The Defense Department will soon begin explaining the intricate details of the new military retirement system that is slated to take effect Jan. 1, 2018.

In 2016, troops can expect the first iteration of the forcewide financial education programs that will help eligible service members decide whether to opt into the new retirement package or stick with the traditional benefit offered under a grandfather clause.

The new model will be mandatory for all troops who enter service after Jan. 1, 2018, but anyone already in the ranks will be grandfathered into the traditional, 20-year retirement system.

Then, those who entered service after Jan. 1, 2006, will have the choice of opting into the new 401(k)-style system — creating some complex financial decisions for midcareer service members once 2018 arrives.

Troops who entered before 2006, who will have served more than 12 years once the new system launches, could opt in with a special waiver, but lawmakers believe most people in this group would see little financial benefit in switching.

The Pentagon is expecting thousands of current troops to voluntarily choose the new benefit because it will include cash contributions to Individual Retirement Accounts that vest regardless of whether members reach 20 years of service, the traditional qualifying threshold for retirement pay.

Today, only about one in five service members sees any retirement pay. Under the new plan, officials estimate, about four in five will leave the military with some level of retirement savings. The new plan would give troops who serve as little as two years some retirement benefits through their vested 401(k)-style investments in their Thrift Savings Plan accounts.

About Andrew Tilghman

Andrew Tilghman is the executive editor for Military Times. He is a former Military Times Pentagon reporter and served as a Middle East correspondent for the Stars and Stripes. Before covering the military, he worked as a reporter for the Houston Chronicle in Texas, the Albany Times Union in New York and The Associated Press in Milwaukee.

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