Military Buyback Calculator

What is a FERS military buyback?

A military service credit deposit — commonly called a military buyback — lets FERS employees count their active duty military service toward their federal civilian retirement. You pay a deposit equal to 3% of the military basic pay you earned, and OPM adds those years to your FERS creditable service as if you had been a civilian employee the entire time.

The practical effect: each military year you buy adds an amount equal to your FERS multiplier (1% or 1.1%) times your High-3 salary to your annual annuity — permanently and for life. It also increases your creditable service toward retirement eligibility thresholds.

How the deposit is calculated

The formula is straightforward: 3% × total military basic pay. Basic pay is the base monthly pay from your Leave and Earnings Statement or W-2 Box 1 — it excludes BAH, BAS, special pays, and all allowances. If you served for four years at an average of $40,000/year in basic pay, the base deposit is $4,800.

Interest begins accruing after a two-year grace period from the date of your civilian appointment. OPM applies a variable compound interest rate (historically around 4.5% per year). The longer you wait, the more the deposit grows — which is why paying as soon as possible after being hired makes financial sense.

Is the military buyback worth it?

For most FERS employees, yes — and often by a wide margin. The pension increase from each military year is paid monthly for life; the deposit is a one-time cost. A four-year buyback costing $8,000–$10,000 (including interest) that adds $333/month in pension typically recoups itself in under 30 months of retirement. After that, the additional pension is pure gain.

The buyback is less compelling for employees with very high-interest situations (many years of outstanding interest on a low-pay military career) or for those with short life expectancies. The break-even calculator above shows your specific payback age — use that to evaluate your own situation.

Military pension and the waiver rule

If you are receiving regular active-duty retired pay (a 20+ year career retirement), you generally must waive it to count those same years under FERS — giving up a guaranteed military annuity to add years to a FERS pension, which is rarely a good trade. But 5 U.S.C. 8411(c)(2) carves out two exceptions to that waiver requirement: retired pay awarded for a service-connected disability, and Reserve or National Guard retired pay earned under 10 U.S.C. Chapter 1223— the points-based "non-regular" system most Guard/Reserve retirements fall under. If either applies to you, you keep your full military retired pay and get FERS credit for the active-duty years you buy back — no waiver required. Consult your HR office or OPM to confirm which category your retired pay falls into.

How to pay — OPM Form RI 20-97

To initiate the buyback, request a military earnings statement from the Defense Finance and Accounting Service (DFAS), then complete OPM Form RI 20-97 (Estimated Earnings During Military Service) and submit it to your agency HR office. HR will calculate the exact deposit and issue a billing statement. You can pay in a lump sum or in installments via payroll deduction. The deposit must be paid before you separate from federal service — it cannot be paid after retirement.