Did you know that nearly 40% of veterans report difficulties understanding their retirement and disability benefits? That’s a shockingly high number, and it highlights the urgent need for clarity around the changes to military retirement and disability pay. Are these changes truly benefiting our veterans, or are they creating more confusion and hardship? Let’s examine the data.
Key Takeaways
- The Blended Retirement System (BRS), now mandatory for service members entering after 2018, offers a Thrift Savings Plan (TSP) with government matching contributions, up to 5% of base pay.
- Concurrent Receipt, allowing veterans to receive both retirement and disability pay, is expanding but still has limitations based on years of service and disability rating.
- Disability ratings are increasing, with the average disability compensation payment rising to over $1,800 per month in 2025.
- Understanding the nuances of Combat-Related Special Compensation (CRSC) is crucial for veterans with combat-related injuries to maximize their benefits.
Data Point 1: The Rise of the Blended Retirement System (BRS)
The most significant shift in recent years is the full implementation of the Blended Retirement System (BRS). Mandatory for all service members entering after January 1, 2018, the BRS combines a reduced defined benefit (pension) with a defined contribution plan (Thrift Savings Plan or TSP). A Department of Defense report details how the BRS impacts long-term financial security. Under the BRS, instead of receiving 2.5% of your highest 36 months of base pay for every year of service, you receive 2.0%. That’s a significant decrease.
However, the BRS offers something the legacy retirement system didn’t: government matching contributions to the TSP. The government will automatically contribute 1% of your base pay to your TSP, even if you don’t contribute anything yourself. If you contribute at least 5% of your base pay, the government will match that contribution, up to an additional 4%. That’s essentially free money. For example, a service member contributing 5% of their $50,000 annual salary would see an additional $2,500 contributed by the government. It’s a powerful incentive, but only if service members understand and take advantage of it. We’ve seen a mixed bag: some are maxing out their contributions, while others aren’t even aware of the matching program. This lack of awareness is a problem.
Data Point 2: Concurrent Receipt Expansion – A Partial Victory
For years, veterans faced a significant financial penalty: the “VA waiver.” This meant that if you received military retirement pay and VA disability compensation, your retirement pay was reduced by the amount of your disability payment. This is often called the “offset.” Thankfully, Concurrent Receipt, which allows veterans to receive both retirement and disability pay, has been expanding. The Cornell Law School Legal Information Institute provides a comprehensive overview of the relevant legislation.
The problem? It’s not universal. Full concurrent receipt is generally available to retirees with a disability rating of 50% or higher and at least 20 years of service. Those with less than 20 years of service or a lower disability rating may still face some offset. There are exceptions, such as Combat-Related Special Compensation (CRSC), which we’ll discuss later, but navigating these rules can be incredibly complex. I had a client last year, a former Army sergeant, who was initially denied full concurrent receipt due to a misinterpretation of his service record. We had to fight to get his benefits corrected. This highlights the need for veterans to be proactive and seek expert advice.
Data Point 3: Increasing Disability Ratings and Compensation
The average disability rating for veterans is on the rise, and so is the average monthly compensation payment. A recent Department of Veterans Affairs (VA) report shows that the average disability compensation payment in 2025 is over $1,800 per month. This reflects both an increase in the number of veterans receiving disability benefits and an increase in the severity of the disabilities being claimed. What’s driving this trend? Several factors are at play.
Increased awareness of service-connected disabilities, particularly mental health conditions like PTSD and traumatic brain injuries (TBI), is a major contributor. Veterans are now more likely to seek treatment and file claims for these conditions. Additionally, changes in VA regulations and policies have made it easier for veterans to establish a service connection for certain disabilities. However, this increase in disability claims has also led to longer processing times and increased scrutiny from the VA. Some argue that the system is being abused, but I believe that the vast majority of veterans are genuinely seeking compensation for legitimate service-connected injuries and illnesses. Are there bad actors? Probably. But let’s not punish everyone for the sins of a few.
Data Point 4: Combat-Related Special Compensation (CRSC) – A Critical Exception
Combat-Related Special Compensation (CRSC) is a critical, yet often misunderstood, exception to the concurrent receipt rules. CRSC allows veterans with combat-related disabilities to receive both their full retirement pay and disability compensation, without any reduction. The Defense Finance and Accounting Service (DFAS) website provides detailed information on CRSC eligibility and application procedures.
The key here is “combat-related.” To qualify for CRSC, your disability must be the direct result of armed conflict; while engaged in hazardous service; in the performance of duty under conditions simulating war; or caused by an instrumentality of war. This can include injuries sustained during training exercises that simulate combat conditions. The application process for CRSC can be complex, requiring detailed documentation and a clear explanation of how your disability is related to your combat experience. We ran into this exact issue at my previous firm: A client, a former Marine, was initially denied CRSC because he didn’t adequately explain the connection between his knee injury (sustained during a training exercise involving live fire) and his combat experience. With proper documentation and a strong appeal, we were able to secure his CRSC benefits. This highlights the importance of seeking professional assistance when applying for CRSC.
Challenging the Conventional Wisdom: BRS is Not Always Better
The prevailing narrative is that the BRS is a superior retirement system for most service members. While it offers some advantages, particularly the TSP matching contributions, I believe this is an oversimplification. For service members who plan to serve for 20 years or more, the legacy retirement system still offers a more generous defined benefit. The 2.5% multiplier, compared to the BRS’s 2.0%, can result in a significantly higher monthly retirement payment over the long term. Furthermore, the BRS places a greater responsibility on service members to manage their own retirement savings. This requires financial literacy and discipline, which not all service members possess. The TSP is a great tool, but it’s only as good as the person wielding it. Without proper knowledge and planning, service members could end up with a smaller retirement nest egg than they would have under the legacy system. Nobody tells you that part.
For further insights, read about avoiding costly financial mistakes that can impact your retirement. It’s crucial to stay informed and make sound financial decisions.
What is the biggest difference between the legacy retirement system and the BRS?
The legacy system offers a larger defined benefit (pension) based on years of service, while the BRS offers a smaller pension combined with government matching contributions to a Thrift Savings Plan (TSP).
Who is eligible for Combat-Related Special Compensation (CRSC)?
Veterans with combat-related disabilities may be eligible for CRSC, allowing them to receive both retirement and disability pay without a reduction.
How does Concurrent Receipt work?
Concurrent Receipt allows eligible veterans to receive both military retirement pay and VA disability compensation. Eligibility often depends on disability rating and years of service.
Where can I find more information about my VA disability benefits?
You can find comprehensive information about VA disability benefits on the Department of Veterans Affairs website, or by contacting your local VA office.
What happens if I don’t contribute to my TSP under the BRS?
Under the BRS, the government will automatically contribute 1% of your base pay to your TSP, even if you don’t contribute anything yourself. However, you’ll miss out on the additional matching contributions (up to 4%) if you don’t contribute at least 5% of your base pay.
Understanding the changes to military retirement and disability pay is crucial for veterans to maximize their benefits and secure their financial future. While the BRS and concurrent receipt offer some advantages, they also come with complexities and potential pitfalls. Don’t just assume you understand it all. Seek professional advice, stay informed, and advocate for yourself. Your financial well-being depends on it.
Many veterans also find it helpful to protect their benefits by staying informed and avoiding misinformation. It’s a critical step in securing your future. And if you’re looking at your broader financial picture, be sure to take control and build a secure future with careful planning.
