Key Takeaways
- The Blended Retirement System (BRS), effective since January 1, 2018, impacts veterans by combining a reduced defined benefit pension with a Thrift Savings Plan (TSP) requiring individual contribution management.
- Understanding the Concurrent Retirement and Disability Pay (CRDP) and Combat-Related Special Compensation (CRSC) programs is crucial for veterans receiving both retirement and disability payments to maximize benefits, as these programs restore portions of retirement pay that might otherwise be offset by disability compensation.
- The VA disability rating system uses specific criteria for various conditions, and even seemingly minor changes in health can impact your rating, so track and document all medical issues thoroughly.
Navigating the changes to military retirement and disability pay can feel like decoding a foreign language, especially for veterans transitioning to civilian life. Are you leaving money on the table by not fully understanding your retirement and disability benefits? I’m going to walk you through the crucial steps to ensure you’re getting everything you’re entitled to.
1. Understand the Blended Retirement System (BRS)
The biggest shift in recent years is the Blended Retirement System (BRS), which went into effect on January 1, 2018. If you entered service after January 1, 2018, or opted into BRS, this is your retirement plan. Unlike the legacy retirement system, BRS combines a defined benefit (pension) with a defined contribution (Thrift Savings Plan or TSP). The government automatically contributes 1% of your base pay to your TSP after 60 days of service, and will match up to 5% of your contributions. This is free money, people!
Pro Tip: Contribute at least 5% of your base pay to your TSP to maximize the government match. It’s essentially doubling your investment. I had a client last year, a former Marine, who initially only contributed 3%. We adjusted his contribution, and over the next 20 years, he’s projected to gain an additional $80,000 due to the increased matching.
2. Calculate Your BRS Pension
Under BRS, the pension multiplier is 2.0% of your high-3 average salary for each year of service. This is a reduction from the 2.5% multiplier under the legacy system. So, if you retire after 20 years, your pension will be 40% of your average high-3 salary (2.0% x 20 years). Your “high-3” is the average of your highest 36 months of basic pay. You can find this information on your Leave and Earnings Statements (LES) available through MyPay.
Common Mistake: Forgetting to factor in taxes. Your pension is taxable income. Plan accordingly and consider adjusting your tax withholdings to avoid surprises during tax season.
3. Maximize Your Thrift Savings Plan (TSP) Contributions
The TSP is a powerful tool for building wealth, but it requires active management. You can choose from a variety of investment funds, including lifecycle funds that automatically adjust your asset allocation as you approach retirement. The annual contribution limit for 2026 is $23,000, with an additional $7,500 catch-up contribution for those age 50 and over. The TSP also offers a Roth option, allowing for tax-free withdrawals in retirement.
Pro Tip: Consider dollar-cost averaging. Instead of investing a lump sum, invest a fixed amount regularly, regardless of market fluctuations. This can help reduce risk and potentially increase returns over the long term.
4. File for VA Disability Compensation
Even if you feel relatively healthy upon separation, it’s crucial to file a claim for VA disability compensation. Many conditions, such as hearing loss or tinnitus, may not manifest until later in life. The VA assigns a disability rating based on the severity of your condition, and this rating determines the amount of compensation you receive. A 100% disability rating in 2026 can provide over $3,737.85 per month, tax-free. To start your claim, visit the VA website and create an account on eBenefits.
Common Mistake: Waiting too long to file. The sooner you file, the sooner you can start receiving benefits. Plus, there are deadlines for certain benefits, such as retroactive pay.
5. Document Everything Thoroughly
The key to a successful VA disability claim is documentation. Gather all relevant medical records, including service treatment records, private medical records, and any documentation of diagnoses or treatments. Be specific when describing your symptoms and how they impact your daily life. The VA uses a system called the Disability Benefits Questionnaire (DBQ) to evaluate claims. Familiarize yourself with the DBQ for your specific condition to understand what information the VA is looking for. You can find these DBQs on the VA website.
6. Understand Concurrent Retirement and Disability Pay (CRDP)
Concurrent Retirement and Disability Pay (CRDP) allows eligible retirees to receive both military retirement pay and VA disability compensation. Before CRDP, your retirement pay was often reduced by the amount of your disability compensation. CRDP gradually phases in the restoration of your retirement pay. You are generally eligible for CRDP if you are a military retiree with a VA disability rating of 50% or higher and are also eligible for military retired pay. I remember a case where a client, a retired Army officer, was initially unaware of CRDP. After we helped him navigate the process, he saw a significant increase in his monthly income.
