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Toggle navigation. Before you start to explore the benefits of buying back your time, you should do two things: Estimate how much your service deposit will be use the calculator below to find "true cost"; deposit plus interest. Buy Back Your Time Now. Does it make sense to buy back time? You Be The Judge. Military Time Buy Back Calculator. Basic Advanced. Branch Select the branch of the Armed Forces in which you served. Grade Select your grade for this entry period of service.
It can be found on your DD, block 4a. From Date Select the beginning date of this period of your military service. If an exact date is not known, you may use an estimated date for the purposes of this calculator. Alternatively, it can be found on your DD, block 12i. YYYY To Date Select the end date of this period of your military service. How Much Will It Cost? How much you will have to pay to buy back your military time depends on these factors… When was your service?
How much were you paid during your military service? How much interest has accrued on that time? Click below and learn how to avoid making them yourself. Download The 7 Critical Mistakes Article. Who is Micah? Leave a Reply Cancel reply Your email address will not be published. Related Articles. Are you confused about Roth TSP rules?
Can you deduct your FEHB premiums in retirement? Leaving Federal Service for Private Sector I am considering leaving federal civilian employment after 14 years, which includes 8. Your Financial Planners. Learn More. Learn About Retirement. Retirement Tools. Get Help. Facebook-f Linkedin-in. Send Me The Article. Your Email. First Name. Last Name. Here is the formula to calculate your military deposit aka, what it costs to buy back your military time.
See chart above. Note: Your Basic pay does not include allowances, flight pay, combat pay, etc. This means that it would cost the following to buy back these 6 years before we think about interest:. But we are not out of the woods yet. Most federal employees will also have to pay interest on their deposit as well. The interest rate is different every year but as you can imagine, the longer you wait to buy back your military time, the more it is going to cost you.
Here is a chart showing the interest rate from previous years. But with current interest rates being much lower than they were in the past, the variable interest rate for military deposits have been much lower in recent years. In , it is 1. And while the interest calculation can get a little hairy, the most important thing is that you buy back your time as soon as possible so as to not accrue more interest.
The government offers a grace period of 2 years from the day you started your civilian job to pay back your time without interest accruing. It often still makes a ton of sense to buy back your time even if you are paying a bunch of interest.
When thinking about buying back your military, it simply comes down to if the cost of making the deposit is worth the benefits you receive. When you buy back military time, that time is added back into your years of creditable service and thereby increasing your monthly pension. Your new pension calculation would look like this:.
The Cost. Note: Interest has only accrued for the last 21 years of the 24 year civilian career because the first 3 were in the grace period. You would earn your deposit back with 2 years of retirement! That is a great investment.
However, Eddie mentioned it is much easier to do the computations yourself to not only make their job easier, but so you can ensure accuracy. No one has a greater interest than you in making sure the calculations are done correctly. Once the calculations are complete, you can buy back your time by writing the government a check, or through payroll deductions over the next couple of years.
You must buy your military service credits within two years of beginning your federal service or the balance will accrue interest. The interest rates vary based on the year s of your military service and are determined by the Department of the Treasury every year. You can find the interest rates on the OPM website. All non-retired military veterans can buy back their military service time through a Military Service Credit Deposit.
You only need 5 years of federal service to qualify for a deferred annuity , which is a pension you can begin drawing at age Even a small pension will be valuable in your retirement years.
Graduates from the Service Academies can also buy back their academy time, which is an amazing benefit because Service Academy Cadets only earned a small stipend during their Academy days.
This makes the cost to buy that time inconsequential compared to the return they would receive in federal service time and annuity value. Members of the Guard and Reserves are able to buy back their active duty time and work toward dual pensions.
This is what Eddie is doing. He is also working toward his retirement from the Navy Reserves, which he would also receive at age 60 unless he is eligible for early Reserve retirement pay. Federal law prohibits retired active duty military members from buying back their military time and adding it to their FERS pension this is because they are already receiving compensation for their military retirement.
As noted earlier, military retirees should still look into getting credit for their Service Computation Date for Leave.
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