Key Takeaways
- Military time can significantly boost your federal retirement benefits if you know how to buy it back.
- The military buyback process is straightforward but involves a few key steps that can save you money and enhance your retirement package.
Ready to Cash In on Your Military Service?
- Also Read: Military Buyback Programs Are Opening Doors to Early Retirement—What Employees Should Know Today
- Also Read: What Every Federal Worker Should Know About the Rising Cost of FEHB Premiums
- Also Read: From Health Plans to Retirement Perks: Why Federal Benefits Are Still Leading the Way
This article is all about walking you through the process of adding your military service to your federal civilian retirement benefits. Let’s dive in and see how you can make the most of your years of service.
What Is Military Buyback?
First things first—what is military buyback? It’s a program that allows federal employees who have served in the military to “buy” their military service time and apply it toward their federal civilian retirement. In other words, you’re paying a small amount now to gain more years of service credit, which can increase your overall pension down the line. This buyback could make a significant difference in your retirement income.
Why Should You Consider Buying Back Your Military Time?
One of the biggest reasons to buy back military time is that it can shorten the time you need to reach retirement eligibility. The more years you add, the closer you get to retirement, which could mean fewer years of work ahead and more years of enjoying the fruits of your labor!
And let’s not forget the money side of things. Every extra year of service you add could bump up your retirement annuity, meaning a bigger check each month when you retire. You’ve already put in the years of service—why not get the most out of them?
Breaking Down the Military Buyback Process
1. Find Out If You’re Eligible
Not all military service qualifies, so you’ll want to check if your service counts. Generally, any active-duty military time you served can be bought back, including time in the Reserves or National Guard, as long as it wasn’t already credited toward a military pension. If you’re getting or expect to get military retirement pay, you’ll need to waive that in order to buy back your time for federal retirement.
2. Gather Your Records
You’ll need your military service records, specifically your DD-214 form, which shows the details of your service. This is a crucial document, so if you don’t have it, you can request it from the National Archives.
3. Calculate the Cost
Once you’ve determined that your service qualifies, it’s time to calculate how much it will cost to buy back. The cost is generally based on a percentage of your military base pay during your time in service. You’ll usually pay 3% of your basic pay, but if you wait more than two years after starting federal employment to begin the process, you’ll also owe interest.
4. Submit Your Application
Next, you’ll need to submit an application to your HR office or the agency responsible for processing military buybacks. You’ll also need to provide a copy of your DD-214 and any other required documentation. From there, the office will calculate the exact amount you need to pay to buy back your time.
5. Make the Payment
Once your application is processed and the cost is determined, you can make your payment. Some agencies allow you to pay in installments, but others require a lump-sum payment. It’s important to know your options so you can plan accordingly. And remember, the sooner you pay, the less interest you’ll owe.
The Benefits of Buying Back Your Military Time
Get More Years of Service Credit
The most obvious benefit of buying back your military time is that it increases the number of years you have toward your civilian retirement. More years of service mean a higher pension, plain and simple.
Retire Earlier
Adding military time to your federal service can also help you reach retirement eligibility sooner. For federal employees under the Federal Employees Retirement System (FERS), you need at least five years of civilian service to qualify for a retirement annuity. However, adding military service can reduce the years you need to work to reach eligibility for benefits, which could allow you to retire sooner than you expected.
Boost Your Annuity
Your federal retirement annuity is calculated based on your length of service and your “high-3” average salary (the highest average pay you earned during any three consecutive years of federal service). By buying back military time, you increase your total years of service, which directly boosts your annuity.
Timelines to Keep in Mind
Start the Buyback Process Early
You can start the military buyback process at any time once you’re a federal employee, but it’s best to start sooner rather than later. If you wait more than two years after you begin federal employment, you’ll have to pay interest on the amount you owe, which can add up quickly.
The Two-Year Window
Many federal employees get caught by surprise when they realize how much interest has accrued on their military buyback. After two years, the interest starts piling up, which can increase the total cost significantly. If you’re thinking about buying back your time, try to do it within your first two years of federal service to avoid paying more than you have to.
A Few Common Questions Answered
Do I Need to Buy Back All My Military Service?
No, you don’t have to buy back all of your military service. You can buy back as much or as little as you like. However, the more time you buy back, the bigger the boost to your retirement benefits.
Can I Get Credit for Military Service in the Reserves?
Yes, time spent in the Reserves or National Guard may count toward your civilian retirement if you were on active duty. However, weekend drills and inactive duty don’t count. Always check the specifics with your HR office to know for sure what qualifies.
Time to Act: Maximize Your Retirement Benefits
If you’re a federal employee with military service under your belt, don’t let this opportunity pass you by. Buying back your military time could significantly increase your retirement benefits and might even get you to retirement faster. Whether you’re just starting your federal career or already nearing retirement, this is one financial move that can really pay off in the long run.
So, get those records in order, calculate the cost, and start the process sooner rather than later. Your future self will thank you!
