Military Pension vs Civilian 401(k)

The military pension (under legacy or BRS) is a defined benefit plan — you get a guaranteed monthly payment for life based on years served and pay grade. A civilian 401(k) is a defined contribution plan — you get whatever your investments grow to, with no guarantee.

The military pension's value is enormous. An E-7 retiring at 20 years with $2,700/month pension has a present value (at 4% discount) of approximately $650,000–$800,000. To generate $2,700/month from a 401(k) using the 4% rule, you'd need roughly $810,000 saved.

But the 401(k) has advantages: portability (you don't need 20 years to vest), investment control, and a death benefit (your pension dies with you unless you elected SBP; a 401(k) passes to heirs). Under BRS, the TSP is essentially a military 401(k) that supplements the reduced pension.

The combined value of a BRS pension + maximized TSP often exceeds the standalone legacy pension, especially when accounting for the time value of TSP matching from day one.