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FERS - Buying back military AD service time - is it worth it?
- Thread starter ChuckMK23
- Start date
Compare the cost of the military service deposit to what you expect to gain at FERS retirement. Depending on your length of service, the gain in FERS retirement can easily make up for the deposit in a year or so.
Depends on your age and ability to get a piece of govt retirement. You can look at OPM to see the requirements to get retirement. But, if you can get it, I see little to no harm in spending a few bucks to get those years added to my overall retirement % that I'll be getting forever.
I'm sure someone will say something about opportunity cost and what else you could do with the money but the buy in cost is pretty low.
@Pags thats what I am thinking - I submitted my request for my Estimated Earnings During Military Service to DFAS - will see what that comes back with. So assuming I stay in Federal Service until age 64, and I'm 56 now, that would give me 8 years military plus 8 years CIV. I was hired at a higher step level too so I need to see what credit I get for that. At a minimum that's 16 years though and easily qualify. Its interesting. I don't quite understand the nuances yet. I'll be curious to see what the buy back amount is: $4-5K?
You should probably buy back your time. Federal pay is only going to go up, up, up - and your FERS retirement is calculated off of your high-3 salary. Federal civilian retirement is easy to get. In order to get at least something annually, you basically only have to work at least 5 years in civil service and be over age 62 to receive an immediate retirement pension and FEHB eligibility. Now, the pension starts at barely 10% of your high-3 salary for only 5 years of federal service, but if you've bought back some military time and you're retiring with high-3 out of a GS-14 or above job and you also have a military retirement or part-time income on the side (rental income?) and Social Security of course, then it stacks nicely as a 5-figure retirement supplement. By the way, locality pay is factored-into your high-3, but COLA is not. Choose wisely.
Wasn't aware of this 5 year route. Might keep that in mind down the road. Thanks for sharing.
There was an Obama political appointee plucked from the private sector who had no federal service. She did 5 years + 1 day, and netted a 10% lifetime pension on her Executive Schedule salary, because she was already over age 62. Her name is escaping me right now, but I am sure this practice is not unique to only one political party.
Personally, I already have ~3 years and change of federal civilian service, and my plan is to go back into a federal civilian job around age 60 and ride it for at least 3 years to get a good high-3 salary then punch out. Who knows if I will make it to 20 in the Navy Reserve or not, but that would be on top of any military benefits or buyback of military time.
@Hair Warrior thank you for connecting the dots! My plan is to punch out at 64 would give me 8 years of Fed Service + 8 years of Navy active duty = 16. Seems like a no brainer to buy back even I never go beyond GS-12
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Frankly it's part of the benefits package that comes with the job (and you pay into it as part of your FERS contribution each pay period). If she served the required amount of time she, or any other federal employee, is entitled to the same benefits.
@ChuckMK23 speaking Fed to Fed, buy it back. It will lay for itself easily in your case. I am retired from the reserves, bought back 15 years of time, and will retire in about five year with about 25 years of FERS time, Social Security, Reserve Retirement, and some VA change in my pocket. Not bad for a moron who failed to start saving until he was over 40!
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So different things get you different credits...I'll caveat this and say I don't work for OPM, HR, nor am I a supervisor. But I've read the OPM webpage a few times and gone through this for myself, Mrs. Pags, and some other vets.
-DD214: If you haven't already, turn this guy over to HR and every year you were ACDU will count towards your leave accrual. So, as a guy with 8yrs ACDU you should automatically have your leave service computation date programmed back to 2012. That will give you leave (and only leave) credit for those 8yrs which will put you in the middle leave tier earning 6hrs LA/pay period. This should be automatic and is pretty much part of the ACDU fine print. If HR says no ask to speak to someone else.
-industry credit: if you've worked in similar industries you can use your resume to get credit for additional leave. Not sure if you can do this on top of a DD214. Also, this generally needs to be done as part of negotiations so this ship may have sailed for you.
-ACDU buyback: those 8yrs aren't doing squat for you now. Might as well buy them back and add them to your total pension %. In this case it would add 8% to your annual annuity that you get when you retire and until you die. Can't think of a good reason why you wouldn't pay what may be the price of a mid range car to get this money forever. You can either pay a lump sum or you can pay as much/little as you want per pay period down to a minimum of $25/pay period.
Remember that the federal retirement is designed to function as a three part system: FERS annuity+TPS+social security. Social security is kind of a static # and FERS annuity is only increased by years served, ACDU buy back and high three pay grade. However, your agency probably has generous TSP matching. In addition if you have other 401k funds and you think TSP will perform better you can roll them over into TSP.
Also, look at FEGLI. Its very affordable to get a lot of coverage. Onboarding is one of the few times in life you have to set it to the max but you can always dial it back. I set it to the max and forget it (it's pretty affordable).
Health insurance. Tons of options for whatever coverage you want. I believe there's a way to keep it into retirement but I don't know the specifics of this.
Ask around your agency about how CR/govt shutdown may affect you. Depending on how you're funded it may result in unpaid furloughs. Good to know ahead of time if there's an annual chance for a furlough. If you know it's coming you can gird yourself appropriately.
Thank you for all this - huge help. I did do the industry credit documentation prior to appointment - my agency awarded as a higher pay step (GS-12 Step 5). And I did get the Leave Credit at 6/hrs per pay period. The rollover to TSP is something I hadn't considered but makes total sense!
My role is flagged as essential - I have a colleague who is a former Navy Meridian IP who's been in the job a good while and avoided impact from CR's.
I am truly grateful for the advice. Thanks!
My role is flagged as essential - I have a colleague who is a former Navy Meridian IP who's been in the job a good while and avoided impact from CR's.
I am truly grateful for the advice. Thanks!
As so many others have said, buy it back. It is only 3% of your total base pay from your time in active service, if I had to hazard a guess it would roughly be $10k or a bit less for you. There is a form you have to submit to DFAS to get the amount you owe, they then send another form back showing the amount you owe that you submit that to your agency's HR and go from there. You can pay it in a lump sum or have it taken out in a designated amount for each paycheck, you have 3 years minus a day to pay that off from the time you enter employment without interest and past that the interest rate isn't too bad.
PM me if you have any more questions.
PM me if you have any more questions.
I’d be curious to know any nuances or limitations on reservists trying to buy back time if they later become a fed civilian, i.e. what time counts or doesn’t count/ how they calculate military service.
(I know the VA doesn’t count IDT/ADT toward veteran status - only ADSW/ADOS/Mob/Recall.)
(I know the VA doesn’t count IDT/ADT toward veteran status - only ADSW/ADOS/Mob/Recall.)
Pretty sure it is much the same for OPM, you get a DD214 and you can buy your time as a reservist. I have a split now between my credited federal service and my mil time because I haven't bought my MOBs and ADSW back yet, but I can and will buy that time back.