Understanding the changes to military retirement and disability pay is vital for veterans and their families. These changes can significantly affect financial planning and long-term security. Navigating these updates can be complex, but with the right information, you can ensure you receive the benefits you’re entitled to. Are you prepared for the potential impact on your financial future?
1. Understand the Blended Retirement System (BRS)
The Blended Retirement System (BRS) went into effect on January 1, 2018, and represents a significant shift from the legacy retirement system. It combines a traditional defined benefit (pension) with a defined contribution plan (Thrift Savings Plan or TSP). If you entered the military after 2017, you’re automatically enrolled in BRS. Those who joined before had the option to opt-in.
Pro Tip: Even if you opted out of BRS, understanding its components is helpful, especially regarding TSP contributions and matching. It can influence your overall financial strategy as a veteran.
The defined benefit portion provides a pension calculated as 2.0% (instead of the legacy system’s 2.5%) of your highest 36 months of base pay for each year of service. The TSP portion allows you to contribute a percentage of your pay, and the military matches contributions up to 5%.
2. Review Your Leave and Earnings Statement (LES)
Your Leave and Earnings Statement (LES) is your primary source for understanding your current pay and benefits. Look for sections detailing your TSP contributions, matching amounts, and any deductions related to retirement or disability. This document is accessible through your MyPay account. I remember when I first transitioned out; deciphering the LES was like learning a new language, but it’s essential for tracking your benefits.
Common Mistake: Many veterans fail to regularly review their LES, missing potential errors in contributions or deductions. Set a recurring reminder to check it monthly.
3. Navigate Disability Compensation Changes
Disability compensation is managed by the Department of Veterans Affairs (VA). Changes to disability ratings and compensation amounts occur periodically, often tied to cost-of-living adjustments (COLA). Keep an eye on announcements from the VA regarding these updates. You can find this information on the VA’s official website.
The amount of compensation you receive depends on your combined disability rating, which is determined using a complex formula outlined in the VA Schedule for Rating Disabilities. The higher your rating, the greater the compensation. In 2026, a veteran with a 100% disability rating and no dependents receives approximately $4,000 per month. This figure is subject to change based on annual COLA adjustments.
4. Understand Concurrent Retirement and Disability Pay (CRDP) and Combat-Related Special Compensation (CRSC)
Concurrent Retirement and Disability Pay (CRDP) and Combat-Related Special Compensation (CRSC) are two programs designed to mitigate the offset between military retirement pay and VA disability compensation. CRDP gradually restores retirement pay that was previously reduced due to receiving disability pay. CRSC, on the other hand, provides compensation for disabilities that are directly related to combat. These are not automatic; you must apply.
Pro Tip: Explore both CRDP and CRSC to determine which program benefits you most. Eligibility criteria vary, and you may qualify for one but not the other. Applying for both could maximize your benefits.
I had a client last year, a former Army Ranger, who was initially unaware of CRSC. After reviewing his medical records and service history, we determined he was eligible due to injuries sustained during a deployment to Afghanistan. He received an additional $1,500 per month, significantly improving his financial situation. Don’t leave money on the table.
5. Update Your Beneficiary Designations
Ensure your beneficiary designations for your TSP account and other retirement plans are up to date. Life changes, such as marriage, divorce, or the birth of children, necessitate reviewing and updating these designations. This ensures your assets are distributed according to your wishes. You can manage your TSP beneficiaries through the Thrift Savings Plan website.
Common Mistake: Forgetting to update beneficiary designations after significant life events is a common oversight. I’ve seen cases where ex-spouses remained listed as beneficiaries years after a divorce, leading to legal complications and unintended consequences.
6. Review Your SBP (Survivor Benefit Plan) Coverage
The Survivor Benefit Plan (SBP) provides a monthly annuity to your surviving spouse or eligible children upon your death. Carefully consider your SBP coverage options during retirement. Declining or reducing coverage can save money in the short term but may leave your family financially vulnerable. The cost and benefit depend on the coverage level you choose.
