BRS vs Legacy Retirement: Which Military Retirement System Builds More Wealth?

One of the most consequential financial decisions for service members is understanding which retirement system applies to them — and whether they're maximizing it. The Legacy High-3 system and the Blended Retirement System (BRS) work very differently, and that difference can mean hundreds of thousands of dollars over your lifetime.

Let's break down both systems, run the real numbers, and figure out which one actually builds more wealth.

The Legacy High-3 System: All or Nothing

The Legacy retirement system is straightforward: serve 20 years, receive a pension for life. Your pension equals 50% of your highest 36 months of base pay (the "High-3"), plus an additional 2.5% for each year beyond 20.

Legacy Math:

20 years = 50% of High-3
24 years = 60% of High-3
30 years = 75% of High-3 (max)

Sounds great — but there's a catch. If you separate at 19 years and 364 days, you get nothing. Zero pension. All those years of service, and you walk away with whatever you saved on your own.

This is the "all or nothing" reality of Legacy. No vesting, no partial credit, no government matching along the way. You're betting your entire retirement on making it to 20.

The Blended Retirement System: Something for Everyone

BRS, which became the default for service members joining after January 1, 2018, takes a different approach. You get:

Reduced pension: 40% of High-3 at 20 years (instead of 50%)
TSP matching: Government matches up to 5% of your base pay
Continuation pay: Mid-career bonus at 8-12 years (requires additional service commitment)
Immediate vesting: TSP matching starts at 60 days, fully vests at 2 years

The pension is smaller, but you're building wealth from day one through TSP matching. And if you separate before 20 years? You keep all your TSP contributions and the government's matching — that's yours forever.

The Real Trade-Off: Pension vs. Portable Wealth

Here's what it comes down to: Legacy gives you a bigger pension if you make it to 20. BRS gives you smaller pension plus portable wealth that grows regardless of whether you stay in.

Legacy pros:

10% higher pension multiplier (50% vs 40%)
No action required — just serve and collect
COLA adjustments from day one

BRS pros:

TSP matching from the start (free money)
Portable wealth if you separate early
Continuation pay bonus
Lump sum option at retirement

When Does BRS Actually Win? The Breakeven Analysis

The math depends on three factors: your contribution rate, investment returns, and how long you serve.

Scenario 1: You Don't Reach 20 Years

If you separate before retirement eligibility, BRS wins by default. Legacy service members who separate early get zero pension value from their service years. BRS service members keep their TSP balance — including all government matching — and can continue growing it for decades.

About 83% of enlisted members and 70% of officers don't make it to 20 years. For the majority of service members, BRS is objectively better because they'll actually receive something.

Scenario 2: You Serve Exactly 20 Years

This is where it gets interesting. Let's run real numbers.

Assumptions:

Consistent 5% TSP contribution (to capture full match)
7% average annual investment return
Standard promotion timeline
2026 pay scales

For an E-7 retiring at 20 years:

Factor	Legacy	BRS
High-3 Average	~$5,500/month	~$5,500/month
Monthly Pension	$2,750 (50%)	$2,200 (40%)
Pension Difference	—	-$550/month
TSP Balance (20 yrs)	~$180,000*	~$250,000**
TSP Difference	—	+$70,000

*Self-funded only, no match | **Includes government matching

The $70,000 extra in TSP, invested until age 67, could grow to over $280,000 (at 7% returns). Meanwhile, the $550/month pension difference ($6,600/year) would need to compound for decades to close that gap.

Breakeven age for E-7: Around 72-75 years old. If you live past that, Legacy's larger pension overtakes BRS's investment advantage. If you don't, BRS built more total wealth.

For an O-4 retiring at 20 years:

Factor	Legacy	BRS
High-3 Average	~$9,000/month	~$9,000/month
Monthly Pension	$4,500 (50%)	$3,600 (40%)
Pension Difference	—	-$900/month
TSP Balance (20 yrs)	~$300,000*	~$420,000**
TSP Difference	—	+$120,000

Breakeven age for O-4: Around 73-77 years old.

Officers have higher base pay, so both the pension difference and the TSP matching difference are larger — but the percentages work out similarly.

The "Golden Handcuffs" Reality

Here's what the breakeven math doesn't capture: the psychological and career cost of feeling trapped.

Legacy retirement creates intense pressure to stay in, even when:

You hate your job
Your family is struggling with the lifestyle
A better civilian opportunity appears
Your mental health is suffering

Walking away at year 15 or 17 means abandoning a pension worth potentially $1.5 million over your lifetime. That's not an easy choice, and many service members stay in situations they shouldn't because the math feels impossible.

BRS changes this dynamic. With portable TSP wealth building from day one, separating at year 12 doesn't mean starting from scratch. You've got a solid retirement foundation and freedom to pursue civilian opportunities without the "sunk cost" pressure.

The question isn't just which system is worth more — it's which system lets you make career decisions based on what's actually right for you.

How to Maximize BRS

If you're under BRS, here's how to squeeze every dollar out of it:

1. Contribute at Least 5% to TSP

This captures the full government match. Anything less is leaving free money on the table. The match works like this:

1% automatic (you get this no matter what)
1% match on your first 3%
0.5% match on the next 2%

At 5% contribution, you're getting 5% total from the government. That's a 100% return on part of your investment before the market even opens.

2. Use Roth TSP for Combat Zone Pay

Deployed to a tax-free zone? Contribute to Roth TSP. Tax-free money going in, tax-free growth, tax-free withdrawals in retirement. This is one of the most powerful wealth-building opportunities in the entire tax code.

3. Plan Your Continuation Pay Strategically

Continuation pay (typically 2.5x monthly base pay for active duty) hits between years 8-12. Time your acceptance to maximize both the bonus and your career flexibility. Consider whether you want a 3-year or 4-year additional commitment.

4. Consider the Lump Sum Option Carefully

BRS lets you take 25% or 50% of your pension as a lump sum at retirement. This can make sense if you have a specific investment opportunity or need — but for most people, the guaranteed income stream is more valuable. Run the numbers for your specific situation.

The Bottom Line

Neither system is universally "better." Legacy wins if you're certain you'll serve 20+ years and live into your 80s. BRS wins if there's any chance you'll separate early, or if you value flexibility and portable wealth over maximum pension.

For the 80% of service members who won't reach 20 years, BRS is objectively better — you'll actually have something to show for your service.

For career service members, it's closer. BRS trades 10% pension reduction for decades of compounding TSP growth. Depending on your contributions, returns, and longevity, either system could come out ahead.

The real question: Are you making decisions that maximize your chosen system, or just hoping it works out?

Nova Net Worth helps military families track their complete financial picture — TSP, pension projections, VA benefits, and everything in between. Built by a service-disabled veteran who understands the unique challenges of military finance. Start tracking your net worth today and see where you actually stand.