A Uniformed Services Benefits Primer: What Every Service Member Should Know

Understanding your benefits is essential to making informed financial decisions. The Uniformed Services offer one of the most comprehensive retirement and healthcare packages available, but the rules can be complex.

This primer covers some of the key benefits every service member should understand, including  the difference between the two retirement systems used for uniformed services, healthcare coverage through TRICARE, considerations for those moving into civilian federal employment, and more.

About Your Pension: The Legacy Retirement System vs. Blended Retirement System

One of the most significant retirement decisions affecting today’s service members is whether they are covered by the Legacy Retirement System (LRS) or the Blended Retirement System (BRS):

• The Legacy Retirement System provides a traditional defined-benefit pension for members who complete at least 20 years of qualifying active-duty service. It’s what’s often called a “cliff vest” pension, meaning that once a service member reaches 20 years of service, they are fully and immediately vested in the plan. If they separate before reaching the 20-year mark, however, they generally receive no pension benefit.
• The Blended Retirement System, which applies to most members who entered service on or after January 1, 2018 (or those who elected to opt in), combines a smaller defined-benefit pension with an employer match to the Thrift Savings Plan (TSP). The employer match vests in just two years of service, allowing service members who leave the military before completing 20 years in service to retain the match and all earnings on it in their TSP accounts, and making this system more portable than its predecessor. The employer match to TSP is identical to the civilian service TSP match: your service will contribute a mandatory 1% regardless of your elective TSP contribution. In order to get up to another 4% in employer match monies, you must contribute at least 5% in elective deferrals to your TSP.

While the two systems differ in structure, both reward long-term service and should be considered as part of a broader retirement funding strategy.

How Military Pensions Are Calculated

While both the legacy “High-3” system and the Blended Retirement System (BRS) calculate the monthly pension using the same base pay average, they use different multiplier percentages:

• Under the Legacy High-3 System: 5% × Years of Service × Average of Highest 36 Months of Basic Pay
• Under the Blended Retirement System (BRS): 0% × Years of Service × Average of Highest 36 Months of Basic Pay

For example, a service member retiring after 20 years under the Legacy Retirement System would get a pension equal to 50% of their HI-36 average basic pay(20 years x 2.5%), whereas a service member retiring after 20 years under the BRS would receive a pension equal to 40% of their HI-36 average basic pay (20 years × 2%). The up to 5% employer match available under the BRS is intended to bridge the gap between the Legacy pension and the smaller BRS pension.

It’s also important to note that only basic pay is used in the pension calculation. Special pays, housing allowances, subsistence allowances, bonuses, and other forms of compensation are not included in the pension calculation.

Cost-of-Living Adjustments (COLAs)

Whereas civilian Feds receive an adjusted COLA under FERS, military retirees receive a full annual COLA that exactly matches the percentage increase in the Consumer Price Index (CPI-W), ensuring their pensions fully keep pace with inflation. The same is true for COLAs on VA disability payments.

In 2025, for example, the CPI-2 was 2.5%, and military retirees received a mirrored 2.5% COLA.

TRICARE Healthcare Benefits

Healthcare is one of the most valuable benefits available to uniformed service members and retirees.

While serving on active duty, service members receive comprehensive healthcare coverage at no cost.

After retirement, eligible retirees and their families can continue coverage through TRICARE, which offers healthcare at premiums and out-of-pocket costs that are often significantly lower than comparable private insurance. Depending on the plan selected (TRICARE Prime vs. TRICARE Select), retirees may pay varying enrollment fees, deductibles, and copayments prior to age 65. These costs are based on whether you are in Group A (initial enlistment/commission before Jan 1, 2018) or Group B (initial enlistment/commission on or after Jan 1, 2018):

TRICARE Prime

• Group A: $381.96 per year for individuals; $765 per year for families.
• Group B: $462.96 per year for individuals; $927 per year for families.

TRICARE Select

• Group A: $186.96 per year for individuals; $375 per year for families.
• Group B: $594.96 per year for individuals; $1,191 per year for families.

Because these amounts are updated periodically, it’s a good idea to review the latest figures each year on the TRICARE website.

Transitioning from Uniformed Service to Civilian Federal Employment

Many service members continue serving the public after leaving the military by accepting civilian positions with the federal government. While this can provide an excellent second career, it’s important to understand how military and civilian retirement benefits interact.

In general, active-duty service cannot be used to earn both a military pension and a Federal Employees Retirement System (FERS) pension for the same period of service.

Service members who want to receive credit for their active-duty military service under FERS must typically make a military service deposit (often called “buying back” military time) and waive their military retired pay at retirement. This allows the years of military service to be combined with civilian federal service toward a single FERS pension.

There are important exceptions, particularly for members of the Reserve and National Guard who receive reserve retired pay. Because the rules vary based on an individual’s service history, retirement eligibility, and career plans, it’s important to evaluate these decisions carefully before making a military service deposit or applying for retirement.

The uniformed services offer valuable retirement benefits that can provide financial security for decades, but understanding how those benefits work is essential to making the most of them!

Whether you’re comparing retirement systems, planning for healthcare costs, preparing for retirement, or considering a transition to civilian federal employment, taking the time to understand your options can help you make more informed financial decisions. The team at Serving Those Who Serve understands the unique benefits available to our service men and women, and we’d be happy to help you build a personalized financial plan that makes the most of the benefits you’ve earned through your service. Feel free to reach out to us to learn more!

**Written by Katelyn Murray, CFP®, ChFEBC®, FBS®, CFT-1™, ECA. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Katelyn Murray and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **