Military Buyback Could Be the Game-Changer You Didn’t Know You Needed for Retirement

Missy E
November 14, 2025

Key Takeaways

Military buyback can significantly boost your retirement income by adding valuable years of service to your civilian pension calculation.
The process involves careful timing and understanding costs, but the long-term benefits often outweigh the upfront expense.

Understanding the Basics of Military Buyback

If you’ve served in the military and are now working in the public sector, you might not realize how much your military service could enhance your retirement benefits. The military buyback program allows you to credit your years of active duty toward your civilian retirement under the Federal Employees Retirement System (FERS) or Civil Service Retirement System (CSRS). This can be a game-changer for those seeking to maximize their pension.

What Is Military Buyback?

Military buyback is a program that allows you to “purchase” your military service time to count as creditable service in your civilian retirement system. This means the time you served on active duty could be factored into your pension calculations, potentially increasing your annuity significantly.

Here’s how it works: You make a one-time payment, referred to as a deposit, to buy back your military service. This deposit includes a percentage of your military base pay during active duty and accrued interest if applicable.

Who Is Eligible?

Before diving into the process, you need to confirm your eligibility. Generally, if you’ve served in active-duty military and later transitioned to a civilian role within the federal government, you’re eligible to buy back your service time.

Key Considerations for Eligibility:

Retired Military: If you’re receiving military retirement pay, you can still buy back your time, but it may require waiving your military retirement. Exceptions apply for certain categories, such as combat-related disability retirees.
Reserves or National Guard Members: Service in the Reserves or National Guard may only count if it included periods of active duty.

Why Should You Consider Military Buyback?

The primary reason to consider military buyback is the financial impact on your retirement benefits. Adding years of service can:

Increase Your Pension: Your annuity is based on your years of service and average high-3 salary. More years of service mean a higher monthly payout.
Accelerate Retirement Eligibility: If you’re close to meeting the Minimum Retirement Age (MRA) or years of service requirement, buying back time can push you over the threshold sooner.
Enhance Job Security: Some public sector positions require a minimum number of years of service for tenure or other benefits.

Breaking Down the Costs

While the long-term benefits of military buyback are substantial, the process isn’t free. Here’s what you need to know about the costs involved.

Military Buyback Deposit

Your deposit typically consists of a percentage of your military base pay during active duty. For FERS employees, this percentage is 3%, while CSRS employees may face higher rates.

Interest Accrual

The earlier you start the process, the better. If you delay beyond two years of entering civilian service, interest begins to accrue on your deposit. Over time, this can significantly increase the cost of buyback.

Timing Matters

To save money, it’s wise to initiate the process as soon as you transition to civilian employment. By doing so, you minimize or even avoid interest costs entirely.

How to Start the Military Buyback Process

Getting started with military buyback may seem daunting, but breaking it into steps can make it manageable.

Step 1: Obtain Your Earnings Records

You’ll need to request your military earnings records, which detail your base pay during active duty. This document is essential for calculating your buyback deposit.

Step 2: Complete Required Forms

Fill out the appropriate buyback forms, such as SF-2803 (for CSRS employees) or SF-3108 (for FERS employees). These forms initiate the process with your agency’s human resources office.

Step 3: Request Cost Estimates

Submit your military earnings records and forms to your HR department to receive an estimate of your buyback deposit. This will help you decide whether the cost is worth the benefit.

Step 4: Make Your Deposit

Once you’ve reviewed the estimate and decided to proceed, you’ll make your payment through payroll deduction or a lump sum.

What Happens After You Buy Back Your Time?

Once you’ve completed the buyback process, the credited military time is added to your civilian service record. This affects your pension calculation by:

Increasing your total creditable service years
Raising your annuity based on your high-3 salary

It’s important to verify that your records accurately reflect your added service time.

Pitfalls to Avoid in Military Buyback

While the process offers numerous advantages, there are some common mistakes you’ll want to avoid:

Waiting Too Long: Delaying the buyback process can result in higher costs due to accrued interest.
Inaccurate Records: Ensure your military earnings records are accurate, as errors can delay the process.
Not Doing the Math: Use online calculators or consult a retirement specialist to ensure the cost of buyback aligns with your retirement goals.

The Bigger Picture: Military Buyback in Retirement Planning

Military buyback isn’t just a one-off decision; it’s a strategic move in your broader retirement planning. By increasing your annuity, you reduce your reliance on savings or other income sources, providing a more stable and predictable retirement income.

Integrating Military Buyback with Other Benefits

If you’re eligible for Social Security or have contributions in the Thrift Savings Plan (TSP), combining these income streams with an enhanced pension can create a more robust financial future.

When Is the Right Time to Buy Back?

The timing of your buyback is critical for maximizing benefits and minimizing costs. Here are some key timelines to keep in mind:

Within Two Years of Civilian Employment: Avoid interest accrual by starting the process early.
Before Retirement Planning Finalization: Ensure your buyback is complete before filing for retirement to avoid delays.

Unlocking Your Retirement Potential

Military buyback isn’t just a technical process; it’s a tool that can unlock greater financial security and flexibility in your retirement years. By leveraging your years of military service, you gain an advantage that many overlook.

Whether you’re early in your civilian career or nearing retirement, it’s worth exploring how this program could transform your future.

Take Charge of Your Retirement Strategy

Now that you understand the ins and outs of military buyback, it’s time to take the next step. Reach out to your HR office, gather your records, and start the process today. The sooner you act, the more you’ll save—and the brighter your retirement future will be.