BRS vs High-3 at the 10-Year Mark
The math on staying or leaving under BRS vs High-3 for E-7s and O-4s at the 10-year decision point, with TSP match and continuation pay.
Ten years in uniform is the fork in the road nobody talks about until it is too late. You have enough time in service to see the finish line at 20 years, but not enough to ignore the cost of chasing it. For service members whose Date of Initial Entry to Military Service (DIEMS) puts them on the borderline between the Blended Retirement System (BRS) and the legacy High-3 system, the math at the 10-year mark tells a story that generic “stay to 20” advice misses entirely.
Two Systems, Two Philosophies
The legacy High-3 system pays a defined pension at retirement: 2.5% of the average of your highest 36 months of basic pay, multiplied by your years of service. No TSP match. No continuation pay. The entire bet rides on reaching 20 years.
The Blended Retirement System trades a smaller pension multiplier (2.0% instead of 2.5%) for three additions: a 5% TSP match at 5% employee contribution, a continuation pay bonus between years 8 and 12, and portability through your TSP account if you separate before 20.
The question at year 10 is not which system “pays more.” It is which system pays more for you, given your actual probability of staying to 20.
The E-7 Scenario: 10 Years In, Deciding at 12
An E-7 (Sergeant First Class/Chief Petty Officer) at 10 years of service earns roughly $5,246 per month in 2026 basic pay, reflecting the 3.8% raise effective January 1, 2026. At the 12-year mark, when continuation pay hits, that figure climbs to approximately $5,515/month.
| Factor | High-3 | BRS |
|---|---|---|
| Pension multiplier | 2.5% x YOS | 2.0% x YOS |
| Monthly pension at 20 YOS (est. high-3 avg ~$6,200/mo) | $3,100/mo | $2,480/mo |
| Annual pension | $37,200 | $29,760 |
| Pension difference | Baseline | -$7,440/yr |
| TSP match (5% of base pay, 10 yrs of contributions) | $0 | ~$33,000 contributed + growth |
| Continuation pay at 12 YOS (2.5x monthly base) | $0 | ~$13,788 |
| Value if you separate at year 14 | $0 pension | TSP balance + continuation pay |
The breakeven math: The $7,440 annual pension gap means High-3 pays an extra $148,800 over 20 years of retirement payments (to age 60 for an E-7 retiring around 40).
But BRS gives you roughly $33,000 in TSP match contributions over 10 years, plus continuation pay of ~$13,788, plus compound growth. At a 7% average return, that $33,000 in TSP match contributions alone grows to approximately $64,900 by retirement at 20 YOS if invested for another 10 years.
The O-4 Scenario: Higher Pay, Higher Stakes
An O-4 (Major/Lieutenant Commander) at 10 years of service earns approximately $9,420 per month in 2026 basic pay. The numbers scale up, but the tradeoffs sharpen.
| Factor | High-3 | BRS |
|---|---|---|
| Monthly pension at 20 YOS (est. high-3 avg ~$11,200/mo) | $5,600/mo | $4,480/mo |
| Annual pension | $67,200 | $53,760 |
| Pension difference | Baseline | -$13,440/yr |
| TSP match (5% of base pay, 10 yrs) | $0 | ~$56,500 contributed + growth |
| Continuation pay at 12 YOS (2.5x monthly base) | $0 | ~$24,750 |
The pension gap for the O-4 is $13,440 per year, or $268,800 over 20 years of retirement. The TSP match contributions of ~$56,500 growing at 7% for 10 years compound to roughly $111,100.
When BRS Wins
BRS is the better system when:
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You separate before 20 years. Under High-3, leaving at year 14 means zero pension. Under BRS, you keep your entire TSP balance (including the government match) plus whatever continuation pay you received. The TSP contribution limits for 2026 are $24,500, with an $8,000 catch-up for those 50 and older.
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You maximize your TSP. A BRS member contributing 5% to get the full match, plus additional voluntary contributions, builds a portable retirement account that compounds regardless of whether they hit 20 years. This pairs well with other savings vehicles like a Roth IRA or a traditional 401(k) in a future civilian career.
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You deploy to a combat zone. The Savings Deposit Program (SDP) pays 10% APR on up to $10,000 during CZTE deployments. Combined with tax-free Roth TSP contributions in a combat zone, BRS members can stack multiple tax advantages that High-3 members also access but without the TSP match sweetener.
When High-3 Wins
High-3 is the better system when:
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You are certain you will serve 20+ years. The 0.5% multiplier difference (2.5% vs 2.0%) compounds across every year of service. For a 20-year career, that is 10 percentage points of your high-3 average, which translates to $620/month for an E-7 and $1,120/month for an O-4 in our scenarios above.
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You plan to serve beyond 20. Each additional year adds 2.5% under High-3 versus 2.0% under BRS. A 24-year O-5 under High-3 earns 60% of their high-3 average versus 48% under BRS.
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Your TSP investing discipline is low. High-3 is a guaranteed annuity. BRS shifts part of the risk to you. If you are not contributing at least 5% to get the full match, or if you are investing your TSP in the G Fund earning roughly 4.5% in 2026, BRS loses its advantage.
What Virginia Service Members Should Know
Virginia now offers a $40,000 military retirement income subtraction with no age restriction (the old age-55 requirement was removed for tax year 2024). This applies to both BRS and High-3 pension income, reducing the state tax bite on your retired pay. For service members considering a post-military career in Hampton Roads, this subtraction is worth up to $2,300 per year in state tax savings.
If you are weighing a move to Florida instead, the absence of state income tax eliminates the state-level pension taxation question entirely.
How to Think About This Decision
The Department of Defense’s own BRS Comparison Calculator is the starting point. But the calculator cannot answer the question that matters most: what is your honest probability of staying to 20?
If the answer is “I do not know,” that uncertainty is itself an argument for BRS. The system was designed for the 83% of service members who separate before pension eligibility. If you are in the 17% who will definitely reach 20, High-3 pays more in lifetime pension income. The math is unambiguous on both sides. The hard part is knowing which side you are on.
A fee-only financial advisor who understands military compensation can model both scenarios using your actual pay trajectory, promotion timing, and TSP balance, giving you a personalized breakeven analysis rather than a generic rule of thumb.
Ferrante Capital LLC is a registered investment adviser. Information presented is for educational purposes only and does not constitute investment advice, a solicitation, or a recommendation to buy or sell any security. All investing involves risk, including the possible loss of principal.
FC and its principals may hold positions in securities or asset classes discussed in this article. This analysis is for educational purposes only and does not constitute a recommendation to buy, sell, or hold any security.
Forward-looking statements reflect Ferrante Capital’s current analysis and involve assumptions and estimates. Actual results may differ materially. Past performance is not indicative of future results.
Please consult a qualified financial professional before making investment decisions.
