With many taking advantage of deferred resignation, early outs, or simply deciding it’s time to retire, start the military deposit paperwork immediately if you haven’t already done so. There is a free webinar at 7:00 pm on July 31st about savings for retirement that you may wish to take advantage of.
FERS retirees with post-January 1, 1957, military service will not receive credit or annuity computation for their military time without making a deposit. If a deposit is made, the employee will receive credit towards his/her annuity computation.
Under CSRS rules, if you served on active duty and will be eligible at age 62 to collect Social Security, your CSRS annuity will be reduced by the number of years that you served unless you buy back that time.
Options
Federal employees have the option of making military service credit payments for creditable military service before they retire. I bought back my 3-plus years of active-duty military time when I discovered that my CSRS retirement annuity would decrease at age 62 if I didn’t.
All FERS employees and CSRS employees who anticipate having at least 40 quarters or 10 years of work under Social Security at age 62 should consider paying back their military time. Otherwise, your annuity will decrease. In my case, the cost was minimal, $650 total, and I was able to pay $25 a pay until the debt was settled. Deposits for military service from the 1980s and up can be substantial because military pay increased dramatically.
The earlier you initiate the payback, the less interest penalties you will pay. I suggest buying it back early in your career, even if you are CSRS and aren’t sure you will be able to collect Social Security. You can always have the payment refunded before you retire if you are certain that you won’t have the 40 quarters necessary to collect Social Security. My military pay was meager, $97 a month, in 1969 when I was in the Air Force.
Confusion Abounds
There is considerable confusion about whether it is worthwhile to recoup your military time. If you make a military deposit, there is no effect on your other military benefits, such as medical benefits, base access, commissary, or VA benefits, including any disability payments from the VA. Visit our Military Credit section for complete information on this subject.
It only affects (active duty) retired military pay; you cannot receive 2 separate retirements (military and civilian) for the exact same period of service. If you are retired from active duty and elect to buy back your 20+ years of military service, your military retirement will cease once you begin collecting your federal civil service annuity. Reserve or National Guard members under Title 32 can collect both a federal civil service retirement and a Reserve or National Guard retirement.
Helpful Retirement Planning Tools
- Financial Planning Guide for Federal Employees and Annuitants
- TSP Guide
- Budget Work Sheet
- Retirement Planning for Federal Employees & Annuitants
- The Ultimate Retirement Planning Guide – Start Now
- Deciding When To Retire – A 7-Step Guide
- 2025 Federal Employee’s Leave Chart
- Medicare Guide
- Social Security Guide
Disclaimer: The information provided may not cover all aspects of unique or special circumstances. Federal regulations, medical procedures, investment information, and benefit details are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance, including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change.
The information contained herein may not be suitable for your situation. This service is not affiliated with OPM or any federal entity. You should consult a financial, medical, or human resource professional where appropriate. Neither the publisher nor the author shall be liable for any loss or other commercial damages, including but not limited to special, incidental, consequential, or other damages.
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Dennis V. Damp is an author, retired federal manager, business owner, career counselor and veteran. Damp is the author of 28 books, a recognized benefits expert, and a retired federal manager with 35 years’ service. Dennis has been a guest on hundreds of radio talk shows, CNN’s YOUR MONEY and the Lou Dobbs Cable TV shows, lectured at universities and colleges, produced Internet web sites and training videos, and has written hundreds of articles for national magazines and newspapers. His books have been featured in the Wall Street Journal, Washington Post, New York Times and U.S. News & World Report.
Dennis joined the Air Force in 1968 and spent over three years on active duty and an additional seven years with the Air National Guard. He was hired by the Department of Defense (DOD) after leaving active duty and transferred to the Federal Aviation Administration (FAA) in 1975. He spent the remainder of his career in various positions with the FAA. His last position was technical operations manager at the Pittsburgh International Airport’s air traffic control tower.