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WPAFB personal financial counselor explains blended retirement system

Staff Sgt. Jeria V. Dotson discusses finanancial planning with Micah Neuse, a personal financial counselor at the Airman and Family Readiness Center. (U.S. Air Force photo/W. Eugene Barnett Jr.)

Staff Sgt. Jeria V. Dotson discusses finanancial planning with Micah Neuse, a personal financial counselor at the Airman and Family Readiness Center. (U.S. Air Force photo/W. Eugene Barnett Jr.)

WRIGHT-PATTERSON AIR FORCE BASE, Ohio – Financial planning is important to most people including active duty service members, members of the National Guard and Reserve forces, dependents of active duty/reserve, Gold Star eligible dependents, or recently retired military members who have separated in the last 180 days.

The Airman and Family Readiness Center, located in Building 2, Area A, has a personal financial counselor ready to offer expert financial advice.

This service will guide anyone who is interested in learning how to start saving, eliminate debt, or invest, said Micah Neuse, CFP ®, personal financial counselor.

“I’m here for open dialogue with no preset agenda,” Neuse said. “I start with a financial foundation and help you prioritize your personal goals. Airmen tell me what their needs are and I develop a plan on how to set a course with free financial advice. I’m not selling anything.”

One area of interest that Neuse is discussing a lot these days is the new U.S. Uniformed Services Blended Retirement System.

“The Blended Retirement System is all the talk around Wright Patterson these days,” he said. “Whether to opt-in or not to opt-in is a question people are asking themselves.”

For those that joined the service prior to Jan. 1, 2006, the new retirement system is not an option. For those that joined the service after December 31, 2005 and before January 1, 2018, they must opt in during calendar year 2018. After 2018, these service members are irrevocably grandfathered into the current system.  Anyone joining the service after December 31, 2017, will automatically be enrolled in the new system.  

“The Blended Retirement System brings major changes to the traditional military retirement system,” Neuse said. “Currently, anyone who serves at least 20 years receives retirement pay of 2.5 percent times years served times retired pay base (average of the highest 36 months of basic pay),” he said.

The BRS reduces that formula to 2 percent times years served times retired pay base, said Neuse. 

“Yet it sweetens the pot with matching contributions to the Thrift Savings Plan (TSP). Currently, military members can contribute up to $18,000 a year in 2017 into the TSP, but there are no matching DOD contributions.”

Beginning in 2018, those who opt into the BRS will receive matching TSP contributions. Department of Defense contributes to the BRS in two ways, Neuse explained.

Service members who opt in, but contribute nothing will get a 1 percent automatic contribution (after 60 days of service).  Those who contribute up to 5 percent will see up to an additional 4 percent matching contribution (at the start of three through the completion of 26 years of service).

This means the retiree receives 5 percent matching contributions on the first 5 percent. The BRS also provides continuation pay at year 12 for an additional service commitment. At retirement, the service member has an option for a lump sum payment of 25 percent or 50 percent with reduced retirement pay which bumps back up to 100 percent at full retirement age.

So which is best for an individual?  There is no crystal ball, Neuse says.

“Remember, statistics show that roughly one in five actually serve 20 years and receive a full pension.  Matching contributions are a wonderful opportunity for those who want to serve a 4 or 8 or 12-year career. The matching is well deserved. The choice to opt in is a personal choice based on family and financial needs,” he said.

Financial counselling appointments may be made with Neuse between 8 a.m. and 2:30 p.m. Monday thru Friday by calling him at 937-209-8999 or via email at pfc.wpoh.usaf@zeiders.com