Key Takeaways
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Military buyback allows you to convert your prior military service into creditable civilian service, increasing your federal pension.
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The sooner you make the buyback payment, the lower your overall cost, helping you maximize your retirement benefits.
Understanding Military Buyback and How It Boosts Your Federal Pension
If you served in the military before becoming a federal employee, you have a unique opportunity to increase your pension through the military buyback program. This option allows you to buy back your military service time and have it count toward your federal civilian retirement under the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS).
The best part? This process can significantly increase your retirement income and help you retire with a larger pension. However, you must take action before you retire to make the most of this benefit. Let’s go over the five major ways military buyback can help you secure a better retirement and why you should take advantage of this opportunity as early as possible.
1. Boost Your Total Years of Creditable Service
More Years = Higher Pension
Your federal retirement benefits are directly tied to the number of years you have in creditable service. By buying back your military time, you add those years to your federal service calculation, which ultimately leads to a higher pension.
For example, if you served four years in the military and buy them back, your total federal service increases by four years. This means your retirement calculation will be based on a higher service length, giving you more income in retirement.
How This Affects Your FERS or CSRS Pension
Your pension under FERS is typically calculated as follows:
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1% of your high-3 average salary per year of creditable service if you retire before age 62.
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1.1% of your high-3 average salary per year of creditable service if you retire at age 62 or older with at least 20 years of service.
For CSRS, the formula is more generous, but military buyback still increases your total years, leading to a larger annuity. Additionally, even though CSRS employees generally receive a larger pension, any additional service time you add through military buyback can result in significantly more retirement income.
2. Help You Retire Earlier
Qualify for Retirement Sooner
The more years of creditable service you have, the sooner you become eligible for retirement. If you have military service that you buy back, it brings you closer to retirement eligibility under FERS or CSRS.
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Under FERS, you can retire with an immediate pension at age 62 with five years of service, age 60 with 20 years, or at your Minimum Retirement Age (MRA) with 30 years.
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If you buy back military time, you can reach these thresholds faster and retire on your terms.
How This Helps
Instead of waiting another few years to reach your minimum service requirement, military buyback lets you count your military service toward the total years needed for retirement eligibility. This is particularly beneficial if you’re planning for early retirement and want to take advantage of your federal pension as soon as possible.
3. Increase Your Survivor Benefits
More Service = Better Protection for Your Loved Ones
If you’re planning for your spouse’s future, military buyback can make a difference in the survivor benefits they receive.
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The more years of creditable service you have, the higher your spouse’s survivor annuity.
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Buying back military time increases your total service, which in turn increases the payout available to your surviving spouse after you pass away.
Why Survivor Benefits Matter
Survivor benefits are a key component of federal retirement planning, ensuring your loved ones receive continued financial support. When your total years of service are higher, the survivor annuity amount is also greater. By completing a military buyback, you help protect your spouse’s financial future in case something happens to you.
4. Avoid a Reduction in Your Pension Due to Military Service
Keep Your Full Pension Without Reductions
If you served in the military and are eligible for a military pension, you cannot receive credit for that service in your federal retirement unless you buy it back.
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Without a buyback, your military service doesn’t count toward your civilian pension.
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If you’re receiving military retirement pay, you usually have to waive it to count military time toward your federal pension.
How to Avoid Losing Pension Value
By buying back your military time, you ensure that your full years of military service count toward your federal pension calculation. This prevents you from losing out on valuable retirement benefits and ensures you receive the maximum pension payout when you retire.
5. Lock in a Lower Cost by Buying Back Early
Avoid Higher Interest Charges
One of the best reasons to buy back military time as soon as possible is to lock in a lower cost.
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The military buyback program requires you to pay a deposit based on a percentage of your military basic pay plus interest.
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If you buy back your time early in your federal career, you pay less interest than if you wait until later.
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Interest starts accruing two years after you begin federal employment, meaning the longer you wait, the more expensive it gets.
Take Action Early
By submitting your military buyback paperwork within your first few years of civilian employment, you can keep costs low and maximize your benefits when you retire. Not only will this reduce the amount you have to pay, but it will also allow you to enjoy greater retirement security without worrying about excessive costs.
Why You Should Consider Military Buyback Today
The military buyback program is one of the most powerful tools available to former service members who are now working in federal civilian roles. Whether you want to increase your pension, retire earlier, or protect your family’s future, this option offers financial security and long-term benefits.
With interest charges increasing the longer you wait, it’s smart to start the process as soon as possible. Making a buyback deposit early in your career helps you maximize your retirement income without unnecessary costs. Additionally, buying back your military time ensures you gain full credit for your years of service, leading to a more stable and comfortable retirement.
If you need help understanding your buyback options or completing the process, reach out to a licensed agent listed on this website. They can guide you through the necessary steps and help you make the most of your retirement benefits.
