The BRS lump sum option
Cash now, less pension until 67.
The catch: the cash is far less than the pay you give up, because DoD discounts it.
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1. How the trade works
Under the Blended Retirement System, a member who retires with a pension can give up part of it for cash up front:
- Take 25%, and you get 75% of your monthly retired pay until full retirement age.
- Take 50%, and you get 50% of your monthly retired pay until full retirement age.
- At full Social Security retirement age, 67 for anyone born in 1960 or later, your pay is recomputed to what it would have been with no lump sum, including every cost-of-living increase in between.
The cash can be paid all at once or as a series of payments. For a regular retirement, the first payment comes within 60 days. You must choose at least 90 days before your retirement date, and once you take the money you can’t challenge the amount because COLAs or assumptions change later.
2. Who can take it
- Members under BRS: those who joined on or after January 1, 2018, or who opted in.
- Guard and Reserve: yes. The first payment comes within 60 days of when your retired pay starts, usually at 60.
- Not disability retirees. Members retired under chapter 61 can’t take the lump sum.
- Not legacy High-3 members. The lump sum is only for BRS. See High-3 vs. BRS.
3. Why it’s smaller than it looks
DoD adds up the pay you’d give up until 67, then shrinks it to a present value using a discount rate it sets each year. The rate is stated above inflation, so the lump sum is always less than the total pay you give up, and the gap grows with the rate. Retire at 38 and you give up 29 years of partial pay, so the discount bites hard.
DoD sets a new rate each year, and your branch gives you a personal lump sum estimate before you choose. Use the rate and amount on that estimate. We don’t show a rate here because we couldn’t confirm the current one from an official DoD source.
Taxes cut it further. The lump sum is retired pay, so it’s taxed as ordinary income in the year you receive it. A big single payment can push you into a higher bracket; spreading it over more than one payment can soften that.
4. Run your numbers
5. When it can make sense
For most retirees, keeping the full monthly pension is the better deal. The lump sum is worth a closer look if:
- You’d pay off high-interest debt that costs more than the discount rate.
- You have a civilian job lined up and won’t need the full pension to live on until 67.
- You have a real, time-sensitive need, such as a home purchase you’d otherwise borrow heavily for.
Before you choose, ask the retirement office how the reduced pay works with your Survivor Benefit Plan election and any VA disability offset. See also how retired pay is calculated and your TSP after the military.
6. Frequently asked questions
Who can take the BRS lump sum?
Members covered by the Blended Retirement System, meaning those who joined on or after January 1, 2018 or opted in, who retire with retired pay. Members retired for disability under chapter 61 cannot take it.
How much of my pension do I give up for the lump sum?
Either 25% or 50% of your monthly retired pay, from retirement until you reach full Social Security retirement age, which is 67 for anyone born in 1960 or later.
Does my full pension come back at 67?
Yes. At full retirement age your retired pay is recomputed to the amount it would have been with no lump sum, including all the cost-of-living increases in between.
When do I have to decide on the lump sum?
No later than 90 days before your retirement date.
Why is the lump sum smaller than the pay I give up?
DoD discounts the future payments to a present value using a discount rate it sets each year. The higher the rate and the younger you retire, the smaller the lump sum is compared with the pay you give up.