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Four Ways Military Buyback Programs Are Transforming Federal Employee Retirements

Missy E
May 13, 2025

Key Takeaways

Military buyback programs are a powerful tool for increasing your federal retirement benefits, allowing your military service to count toward your civilian retirement under FERS or CSRS.
Understanding the process, timelines, and benefits of buyback programs can help you maximize your retirement package and secure a more comfortable future.

Unlocking the Potential of Military Buyback Programs

If you’ve served in the military and now work as a federal employee, you have a unique opportunity to enhance your retirement benefits through military buyback programs. These programs let you credit your military service toward your federal retirement plan, potentially increasing your annuity and reducing the number of years you need to work in the civilian sector. Let’s break it down and explore how these programs are transforming federal retirements.

What Is a Military Buyback Program?

A military buyback program allows you to “buy back” your active-duty military service time and apply it toward your civilian retirement under the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS). Here’s what that means for you:

Eligibility: To qualify, you must have been honorably discharged and must not be receiving military retired pay (with some exceptions).
Cost: You pay a percentage of your military base pay, along with interest if you delay.
Benefit: The time you buy back counts toward your years of creditable service, which directly impacts your annuity calculation and may allow you to retire sooner.

The Transformation in Federal Retirement

Military buyback programs have become a game-changer for federal employees, offering significant advantages that were previously unavailable or underutilized. Let’s look at four key ways these programs are transforming retirements.

1. Boosting Your Annuity

When you retire under FERS or CSRS, your annuity is calculated based on your years of creditable service and your high-3 average salary. By buying back your military service, you increase your years of service, which means a higher monthly annuity.

FERS Example: Each year of creditable service adds 1% of your high-3 average salary to your annual annuity (1.1% if you retire at age 62 or later with 20 years of service).
CSRS Example: The formula is even more generous, with each year of service adding between 1.5% and 2.0% of your high-3 average salary.

By increasing your total years of service, you maximize the percentage used to calculate your pension, leading to a more secure and comfortable retirement.

2. Shortening Your Career Timeline

Federal employees under FERS or CSRS typically need a minimum of 30 years of service for full retirement benefits. With military buyback, you can count your active-duty service toward this total, potentially allowing you to retire years earlier.

Example Timeline: If you served four years in the military and buy back that time, you only need 26 years of civilian service to meet the 30-year requirement. This accelerates your retirement eligibility and lets you enjoy your post-career years sooner.

3. Offering Cost-Effective Investment

While buying back military time does involve a financial commitment, it’s often a cost-effective way to secure long-term benefits. The amount you pay is based on your base pay during military service, plus interest if you delay starting the process.

Interest-Free Window: You have a two-year window from your federal employment start date to complete your buyback interest-free. After that, interest accrues annually, increasing the cost over time.
Return on Investment: By paying a one-time cost, you’ll enjoy a lifetime of higher annuity payments, often recouping your buyback investment within a few years of retirement.

4. Enhancing Flexibility with Retirement Planning

Military buyback programs provide flexibility when planning your retirement timeline and goals. Here’s how they help:

Faster Eligibility for Early Retirement: Programs like MRA+10 under FERS allow early retirement with reduced benefits. Adding military time helps you reach eligibility sooner.
Survivor Benefits: Additional years of service also increase the survivor annuity for your spouse or dependents.
Thrift Savings Plan (TSP) Contributions: The ability to retire earlier may allow you to tap into your TSP savings without delay, ensuring a smooth transition to retirement income.

How to Navigate the Military Buyback Process

Understanding the process is key to making the most of this opportunity. Here’s what you need to know:

Step 1: Obtain Your Earnings Records

Start by requesting a copy of your DD-214 (Certificate of Release or Discharge from Active Duty) and your estimated earnings during military service. These documents are crucial for calculating your buyback cost.

Step 2: Calculate Your Buyback Cost

Your agency’s HR department or the Office of Personnel Management (OPM) will help you calculate the amount you owe. It’s based on a percentage of your military base pay and varies depending on your years of service.

Interest-Free Period: Remember, you have two years from your federal employment start date to avoid interest charges. Don’t delay if you want to save money.

Step 3: Submit Your Application

Fill out the appropriate forms, including:

Application to Make Service Credit Payment (SF-2803 for CSRS or SF-3108 for FERS).
Attach your DD-214 and earnings statement.

Submit these forms to your agency’s benefits office or HR department for processing.

Step 4: Make Payments

Once your application is approved, you’ll receive instructions on how to make your buyback payments. These can often be made in a lump sum or through installments. Keep records of your payments for future reference.

Is Military Buyback Right for You?

Not every federal employee benefits equally from military buyback programs. Here are some factors to consider:

Career Goals: Are you planning to work the full 30 years, or would you prefer to retire earlier?
Financial Resources: Can you afford the buyback cost now, or will interest charges significantly increase the amount you owe?
Military Retired Pay: If you’re receiving military retired pay, you’ll need to waive it to use the buyback program (exceptions apply).

Weigh the costs and benefits carefully and consult a retirement specialist or financial advisor for guidance.

Don’t Wait—Act Now to Secure Your Future

Timing is critical when it comes to military buyback programs. The earlier you start, the less interest you’ll pay and the sooner you can enjoy the benefits of your enhanced retirement package. By taking advantage of this opportunity, you’re investing in a more secure and rewarding future.

Planning for a Better Tomorrow

Military buyback programs offer a unique chance to make the most of your service—both in uniform and as a federal employee. By understanding the process, acting promptly, and planning strategically, you can transform your retirement outlook and enjoy the rewards of a lifetime of service.