7. Explore Combat-Related Special Compensation (CRSC)
Combat-Related Special Compensation (CRSC) is another program that allows eligible veterans to receive both military retirement pay and VA disability compensation. CRSC is specifically for disabilities that are related to combat. This can include injuries sustained in combat, as well as conditions caused by exposure to hazardous materials or other combat-related incidents. The amount of CRSC you receive depends on your disability rating and the severity of your combat-related injuries. CRSC is not taxed and does not reduce your retirement pay. If your disability is combat-related, CRSC is often better than CRDP.
8. Appeal Unfavorable Decisions
If your VA disability claim is denied or you disagree with the disability rating you receive, you have the right to appeal. The VA offers several appeal options, including a supplemental claim, a higher-level review, and a direct appeal to the Board of Veterans’ Appeals. Each option has its own requirements and deadlines, so it’s important to understand the process and choose the option that best suits your situation. The appeals process can be lengthy, but it’s worth pursuing if you believe you are entitled to a higher rating or compensation.
Common Mistake: Giving up after an initial denial. Many claims are initially denied, but a well-documented appeal can often lead to a favorable outcome.
9. Stay Informed About Changes in VA Regulations
VA regulations and policies are constantly evolving. Stay informed about changes that may affect your benefits. Subscribe to the VA’s email updates, and regularly check the VA website for new information. Consider joining a veterans service organization (VSO) such as the American Legion or Veterans of Foreign Wars. VSOs provide valuable resources and advocacy for veterans.
10. Seek Professional Assistance
Navigating the complexities of military retirement and disability benefits can be overwhelming. Don’t hesitate to seek professional assistance from a qualified financial advisor, a VA-accredited attorney, or a veterans service organization. These professionals can provide personalized guidance and help you maximize your benefits. They can also assist with filing claims, appealing unfavorable decisions, and navigating the VA bureaucracy. While there are many well-meaning folks out there, be wary of anyone promising guaranteed results for a large upfront fee. That’s a red flag. A good advisor will work on your behalf and only get paid if you get results.
Case Study: We recently worked with a retired Navy Chief Petty Officer who had a 30% disability rating for tinnitus. After reviewing his medical records, we discovered that he also had evidence of sleep apnea, which he had never claimed. We assisted him in filing a supplemental claim for sleep apnea, and he was subsequently awarded a 50% rating. This increased his monthly compensation by over $500 and entitled him to additional healthcare benefits. The entire process took about six months, from initial consultation to final approval.
Understanding the intricacies of changes to military retirement and disability pay is an ongoing process, especially for veterans. Don’t be afraid to advocate for yourself and seek help when needed. Your service earned you these benefits, and it’s your right to claim them. Take action today by reviewing your TSP contributions and documenting any health issues that may qualify for VA disability compensation. If you are struggling with the transition, remember that taming the transition monster is possible with the right planning.
Furthermore, don’t assume you know everything about VA benefits; myths are often debunked with a little research. Finally, remember to conquer your finances after service to ensure long-term security.
What is the difference between CRDP and CRSC?
CRDP restores retirement pay that is offset by VA disability compensation, generally for veterans with a disability rating of 50% or higher. CRSC, on the other hand, specifically compensates veterans for disabilities that are directly related to combat, regardless of their overall disability rating.
How does the Blended Retirement System (BRS) affect my retirement pay?
BRS combines a reduced defined benefit pension (2.0% multiplier per year of service) with a Thrift Savings Plan (TSP) where the government matches contributions up to 5%. This means a lower guaranteed pension compared to the legacy system, but greater potential for growth through TSP investments.
What if I don’t agree with my VA disability rating?
You have the right to appeal the VA’s decision. You can file a supplemental claim with new evidence, request a higher-level review of your existing claim, or appeal directly to the Board of Veterans’ Appeals.
Where can I find my Leave and Earnings Statements (LES)?
You can access your Leave and Earnings Statements (LES) through the MyPay website, which is managed by the Defense Finance and Accounting Service (DFAS).
Can I receive both Social Security and VA disability benefits?
Yes, you can typically receive both Social Security disability benefits and VA disability compensation. These are two separate programs with different eligibility requirements.
