If you served in the military before joining the federal civilian workforce, you can buy back that time to increase your pension and potentially retire earlier. Here's everything you need to know about the process, costs, and whether it's worth it.
Enter your service years with and without military time to see the dollar impact.
The military service credit buyback lets federal employees with prior active-duty service add those years to their civilian retirement calculation. You pay a deposit based on your military earnings, and in return your pension increases as if you had worked those additional years as a civilian.
The buyback affects two things: your pension amount (more years = higher pension) and your retirement eligibility (military years count toward service thresholds like MRA+30 or age 60+20).
The deposit is a percentage of your military basic pay (not including BAH, BAS, or special pay).
| System | Deposit Rate | Notes |
|---|---|---|
| FERS | 3% | For most service periods (slight variations 1999-2000) |
| CSRS | 7% | Higher rate but higher pension multiplier |
If paid within the ~3-year interest-free window. After that, add 4.25% annually on the outstanding balance.
For most federal employees, the military buyback is one of the best financial decisions you can make. The return on investment is significant and the break-even period is short.
Military years also count toward eligibility. A veteran with 4 years of military and 26 years of civilian service reaches MRA+30 instead of needing 30 civilian years. That could mean retiring 2-4 years earlier.
| Service Type | Qualifies? | Notes |
|---|---|---|
| Active duty (Army, Navy, Air Force, Marines, Coast Guard, Space Force) | Yes | Honorable discharge required (DD-214) |
| Reserve/Guard on Title 10 orders | Yes | Deployments, mobilizations, etc. |
| Service academy time | Yes | Can be bought back separately |
| Reserve/Guard on Title 32 (state) orders | No | State-controlled service does not qualify |
| Active duty for training (Title 10) | Yes | Title 10 orders count as active duty |
The law gives you a 2-year grace period from your first day of FERS-covered civilian employment. Because interest compounds annually (not daily), the first actual interest charge does not hit until the end of the third year. This gives you an effective 3-year window to pay interest-free.
After that window closes, interest accrues at the rate set by the U.S. Treasury. For 2026, the rate is 4.25%, compounding annually. On a $5,000 deposit, that adds about $1,100 after 5 years of accrual.
The DFAS earnings estimate alone takes 2-6 months. If you want to finish before the interest-free window closes, start the process within your first year of federal civilian service. The total process from start to completion is typically 3-9 months.
| Step | Duration |
|---|---|
| Request DD-214 (if needed) | 2-12 weeks |
| DFAS earnings estimate | 2-6 months |
| HR deposit calculation | 2-4 weeks |
| Total from start to completion | 3-9 months |
If you receive a military longevity retirement pension, you must waive your military retirement pay to use those years for FERS/CSRS credit. You cannot receive credit in both systems for the same years of service.
Exceptions to the waiver requirement:
This is critical for CSRS employees. If you have post-1956 military service, are eligible for Social Security at age 62, and did not pay the military deposit, your CSRS annuity will be recomputed at age 62 to remove the military service credit. That means a reduction of roughly 2% per year of military service.
FERS employees are not subject to Catch 62. However, FERS employees still must pay the deposit to receive any credit for post-1956 military service.