The Military COLA Trap: How Overseas Allowances Wreck Your Budget When You PCS Back

The High-3 retirement system gives you 50% of your highest 36 months' base pay at 20 years. BRS gives you 40% plus TSP matching. On paper, High-3 wins for anyone who serves 20+ years. But the real answer depends on whether you actually make it to 20, and how much you contribute to TSP.

The Core Difference

High-3 uses a 2.5% multiplier per year of service. At 20 years, that's 50%. At 30 years, 75%. BRS uses a 2.0% multiplier — at 20 years, that's 40%. However, BRS adds government TSP matching up to 5% of base pay throughout your career, plus a one-time continuation pay bonus at 12 years (2.5x-13x monthly base pay depending on service).

E-7 at 20 Years: Head-to-Head

High-3 pension: 50% × $6,246 = $3,123/month ($37,476/year)

BRS pension: 40% × $6,246 = $2,498/month ($29,976/year)

Difference: $625/month ($7,500/year) in favor of High-3

BRS TSP value at 20 years: $180,000-$350,000+ depending on contributions and market returns

Calculate your specific retirement pay with the Retirement Calculator.

When BRS Actually Wins

BRS is better if you separate before 20 years. Under High-3, separating at 15 years means you get zero pension. Under BRS, you keep your TSP matching — potentially $100,000-$200,000 in retirement savings. Since roughly 83% of enlisted members don't reach 20 years, BRS is actually the better system for the majority of service members.

BRS also wins if you're a disciplined TSP investor. The 5% match compounding over 20 years in the C or S fund historically outperforms the $7,500/year pension gap, especially if you contribute your own 5%+ on top of the match.

When High-3 Clearly Wins

If you're going to serve 20+ years regardless, and especially if you'll serve 25-30 years, High-3 is mathematically superior. The pension gap grows with each year beyond 20 (2.5% vs 2.0% per additional year), and a guaranteed inflation-adjusted pension is worth more than a market-dependent TSP balance for risk-averse retirees.

The Bottom Line

If you entered after January 1, 2018, you're in BRS — the decision is made. If you opted in during the 2018 window, you made the right call if you weren't sure about 20 years. If you're High-3 and committed to 20+, you have the better deal. Either way, maximize your TSP contributions — that's the one lever you control regardless of system.

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How I Think About BRS vs High-3 as a High-3 NCO

I joined the Army in 2016, which means I'm one of the last cohorts under High-3. Soldiers who came in after January 2018 don't get a choice — they're BRS automatically. But I've counseled dozens of junior NCOs through the BRS opt-in window, and the conversation is always the same: "Should I switch?"

My answer depends entirely on one question: are you staying to 20? If the answer is "definitely yes," High-3 wins every time. The 50% multiplier vs 40% is a $600-800/month difference in pension for life. Over 30 years of retirement, that's $200,000-$300,000 more. No amount of TSP matching makes up for that gap unless you're an exceptionally aggressive investor who maxes contributions every year and gets consistently above-average returns.

But here's the thing nobody talks about: 83% of service members don't make it to 20 years. Under High-3, if you leave at 12 years, you get zero retirement. Nothing. Twelve years of service, gone. Under BRS, that same soldier walks away with a TSP account that has 10+ years of government matching in it — potentially $80,000-$150,000 in retirement savings they can roll into a civilian 401(k). That's the real value of BRS.

The soldiers I worry about are the ones at 8-10 years who are "pretty sure" they'll stay but haven't made E-7 yet and don't have a clear path to 20. Retention boards, RCPs, and MOS restructuring can force you out whether you planned to stay or not. If that happens under High-3, you leave with nothing. Under BRS, at least you have the TSP. I've seen it happen — good NCOs who planned to retire getting cut at year 14 because their MOS got restructured. Under High-3, fourteen years of service and zero pension. That's devastating.

Run your specific numbers in the Retirement Calculator and the TSP Calculator. Don't make this decision based on vibes — make it based on math and an honest assessment of whether you'll actually hit 20.

Frequently Asked Questions

What is the difference between BRS and High-3 retirement?

High-3 pays 50% of your highest 36 months of base pay at 20 years with 2.5% per year multiplier. BRS (Blended Retirement System) pays 40% at 20 years with a 2.0% multiplier, but adds government TSP matching up to 5% of base pay and a mid-career continuation pay bonus. BRS benefits those who serve less than 20 years; High-3 benefits 20+ year retirees.

Which is better, BRS or High-3?

High-3 is better if you serve 20+ years due to the higher 50% multiplier. BRS is better if you might leave before 20 years, since you keep government TSP matching (up to 5%) regardless of when you separate. The breakeven point depends on rank, TSP contributions, and investment returns, but most analysis shows High-3 wins for 20-year retirees by $200,000-$500,000 in lifetime pension value.