Your Military Time Counts—But Only If You Follow This Retirement Step

Missy E
November 14, 2025

Key Takeaways

Buying back your military time can significantly increase your civilian government retirement annuity, but it requires timely action and paperwork.
If you don’t complete a military service deposit, your years of service may not count toward your pension calculation under the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS).

Understanding the Military Service Credit

When you join the federal workforce after serving in the military, your prior service doesn’t automatically count toward your civilian retirement benefits

. To have that time credited, you need to make a military service deposit—a payment that allows those years to be applied toward your federal retirement computation.

This applies to most former military personnel now working under FERS or CSRS. The rules differ slightly between the two systems, but the core principle is the same: you must act to make your time count.

Eligible Service Types

Military time that qualifies for buyback generally includes:

Active duty service in the Armed Forces
Certain periods of National Guard or Reserve duty
Military academy attendance, in some cases

However, not all military time is automatically creditable. For example, any period for which you’re already receiving military retired pay may require waiving that pay to count it toward your civilian pension.

What a Military Buyback Entails

A military service deposit is a one-time payment to your agency that essentially reimburses the federal retirement system for the cost of your military service credit.

The amount you pay depends on:

Your military base pay during your years of service
The retirement system you’re under (FERS or CSRS)
How long you wait to make the deposit

Interest Accrual

You have a two-year interest-free grace period starting from your date of hire in a civilian position. If you don’t make the full deposit within those two years, interest begins to accrue annually. That’s why early action is essential.

For 2025, the interest rate charged for late payments is based on the U.S. Treasury rate, which typically ranges between 1% and 5% depending on economic conditions.

Why It Matters for Retirement Eligibility

Without a completed buyback, your military time will not count toward:

Retirement eligibility (meeting the required number of years of service)
The calculation of your pension amount (which is based on your years of creditable service and high-3 average salary)

FERS Retirement Eligibility

If you served in the military and then joined the federal workforce, your time can help you reach milestones such as:

MRA + 30: Minimum Retirement Age (MRA) with 30 years of service
Age 60 with 20 years
Age 62 with 5 years

But only if your military time is officially credited.

CSRS Retirement Eligibility

For those under CSRS (now a smaller group), credited military time helps achieve:

Age 55 with 30 years
Age 60 with 20 years
Age 62 with 5 years

Again, this is contingent on completing the deposit process and possibly waiving military retired pay.

The Buyback Process, Step by Step

1. Request Your Estimated Earnings

You’ll need to obtain your estimated military earnings from the appropriate military finance center. This is different from your W-2s and reflects base pay only.

2. Submit to HR and Request Calculation

Give these earnings to your agency’s HR or benefits office. They’ll calculate the amount you need to deposit, including whether interest is owed.

3. Make the Deposit

Once the amount is confirmed, submit your payment to your agency. You can pay in full or in installments, depending on the agency’s policies.

4. Get Confirmation

After payment, ensure you receive written confirmation that your military service deposit is complete and that your time will be credited.

Cost vs. Benefit: Is It Worth It?

In most cases, yes. Making a military service deposit usually leads to a significantly higher pension benefit over time, especially if you served for multiple years.

Here’s what you gain:

More years added to your creditable service
Potential for earlier retirement eligibility
Larger pension payouts due to increased service years

General Cost Estimate

For FERS employees, the deposit is typically 3% of your base military pay (plus interest if paid after two years). For CSRS, it’s around 7%.

If you served four years on active duty, and your average base pay was $30,000 per year, your total deposit under FERS would be around $3,600—more if interest has accrued.

Compare that one-time cost to the thousands of dollars you may receive annually in additional retirement income, and the investment often pays off within a few years of retirement.

Special Considerations for Retired Military Members

If you’re already receiving military retired pay, things get more complex. In most cases, you must waive your military pension to credit your service toward a civilian annuity.

This isn’t an easy decision and should be evaluated based on:

The size of your military pension
The expected increase in your civilian annuity
Your retirement goals and age

Some military retirees may choose not to buy back their time because their current benefits outweigh the potential gains from FERS or CSRS.

There are exceptions, such as those receiving combat-related or disability military retired pay, who may not need to waive it. Always confirm your situation with a retirement specialist.

Timing Matters: Don’t Wait Until It’s Too Late

It’s easier and cheaper to complete your military service deposit within the first two years of federal employment. Delays lead to compounded interest and tighter retirement timelines.

If you’re approaching retirement and haven’t addressed your military time yet, act immediately. The Office of Personnel Management (OPM) will require proof that your deposit was made before calculating your final annuity.

Many employees assume their agency is automatically crediting military time—but it doesn’t happen unless you initiate the deposit process.

Preparing for Retirement With Credited Military Time

Factoring in your military time can open the door to earlier retirement or a higher pension amount. But it also requires you to:

Keep detailed records of your service
Coordinate with both military and civilian HR offices
Evaluate your options carefully if receiving military retired pay

If you plan to retire in the next 5 to 10 years, now is the time to act. Verifying your buyback status ensures no surprises when it’s time to retire.

Final Thoughts on Making Your Military Time Count

Your years in uniform were valuable—and with the right steps, they still are. But you have to follow the rules to make those years count toward your civilian retirement. Don’t leave benefits on the table because of paperwork or procrastination.

Get the facts, calculate the cost, and decide if a service credit deposit makes sense for your future. If you’re unsure how to start or need help understanding your personal situation, talk to a licensed agent listed on this website for professional advice.