Earlier this week, on March 20th, the Military Times published an insurance guide for people looking to know more about the upcoming changes to the military retirement system. In the article, "Insurance Guide 2017: How the new retirement system may change your insurance plans," AAFMAA COO Mike Meese summarized the changes, and some of the effects that the new system will have on the financial security of the military families who choose to enroll.
The article cited the DOD's statistic that roughly 2.2 million servicemembers will be eligible to opt into the Blended Retirement System (BRS) when it goes into effect in 2018. To qualify, Active Duty servicemembers must have less than 12 years of service as of December 31, 2017. Members of the reserve component must have less than 4,320 retirement points by the end of 2017 in order to enroll in the BRS.
Mike explained that the BRS will mean reduced pensions, with new and different savings and investment options. He gave the example of a 20-year retiree who dies suddenly. The survivors in this situation would be left with less than that of a family in the same situation under the existing retirement system and pension plan. As a result, some families will need to seek out more life insurance to maintain future financial security.
The best decision between remaining in the current system versus opting into the BRS will not be the same for every military family. However, since the decision does have "six-figure implications," every member of the military facing this decision will need to increase their financial awareness.
To read the full article, visit www.militarytimes.com/articles/insurance-guide-2017-how-the-new-retirement-system-may-change-your-insurance-plans.