The Blended Retirement System (BRS) includes a valuable feature called Continuation Pay. It’s a one-time payment you may receive between your 8th and 12th year of service if you agree to stay in the military for a few more years. If you’re planning to reenlist and receive this payment, how you use it can make a big difference in your financial readiness.
Continuation Pay was built into the law that created the BRS in 2017. It’s considered one of the key benefits of the system, along with its savings and investment options. It’s worth taking full advantage of everything the BRS offers.
Here are some of the best things you can do with your Continuation Pay:
Invest It
The military has started your retirement investment account through your Thrift Saving Plan (TSP) with an automatic 1% contribution of your base pay. You should consider contributing as much as you can afford to get the government match to those dollars you are investing in your TSP.
You can do this with your regular pay and essentially give yourself a 5% “raise” simply by making an additional 4% contribution. That amount will be matched by the government up to 5% of your pay. This is a great incentive to save more for retirement!
The TSP account, when used by Servicemembers and Department of Defense personnel has been known to generate a very nice nest egg for many retirees, often growing to over $1 million dollars during the course of a full military career.
Tip:
Make your long-term goal of financial security a higher priority than your short-term wants.
How It Works
When you budget, add your savings and TSP or 401(k) contributions to the first lines in your budget (“pay yourself first”). When I did this, it helped me ensure those parts of my budget were every bit as important as my mortgage or my rent, and certainly way more important than my clothes budget or my streaming subscriptions.
It is relatively easy to select that the continuation pay goes into your TSP. This gives your investing a boost while you still have time for those invested dollars to grow. To learn more about your TSP and how to invest in your Continuation Pay in the funds they offer, what your risk tolerance is, and other planning tools, check out www.tsp.gov and https://militarypay.defense.gov/blendedretirement/
Save It
Having liquid savings for emergencies and short-term goals is essential. Without it every unexpected bill becomes an emergency.
Begin with an emergency fund. Start by setting up simple automatic payments weekly or monthly to a high-yield savings account. You can initially start with $20 per pay period, and when you have unexpected income, like temporary duty reimbursements or Continuation Pay, you can add them to the fund.
This will provide the security you need to weather unexpected expenses. Shoot for just $500 in savings at first, and eventually grow that to two to three months of living expenses. Trust me when I tell you the peace of mind you get from having these funds available will be worth the sacrifices you make to save. It can be very rewarding!
When Paying off Debt Is Just as Good as (Or Better Than) Saving
If you are in a situation where your debt is overwhelming to you, it will be tempting to use your Continuation Pay to get things under control. If this is the path you choose, I highly recommend that you couple that decision with changed behaviors so that you don’t wind up there again. There are many things you can do—I would recommend any or all of these:
Build a Budget
Make the hard choices needed to live within your means. When I was a young Soldier without a lot of obligations, not only had I racked up some credit card debt (on a TV that barely fit into my barracks room!), I had also bought a sweet new mustang—WAY outside what I could afford (and did I mention the huge insurance bill I had to pay each month?!).
One way to learn is by going through your bad decisions. Another way is by learning from other’s bad decisions. Here is your “learning from other’s mistakes” lesson of the day: in hindsight, I didn’t need that car, and I sure as heck didn’t need a TV like that! Oh, the lengths we will go to rationalize our purchases for short term pleasure. Through it I learned to change my behaviors. Now I save and invest first, pay cash for my cars (no car loans!), and make sure to live within my means by “paying myself first” every month.
The situation I was in was my own fault and it came at a cost: it delayed my habit of saving for my future, and it caused difficulty feeling secure in my finances. I overcame those conditions, and you can too, especially if you have a steady income like military service or any stable occupation.
It is possible and you can get there, too, by budgeting and making a habit of living within your means.
Talk to a Financial Counselor on Base
Many installations have a Military and Family Support Center with access to Personal Financial Counselors (PFCs). These folks know the ins and outs of military pay, benefits, and budgeting, and their advice is free. They can walk you through a debt payoff strategy, help you figure out how to use your Continuation Pay wisely, or even show you how to build a savings plan that works with your lifestyle.
Best part? They don’t work on commission and won’t try to sell you anything. They’re just there to help. If your base doesn’t have a PFC on site, you can still connect with one through Military OneSource or ask your command for help finding local support.
Explore Whether Debt Settlement Is a Fit for You
If your debt has started to feel unmanageable, you might be looking for a way to reduce what you owe. One option some people explore is debt settlement. This process typically involves working with a company that negotiates with creditors to settle your unsecured debts for less than the full amount.
Debt settlement isn’t the right path for everyone. It may come with trade-offs, like credit impacts, and it’s important to fully understand how the process works before committing. If you’re considering this route, take time to research companies carefully.
Look for a provider that:
- Is upfront about how their program works and what it costs
- Has a strong track record and holds membership in organizations like the American Association for Debt Resolution
- Provides personalized support, including assistance with budgeting and financial education resources
Reading reviews and asking questions can also help you understand what to expect. Just like budgeting or cutting expenses, debt settlement is a tool—not a quick fix.
Final Thoughts
Getting Continuation Pay is a big deal, but what you do with it matters even more. Whether you save it, invest it, or use it to pay down debt, make sure it supports the life you want down the road. If you’re unsure where to start, ask for help—there are great resources out there. You’ve earned this pay by committing to serve. Now let it serve you.
