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Department of Defense Rolls Out a New Retirement Plan

The Department of Defense has unveiled a new retirement plan that will go into effect on January 1, 2018. The new “blended” plan will not impact a majority of the currently enlisted members, but will present a complex financial decision for mid-career service members with less than 12 years of service.

The new plan is specifically limited to service members who “opt-in” to the new plan before January 1, 2019 provided they have less than 12 years of service prior to January 1, 2018, and any individual who enters the military once the new plan goes live. For those service members who have more than 12 years of service or do not opt-in, the traditional retirement plan will remain in effect.

Unlike the traditional retirement plan that provides a fixed pension payout for retirees who serve at least 20 years, the new plan will promote contributions to the Thrift Savings Plan (TSP). Specifically, under the new plan, contributions equivalent to 1% of the annual base pay will automatically be contributed to the service member’s TSP account, and provide additional matched contributions of up to 5% of the service member’s annual base pay. In exchange, the pension payments will be reduced by 20% of the current value. Currently, the Department of Defense does not make any contribution to a service member’s TSP account.

Additional perks to the new plan include lump sum payments. Not only does the plan provide a service member with a mid-career continuity bonus, but upon retirement, a service member will receive a lump sum payment that is equal 25% or 50% of a promised pension benefit. This will then cause a reduction in the monthly pension checks until the retiree reaches age 67.

For service members who do not intend on retiring, the new plan, unlike the old “all or nothing” plan, provides an increased retirement benefit. On the other hand, it is clear that service members who are impacted by the new plan should consult with an experienced financial planner. The failure to develop a proper financial plan at the beginning of a military career could have a detrimental impact on the financial status of the service member upon retirement.

Hook Law Center works with a team of financial planners who have developed plans to maximize benefits under the new plan. Should you need any assistance in determining whether to opt-in, how to allocate your TSP portfolio, or how much you should contribute to the TSP, please contact us and we will help make a connection.

Kit KatAsk Kit Kat – Dog Coming to Scotland

Hook Law Center:  Kit Kat, what can you tell us about the little dog, Gobi, who will be coming to live in Scotland?

Kit Kat:  Well, this story you’re going to love! Dion Leonard is a distance runner from Scotland who has participated in some unique events. While he was running in the June 2016 Gobi (Desert) March, which is part of the 4 Deserts Race Series, a small dog approached him. There are 6 stages in the race adding up to a 155-mile trek. During the first day, Gobi just followed the group of runners, but on the 2nd day, she seemed to favor Leonard and stuck close to him. He is not sure of the breed, but she’s copper colored and has pointy ears, and was just a puppy at the time. To me, she looks like she’s part Akita, but that’s just my observation. Anyway, by Day 2, it was clear that Gobi had adopted Leonard. She followed him all that day through 23 miles of varying terrain, making it up to 20,000 feet to cross the Tian Shan mountain range, and finally cross into the Gobi Desert. Leonard shared some of his provisions with her, letting her feast on beef jerky and water. He says he’s not sure why she chose him out of the 101 participants in the race. ‘I didn’t do anything in particular to gain her attention. She chose me. I was the one that she was going to stick to.’

Day 3 arrived and she was still with him. At some points, he carried her, like when they crossed chest-high rivers. In all, she completed stages 2,3, and 6 with him, amounting to 105 miles. During stages 4 and 5, race staff drove her to the finish lines for that day, because of extreme heat when temperatures hovered around 125 degrees.

Leonard finished the race in 2nd place, and both he and Gobi received a medal. By that point he was hooked, and he knew he had to get her back to his home in Scotland. What he found out was that it was possible, but she would have to be quarantined and get various shots and clearances. The cost would be more than $6,500. No problem—he and his wife started an online campaign, and the money was raised. Now, they are just waiting for her to arrive, which they anticipate will be around Christmas! (https://www.washingtonpost.com/news/animalia/wp/2016/08/07/stray-dog-wins-hearts-and-…)

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