Military Buyback Calculator

What military buyback actually is

Military buyback is a deposit you pay to OPM that converts your prior active military service into FERS (or CSRS) creditable service. Once you've made the deposit, those military years count toward your civilian pension exactly the same as your federal civilian years — same multiplier, same effect on eligibility, same impact on the FERS Supplement. Without the deposit, those military years don't count toward your civilian pension at all, even though you served them.

For most prior-service feds, buyback is one of the highest-ROI financial decisions available — typically breaking even within the first 1-3 years of FERS retirement and paying out for the rest of your life. The conditions matter, though, and there are a few traps that can flip the math. Source rules: OPM CSRS/FERS Handbook Chapter 22 and 5 U.S.C. § 8334.

The deposit formula — and what counts as “basic pay”

The base deposit is straightforward:

• FERS: 3% of your military basic pay across all qualifying service.
• CSRS: 7% of your military basic pay (relevant only to feds hired before 1984 — almost everyone reading this is FERS).

The word that matters is basic pay. The deposit is calculated only on the base-pay column from the military pay tables — not BAH, not BAS, not flight pay, not jump pay, not deployment-related special pays, not enlistment bonuses. For most career enlisted and junior officers, that means the deposit is meaningfully smaller than what intuition suggests when you remember your overall LES totals.

Worked example: an E-5 averaging $3,200/month basic pay over 4 years of active duty has total basic pay of $3,200 × 48 = $153,600. The FERS deposit is 3% of that = $4,608 — paid in the grace period — to add 4 years to FERS service. Compare that to the lifetime pension boost (next section).

The 3-year grace period — and why every prior-service fed should care on day one

From the date you're hired into a federal civilian position covered by FERS, you have two years of interest-free time, plus a one-year “catch-up” window before interest starts accruing on the deposit balance. Effectively three years before the cost meter starts.

That window is gold. If you finish your buyback inside it, the price is exactly the 3% formula above and not a penny more. Miss the window and the bill grows — sometimes substantially — every year you delay. The single most common buyback mistake is treating it as “something I'll handle eventually” and quietly missing the grace deadline. People who would have paid $5,000 in year three end up paying $9,000-12,000 in year ten.

If you're a prior-service fed inside the grace window right now, the right move is to start the paperwork (DD-214 → RI 20-97 → SF-3108) today, not when retirement is on the horizon. The administrative process can take 6-12 months on its own.

After grace — variable rate, annual compounding

Once the grace period ends, interest accrues annually at a variable rate set by the Treasury. Recent OPM-published rates have ranged from 1.375% (2013) to 4.625% (2024) and 4.375% (2025) — generally tracking Treasury yields with a one-year lag. The rate is reset every January, and interest compounds annually on the unpaid balance.

For someone who waits 10 years past grace before paying, the original $5,000 deposit can compound to $7,500-$9,000 depending on which years fell into which rate environment. That increase is pure cost — it doesn't buy you more pension service or a bigger annuity. You're just paying late.

The buyback is still usually worth it even after a decade of compounding. But the closer you get to retirement, the worse the comparison: the lifetime benefit you'll receive is shrinking (fewer remaining years to draw the boosted pension) while the cost is growing.

What buyback adds to your pension

Standard FERS pension formula: 1% × years of service × high-3 average salary. Buyback adds your military years directly to the “years of service” term. SCE positions use 1.7% per year for the first 20, so buyback can be even more powerful for federal LEOs and firefighters who haven't hit 20 SCE years yet.

Worked example, continuing the E-5 above: 4 years of military service bought back, retiring as a GS-13 with high-3 of $130,000. The buyback adds 1% × 4 × $130,000 = $5,200/year to the pension — every year, COLA-adjusted, for the rest of life.

Across a 25-year retirement: that's roughly $130,000 in nominal lifetime pension dollars from a $4,608 buyback. Even with COLA aside and a basic present-value haircut, the multiple is dramatic. Buyback also helps you cross eligibility thresholds — the added years count toward MRA + 30, age 60 + 20, and FERS Supplement qualification.

Break-even — usually 1 to 3 years of FERS retirement

Continuing the same example: $4,608 buyback cost ÷ $5,200/year pension boost = break-even in roughly 11 months of retirement. Everything after that is profit, for life.

The break-even calculation gets less attractive when the deposit gets large (high-rank, long military career) or compounds for many years past grace. But for the vast majority of prior-service feds, the break-even is somewhere in the first 1-3 years of FERS retirement. Anyone who expects to live more than a couple years past retirement is statistically ahead by buying back.

The calculator above does this break-even math with your actual numbers — military service length, federal hire date, current age, planned retirement, and high-3 estimate.

The military pension waiver trap

Here's the rule that flips the math for some people: if you are already receiving (or entitled to receive) military retired pay, buying back the same military service requires you to waive your military pension for the rest of your life. The military years can't pay out twice — once as a military pension and again as FERS service.

For a 20-year active duty retiree drawing 50% of high-3 in retired pay, that waiver is enormous and almost never pencils out. You'd trade roughly $40,000-60,000/year in immediate retired pay (depending on rank) for a future +20 years on FERS — adding maybe 20% to a pension that doesn't start for years. The math collapses for nearly every active duty retiree.

Two big exceptions to the waiver requirement:

• Reserve/Guard retirees can usually buy back their active-duty time without waiving Reserve retired pay, because Reserve retirement doesn't start until age 60 and the buyback covers different service. The interaction is technical — some periods of activation may need to be excluded — but the broad outcome is favorable.
• Combat-related disability retirees (Chapter 61 with combat-related determination) and certain other narrow categories may be able to buy back without waiving. Get an OPM benefit specialist to weigh in before assuming.

Reserve and Guard buyback specifics

Reserve and National Guard members can buy back their periods of active duty — basic training, active duty for training, deployment activations, mobilizations, AGR tours. Drill weekends and inactive duty time generally don't count for buyback, since those weren't active service.

Document the active-duty periods carefully. Each activation produces its own DD-214 (or NGB-22 for Guard); you may need multiple. Total the active-duty days, and the deposit calculation runs on the basic pay rate during each period.

Because most Reserve/Guard members aren't drawing retired pay yet (it doesn't start until age 60), the waiver issue typically doesn't apply during the buyback decision window. You can buy back the active periods cleanly while still on track for a future Reserve pension.

Lump sum vs. payroll deduction

Once the deposit amount is calculated, you choose how to pay: a single lump sum, or biweekly payroll deductions ($50 minimum per pay period). The choice has real cost implications.

Lump sum: total cost is locked in immediately. No additional interest. Best option if you're inside the grace period or have the cash on hand and want it done.

Payroll deduction: spreads the payment over months or years, but the unpaid balance keeps accruing interest at the variable rate the entire time you're paying. The longer the deduction schedule, the more interest you pay on top of the original deposit. For deposits in the $5K-15K range, most people can finish a payroll plan in 1-3 years; for larger deposits, longer plans add real cost.

Rule of thumb: if you've got the cash and you're past grace, lump sum almost always wins. If cash is tight, payroll deduction is fine — the underlying buyback ROI is so strong that even paying interest doesn't kill the deal. Just don't stretch a small deposit over 10+ years if you can avoid it. The pay-down calculator inside this tool models the difference if you want to run your specific numbers.