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Buying Back Military Time Could Be the Most Valuable Thing You Ever Do

Missy E
November 14, 2025

Key Takeaways

Buying back your military service time can significantly increase your federal retirement annuity under FERS or CSRS.
The process is time-sensitive, and completing it early in your career can help you avoid interest charges and maximize your benefits.

What It Means to Buy Back Military Time

If you served in the military before beginning your civilian government job, you have an option many overlook: buying back your military time. This means paying a deposit to include those years of active-duty service in your civilian retirement calculation.

For most government employees, this decision has the potential to significantly increase your future annuity. But it’s not automatic—you need to act, and timing is everything.

Why Buying Back Time Matters in 2025

In 2025, with rising inflation and increasing retirement healthcare costs, every dollar in your monthly retirement check counts. When you buy back military time, your annuity calculation under the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS) includes those additional years. That could mean hundreds more each month for the rest of your life.

Here’s the impact in simple terms:

More years = higher annuity.
Higher annuity = greater lifetime retirement income.
Greater income = better financial security, especially if you retire earlier or live longer.

Eligibility: Are You Allowed to Buy Back Time?

Not everyone qualifies, but most veterans who later enter civilian government service do. You’re generally eligible if:

You performed honorable active-duty service.
You were later hired into a FERS or CSRS-covered position.
You have not already used that time to qualify for a military pension.

If you receive military retired pay, you can only buy back the time if you waive that military pension. This is a significant decision that may or may not make financial sense—especially for career military retirees. Always run the numbers carefully or speak to a licensed agent.

How the Military Time Affects Your Retirement

The retirement benefit under FERS or CSRS is based on your years of creditable service and your High-3 average salary. Buying back your military time means you’re adding those years into the total number of service years. For FERS employees in particular, this can be a major bump in long-term benefits.

FERS Formula (2025)

1% x High-3 Salary x Years of Creditable Service (or 1.1% if you retire at age 62 with at least 20 years)

Let’s say you served 4 years in the military. Buying that back could increase your total service from 26 years to 30. That change shifts your entire pension upward—and over a retirement lasting 25-30 years, that difference adds up dramatically.

The Process: Step-by-Step Timeline

Buying back military time takes time and paperwork, so don’t wait. Here’s how it works in 2025:

Step 1: Request Your Military Records

Contact your branch of service to obtain your DD-214 and your earnings during military service (Estimated Earnings Statement).

Step 2: Calculate Your Deposit

For FERS employees, the deposit is 3% of your military base pay.
For CSRS employees, it’s 7%. Interest begins accumulating two years after your entry into federal civilian service. That’s why acting early is essential.

Step 3: Submit the Application

Use Standard Form 3108 (FERS) or SF 2803 (CSRS). Submit it through your HR office to the appropriate retirement processing center.

Step 4: Make the Payment

You can pay all at once or through payroll deductions. Once the deposit is complete, you’ll receive confirmation that your military time is now creditable for retirement.

Time and Money: The Earlier, the Better

Interest is the most important variable to watch. If you wait more than two years from the start of your federal civilian employment to initiate the process, interest begins to compound annually.

As of 2025, the interest rate is tied to Treasury bond rates, and it has been trending higher in recent years. Delaying the buyback could mean paying hundreds—or thousands—more than if you had acted earlier.

Frequently Asked Questions in 2025

Can I Still Receive VA Disability Benefits if I Buy Back Time?

Yes. Buying back your military time does not affect any VA disability compensation you receive. These are two entirely separate benefits.

What Happens If I Don’t Buy It Back?

You’ll still receive your military pension (if eligible), but your time won’t count toward your civilian annuity. That means a smaller federal retirement check.

Can I Buy Back Time After Retirement?

No. The deposit must be made before separation from federal service. If you miss the deadline, there’s no second chance.

Key Benefits You Gain

Higher Annuity: More years mean a larger benefit.
Earlier Retirement Eligibility: Hitting the required service years sooner may let you retire earlier.
Increased TSP Contributions: More years of service could also mean a longer period of TSP contributions, potentially growing your retirement savings.

Mistakes to Avoid

Waiting Too Long: Every year you wait past your second year in service adds interest.
Not Doing the Math: Failing to compare the cost of the buyback with your potential annuity increase.
Skipping Help: Talking to a licensed agent can help you run scenarios and make an informed decision.

It’s Not Just About Money

For many, buying back military time is a way of honoring their own service. It connects the threads of your military and civilian careers into one complete story—one that pays you back every month in retirement.

It also provides peace of mind. Retirement decisions come with a lot of unknowns, but this is one choice where the benefits are relatively predictable and tangible.

Final Thoughts: Make the Most of Your Service

In 2025, retirement planning requires strategic thinking—and buying back your military time could be the smartest financial move you make. It enhances your pension, increases long-term income, and provides more flexibility for your future.

You’ve already earned the right to use this benefit. Don’t leave it on the table. If you’re unsure how buying back your military time would affect your retirement, speak with a licensed agent listed on this website for expert guidance.