Buying Back Your Time From the Military

Military members that are moving beyond their active duty into work in the private sector are presented with an opportunity to “buy back” time from when they were enlisted. What that means, in the loosest sense, is that if you served in the Armed Forces, the time you spent there could be used as a credit towards your retirement if two criteria are met, the first being that you were honorably discharged, and the second being you make arrangements to buy back the time before you retire from private sector work.

While the concept seems straightforward enough, the execution of it can occasionally be a little more challenging to navigate, so with this article, we’re going to quickly run through the process so you can see if buying back your military time is the best move for you.

FERS

Firstly, you are going to need to figure out what your annuity from FERS is going to be in regards to the time you were enlisted. You get 1 percent of your average highest three years of salary contributed towards your FERS annuity. So, for example, let’s say the average of your three year high is 100,000 dollars, and you had 30 years of service, then your annuity contribution of 1 percent would equal $30,00

So to get your time in the military credited to your annuity with FERS, you’re going to need to do what is known ass a Military Service Credit Deposit. Refer to your DD-214 (which can be requested from your personnel office for your service branch) and enter in the pay you received for each year of your service. The deposit amount is figured out from a percentage of what you’ve been paid, and you have a slight period of two years to make this deposit before the interest kicks in.

The question often is, is buying back my military time worth the effort? The answer to that is almost always a yes, and there is hardly ever an instance where it does not make sense. It all comes down to the amount of time it takes to break even (and ultimately payoff) on the initial buy-in of that FERS annuity. Typically, it doesn’t take that long but depending on varying deposit amounts, the interest you owe, and what you are currently being paid, that break-even amount is going to be different for everyone.

You can also raise your spouse’s survivor annuity too by buying back your military time.

Buying back your military time could also expedite your journey to retirement too. Let’s say you have worked 18 years at your civilian job and are 60 years old and you want to retire, but if you do so without 20 years, your annuity will be penalized. But if you opted to buy back the time you spend enlisted, you can use those years towards your time worked, and easily pass that 20-year mark by the age of 60 years old.

Complete the RI 20-97, the Estimated Earnings During Military Service form, which is the first step in buying back your military time. You’ll need your Certificate of Release or Discharge from Active Duty form to complete this step, and once you do, you can give it to the people in charge of finance at whatever branch of the military you served in.