the second career, and a change in tax law. Fifth, the crash rule and the survivor numbers go into the written plan, sent after the second video conversation. The exact cost sits in a signed agreement before step 1 begins.
This is where behavior comes first. Before any fund mix or withdrawal order, the plan names in plain words what you will hold if the TSP drops. We've found a panicked sale in a down year costs a household more than a wrong market forecast ever does.
The written plan gets a review each year. An extra review is triggered by a TSP drop of 20% or more, a new job or a lost one, a new VA rating, a birth, a marriage or a divorce, or any change to DFAS retired pay or SBP rules. The first question at every review is the same: did anyone sell something they planned to hold? If the answer is yes, we look at the cost before touching anything else.
For a retiree with a $5,000 High-3 average, the 2.0% multiplier cuts retired pay by $500 each month and Survivor Benefit Plan pay by $275 each month. That's $3,300 each year for a surviving spouse, or $82,500 over 25 years before cost-of-living raises.
Terrence and Ivy are a hypothetical household, 42 and 40. He's a Marine Corps master sergeant retiring after 20 years under High-3 into a county 911 dispatch supervisor job. She teaches second grade, they have two kids under 12, and the TSP holds about $520,000. Picture his same 20-year career under BRS.
Under the legacy formula, 20 × 2.5% = 50% of $5,000, or $2,500. Under BRS, 20 × 2.0% = 40%, or $2,000. Full SBP pays 55% of that base: $1,375 versus $1,100. Ivy would get $275 less each month, $3,300 each year, $82,500 over 25 years.
The match runs the other way. At 5% of $4,000 average monthly basic pay, government money is $2,400 each year. Over 20 years that's $48,000, about $79,000 assuming 5% a year, for illustration. That money only fills Ivy's gap if she is the named TSP beneficiary and it is never sold in a slump. The annuity can't be sold in a panic. The TSP can.
Picture the mistake as a letter. A $79,000 balance meant to replace a widow's $275 monthly gap goes to a parent, because a Form TSP-3 filed before the wedding was never updated. She reads it in the TSP's letter after the death, when the form can no longer be changed.
Three timing numbers say it's time to plan. Continuation pay is offered between 8 and 12 years of service. The automatic 1% TSP contribution vests after 2 years. The lump sum election comes due before the retirement date, so start at least 12 months out.
BRS gives you the automatic 1% no matter what. The full 5% of government money shows up only when you put in 5% of basic pay yourself. Put in 3% and the government adds 1% plus a 3% match, so you get 4% and leave 1% on the table. On $4,000 of basic pay each month, that's $40 a month, or $480 each year. TSP funds can fall, and a balance can sit below your total contributions for a while. That's why the written plan lists, by fund, what you won't sell.
Retired pay starts at 20 years of service, and the lump sum cuts it until age 67 for people born in 1960 or later. Leave at 12 or 16 years and you keep your vested TSP balance but get no pension at all.
You can elect 25% or 50%. DFAS figures that share from a discounted present value of the retired pay you'd collect up to full Social Security retirement age. Your monthly check is smaller until that birthday. After it, the full amount comes back.
For 2026, the TSP employee deferral limit is $24,500, plus an $8,000 catch-up at age 50 and older. Government contributions don't count against the $24,500. The one-time BRS opt-in window has closed, so nobody can switch systems now.
Once DFAS pays a BRS lump sum, at once or in annual installments (check the current options with DFAS), the smaller retired pay check continues until age 67. The amount is a discounted value, worth less than the payments it replaces. It's taxed as ordinary income when paid. If a 50% lump sum arrives in the year of your last active-duty paychecks, much of it can be taxed at a higher bracket than in a later, lower-income year. Quick test: take it only if fixed bills are covered by reduced retired pay plus the second-career salary until age 67, without touching the TSP.
You keep the government contributions once they vest, which for the automatic 1% happens after 2 years of service. The balance stays in your TSP, or you can move it later. You get no pension, so that account becomes your main retirement asset and needs a clear plan for your next employer's 401(k).
Compare the lump sum, taxed as ordinary income when paid, against the retired pay you lose until age 67. Then test whether reduced retired pay plus your second-career salary covers fixed bills without touching the TSP. If it doesn't, the choice that can't be undone is probably none.
Retired pay is reduced until age 67 for people born in 1960 or later, then returns to the full amount. The reduction depends on your own High-3 and the discount DFAS applies, so use the DoD BRS retirement calculator. A lump sum is worth less than the payments it replaces.
Plan alone until your retirement date is within 12 months, a lump sum is on the table, or your TSP and other investable savings pass $500,000, the firm's minimum. Any one of those is the signal to call First Command Financial Services, because each one makes a choice harder to undo.
Alone first, run the DoD BRS retirement calculator for both lump sum options. Open your TSP account and confirm your spouse is named on Form TSP-3. Then write one sentence about what you will do if the TSP falls 20%.
In the first video call, we walk through the 5 steps above and the agreement that states the cost. One limit: BRS planning can't reopen the closed opt-in window or change the 20-year requirement. A member leaving at 10 years has no pension to plan around, so a TSP and next-employer 401(k) review matters more. DFAS and your branch retirement office produce the official retired pay figures.
This article is general financial information only, not investment advice tailored to your circumstances. Investing involves risk, including loss of principal. Before making any financial decision, consult a qualified professional about your specific situation.