Here’s what nobody tells you: SBP is complex. Consider the long-term financial needs of your family. Consult with a financial advisor to determine the appropriate level of coverage. It’s a significant decision with lasting consequences.
7. Monitor Legislative Changes
Military retirement and disability pay are subject to legislative changes. Congress can pass new laws that affect eligibility criteria, compensation amounts, and program rules. Stay informed about proposed legislation and enacted laws that may impact your benefits. Organizations like the Military Officers Association of America (MOAA) often provide updates on legislative matters affecting veterans.
8. Consult with a Financial Advisor
Navigating the complexities of military retirement and disability pay can be overwhelming. Consulting with a qualified financial advisor who specializes in military benefits is highly recommended. A financial advisor can help you develop a personalized financial plan that takes into account your specific circumstances and goals. They can also provide guidance on investment strategies, tax planning, and estate planning.
9. Case Study: Optimizing Benefits for a Retired Sergeant
Let’s examine a case study. Sergeant Miller, a retired Army veteran, served for 22 years. He retired in 2020 under the BRS system. Initially, he only focused on his pension and didn’t fully understand his TSP options or potential disability benefits. In early 2025, he attended a veterans’ financial planning workshop. There, he learned about the potential for disability compensation and CRSC.
He contacted a VA-accredited claims agent. They reviewed his medical records and helped him file claims for several service-connected conditions, including knee injuries and PTSD. After several months, the VA awarded him a combined disability rating of 70%. This resulted in a monthly disability payment of approximately $1,700. Furthermore, because his PTSD was combat-related, he qualified for CRSC, which further reduced the offset to his retirement pay.
He also began contributing 10% of his remaining retirement pay to his TSP, taking full advantage of the matching contributions. Over the next year, his TSP balance grew significantly. By early 2026, Sergeant Miller had substantially increased his overall financial security by actively pursuing all available benefits.
10. Utilize Online Resources and Tools
Numerous online resources and tools can assist you in managing your military retirement and disability pay. The Defense Finance and Accounting Service (DFAS) website provides information on pay statements, tax forms, and other financial documents. The VA website offers resources on disability compensation, healthcare benefits, and education programs. Additionally, several third-party websites and apps provide calculators and tools for estimating retirement income and disability payments.
Changes to military retirement and disability pay can be intricate. By understanding the BRS, regularly reviewing your LES, exploring CRDP and CRSC, and staying informed about legislative updates, you can make informed decisions about your financial future. Seeking professional advice from a financial advisor is also a smart move. Don’t wait—take control of your benefits today. To ensure you’re not missing out, it’s crucial to understand all your VA benefits.
What is the Blended Retirement System (BRS)?
The Blended Retirement System (BRS) is a retirement system that combines a traditional pension with a defined contribution plan (Thrift Savings Plan or TSP). It applies to service members who entered the military on or after January 1, 2018, and those who opted into it.
What is Concurrent Retirement and Disability Pay (CRDP)?
Concurrent Retirement and Disability Pay (CRDP) is a program that restores retirement pay that was previously reduced due to receiving VA disability compensation. It allows eligible veterans to receive both retirement pay and disability pay without a reduction.
What is Combat-Related Special Compensation (CRSC)?
Combat-Related Special Compensation (CRSC) provides compensation for disabilities that are directly related to combat. It is designed to compensate veterans for injuries or conditions resulting from their service in a combat zone or during combat-related activities.
How often does disability compensation change?
Disability compensation amounts typically change annually based on cost-of-living adjustments (COLA). The VA announces these changes each year, usually in the fall, and the new rates take effect in January.
Where can I find my Leave and Earnings Statement (LES)?
You can access your Leave and Earnings Statement (LES) through your MyPay account. This online portal provides access to your pay statements, tax forms, and other financial documents.
The most crucial action you can take right now is to schedule a consultation with a financial advisor specializing in military benefits. Don’t delay securing your financial future. And remember, mastering your money and benefits is a lifelong journey after your service. Additionally, it’s always a good idea to be aware of common veterans benefits myths to avoid costly mistakes.
