FINANCIAL MANAGEMENT Element 42 Pages 202-206

OBJECTIVES Financial Security Thrift Savings Plan (TSP) Blended Retirement System (BRS) Survivor Benefit Plan (SBP) Indirect Compensation

Financial Security As a TSM the security of love ones are concerns that are usually at the top of a your priority list, when making the decision to separate or retire.

How are you Eligibility? Thrift Savings Plan (TSP) What is TSP? TSP is a retirement savings plan similar to 401(k) plans offered to private sector employees. The purpose of TSP is to provide retirement income. TSP is optional How are you Eligibility? • By being a member of the uniformed services

TSP Withdrawals After You Separate: If your TSP account balance is $200 or more after you leave federal service, you can leave your money in the TSP , or you can withdraw all or a portion of your account. If you leave your money in the TSP after you separate from service, be sure to keep your address up-to-date so that the TSP can reach you. If your TSP account balance is less than $200 when you leave federal service, the TSP will automatically send you a check for the amount in your account. The check will be mailed to the address in your TSP account record. You cannot leave this money in the TSP or make any other withdrawal election. If you are separated from federal service or the uniformed services, you are required to make a withdrawal choice for your TSP account balance by April 1 of the year following the year you turn age 70½. However, if you are still employed at age 70½, your required withdrawals must begin by April 1 of the year following the year you separate from federal service or the uniformed services. If withdrawal has not started by the deadline the account balance will be forfeited. You can reclaim your account but not receive earnings on the account from the time the account was forfeited.

Blended Retirement System (BRS) https://www.youtube.com/watch?v=0lgMEe1Qa0E New service members enter after Jan 1 will NOT receive their service’s first automatic contributions until the first full pay period 60 days after their pay entry base date. Currently 81 percent of service members who join the military separate with no government retirement benefit. Under BRS about 85 percent of service members will receive a government retirement benefit if they serve at least two years, even if they don’t qualify for a full retirement. This expansion of government retirement benefits ensures a greater number of service members receive DoD retirement benefits; previously only available to the 19 percent of active component and 14 percent of National Guard and Reserve members who served 20 or more years.

Survivor Benefit Plan (SBP) Survivor Benefit Plan allows a retiree to ensure, after death, a continuous lifetime annuity for their dependents/ eligible beneficiary. Advantage: You will leave a guaranteed income to your beneficiary Eligible beneficiaries under the plan will receive 55 percent of the retiree’s elected amount of coverage. Advantage: SBP benefits are inflation indexed, and coverage and cost are not affected by illness or age Unlike many private life insurance policies, SBP coverage will not be cancelled or revoked due to any illness you may have or your age.  Whether you retire at age 45 or 80, you or your spouse’s age or health will never be considered a liability and never impact the cost of the program.  In addition, the receipt of survivor benefits will not be affected by Social Security benefits. Finally, the SBP annuity is protected against inflation, increasing each December with a Cost of Living Adjustment based on the Consumer Price Index.  Advantage: You can pay for SBP benefits with a pre-tax payroll deduction For nearly all retirees, Survivor Benefit Plan premiums are automatically deducted from your gross pay prior to the deduction of federal income tax. This decreases your total taxable income.

Survivor Benefit Plan (SBP) cont. Disadvantage: Cost  SBP coverage is supplied at no cost while you are in active service.  During your retirement, however, a monthly deduction is taken from your pay to pay for your SBP coverage. This can be as much as, but no more than, 6.5 percent of your gross retired pay.   Disadvantage: Once you enroll, changing your election is difficult Although it may seem unnecessary to consider providing for your loved ones until later on in life, please be aware that the decisions you make at retirement regarding your SBP can be difficult to change.  For example, if, at retirement, you have an eligible spouse or children and decide not to have them covered under the plan, it will be very difficult to have your current or any future spouse or children covered under the plan in the future

INDIRECT COMPENSATION – The things we do not think about Medical Care including free prescription TriCare Dental Program Federal Tax Advantage on your BAH and BAS State/Local Tax Advantage Military Pension Serviceman’s Group Life Insurance Discounted Services at the Commissary and NEX Educations Programs Counseling and Assistance Program Legal Counseling/Services Space Available Travel aka MAC Flights Gym Membership

Resources www.militaryonesource www.tsp.gov Thriftline 1-878-968-3778 https://www.dfas.mil https://militarypay.defense.gov/blendedretirement/ www.military.com http://militarybenefits.info/ http://militarypay.defense.gov/calculators/RMC-Calculator/ Your Command Financial Counselors Military & Family Support Center JBAB (202)767-0450 Fleet Family Support Center Bethesda (301) 319-4087

WIIFU- What’s in it for U Plan ahead as far as you can. Set yourself and your family up for success once you transition.

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