BRS Calculator

What BRS is and who's on it

The Blended Retirement System was created by Public Law 114-92 (NDAA FY16, Sections 631-635) and took effect January 1, 2018. It replaces the legacy High-3 system for everyone entering active duty on or after that date. Members already serving on 31 Dec 2017 had a one-time opt-in window during 2018 that has since closed.

BRS has three distinct pieces:

1. Defined-benefit pension at retirement: 2.0% × YOS × high-3 (vs 2.5% under legacy High-3 — a 20% reduction).
2. Defined-contribution (TSP): Automatic 1% agency contribution after 60 days + matching up to 4% (after 2-year vesting for the auto 1%, starting at the 25th month of service).
3. Continuation Pay: A one-time bonus at the 12-year point (2.5× to 13× monthly base pay, service-specific). Requires a 3–4 year additional service obligation.

Plus an optional lump-sum election at retirement under 10 USC § 1415 — covered in detail below.

Lump-sum election — the 10 USC § 1415 math

At retirement, a BRS member may elect to receive an immediate lump-sum payment equal to the present value of 25% or 50% of their monthly retired pay that they would otherwise receive between retirement and age 67. Monthly retired pay is correspondingly reduced by 25% or 50% for that period. At age 67, the reduction ends and the retiree returns to the full unreduced amount.

The present-value calculation uses the annually-published Lump Sum Discount Rate (LSDR) from the DoD Office of the Actuary. For calendar year 2026, the rate is 6.46% per the DASD(MPP) memo dated 2025-05-22. This rate is fixed for the year — every BRS member retiring in CY2026 uses the same rate.

What the LSDR means in practice: A higher discount rate produces a smaller lump sum (more aggressive discounting of future payments); a lower rate produces a larger lump sum. At 6.46%, the lump sum is approximately 7.5–8.5× the equivalent monthly pension forgone, depending on retirement age. Compared with historical rates (4–5% in the 2018-2021 window), 2026's 6.46% is on the higher end and produces relatively smaller lump sums.

When the lump sum makes sense

The lump sum trades long-term inflation-protected income for an immediate cash payment. It can win in these scenarios:

• You have a higher private-investment return target than 6.46%: If you can reliably earn >6.46% on the lump sum, you come out ahead. Historical S&P 500 returns are ~10%, but with substantial volatility and sequence-of-returns risk.
• You face a major near-term capital need: paying off a high-interest debt, starting a business, buying a home outright in a high-cost area.
• You have shortened life expectancy: known terminal illness, very poor health.
• Tax-rate arbitrage: The lump sum is taxable in the year received (potentially pushing you into a higher bracket); the monthly pension is taxed gradually. Strategic placement during a low-income gap year can reduce total tax.

And it loses in these scenarios:

• You can't reliably earn the LSDR rate: Conservative investments today yield 3–5% — well below 6.46%. The lump sum is "expensive" money for the government to give you because they assume you'll earn 6.46% on it; if you can't, you lose.
• COLA on the monthly pension: The standard pension receives full CPI-W COLA (38 USC § 1401a). The lump sum locks in today's dollars; over 30 years of 2.5% inflation, the monthly stream gains substantial purchasing-power value the lump escapes.
• SBP coverage: SBP premiums are deducted from monthly retired pay. A lump-sum election reduces both your monthly pay and (proportionally) the SBP base amount that can be elected.
• You will live a long time: The standard pension has no end date; the lump-sum reduction does end at 67 but you give up purchasing power to get there.

Continuation Pay — the 12-year decision

At the 12-year point (between 8 and 12 years per 10 USC § 356 and DoDI 1304.31), BRS members are eligible for a one-time Continuation Pay (CP) bonus. The bonus is a multiple of monthly base pay (statutory range 2.5× to 13×) and is set annually by each service based on retention needs.

In return for accepting CP, the member commits to an additional 3–4 years of service beyond the 12-year point. CP can be taken as a lump sum or in up to 4 annual installments. CP is fully taxable in the year received.

CP multiplier ranges typical of recent years: Officers have generally received the minimum 2.5×; enlisted have ranged from 2.5× to 5× depending on AFSC/MOS/rate and service-specific retention bonuses for critically-short specialties have gone higher. The OSD CP rate memo is updated quarterly — verify your service's current rate via your career counselor or HRC/AFPC/etc. Until a specific service-CP memo is on disk, this calculator accepts your entered CP multiplier (default 2.5×) for accurate math.

BRS TSP matching — the bigger picture

BRS members receive automatic and matching contributions to their Thrift Savings Plan (TSP) from day 60 of service:

• 1% automatic agency contribution — credited regardless of whether the member contributes. Subject to 2-year vesting.
• Matching contributions on member contributions: 1% match on the first 3% of basic pay contributed, plus 0.5% on each of the next 2% (4% match total at 5% member contribution).

Over a 20-year career, the agency match alone can yield $200,000–$400,000 in TSP value (assuming an E-5 to E-7 progression and average market returns), which the legacy High-3 system did not provide. That's the "blended" piece — BRS members give up some defined-benefit pension value in exchange for portable defined-contribution wealth that they keep regardless of whether they reach 20 years.

For separators who leave before 20 years, BRS is a clear win over High-3 (whose pension is forfeited entirely below 20 YOS). For long-career retirees who stay 30+ years, High-3's higher multiplier may produce a larger lifetime pension — though never including the TSP portability.

Lump-sum decision checklist

Before electing a lump sum at retirement, work through these:

1. Project your standard pension with COLA over your expected lifetime — use the comparison above as a starting point and add 2.5% annual COLA.
2. Compute the after-tax lump sum (lump is taxable; consult tax pro for bracket placement).
3. Project the after-tax growth of the invested lump sum at your realistic return assumption.
4. Factor in SBP coverage — lump sum reduces the base amount available for SBP, reducing surviving-spouse protection.
5. Factor in VA disability offset — if you have a VA rating, retired-pay waiver math interacts with both lump and reduced pension.
6. Confirm state tax treatment — some states exempt military retirement entirely, others tax the lump differently than the monthly.