Veteran FERS Retirement Benefits | Military + Federal Service Complete Guide

Military Buyback: The Most Important Decision for Veteran Federal Employees

As a veteran working for the federal government, one of the most impactful retirement decisions you'll make is whether to "buy back" (make a deposit for) your military service time to add it to your FERS retirement calculation.

Bottom Line: Military buyback allows you to add your years of active duty service to your FERS retirement calculation, potentially increasing your pension by thousands of dollars per year. For most veterans, it's an excellent investment with a break-even period of just 1-2 years.

How Military Buyback Works

When you buy back your military service:

Your military years count toward your total FERS years of service
Each year adds 1% (or 1.1% if retiring at 62+ with 20+ years) of your high-3 salary to your annual pension
You must pay a deposit equal to 3% of your military basic pay plus interest (if applicable)
You must waive your military retired pay to receive credit in FERS (unless you qualify for concurrent receipt)

Who Should Consider Buyback?

All honorably discharged veterans with active duty service
Especially beneficial for those with 4+ years of military service
Most valuable for employees who plan to stay in federal service long-term

Military Buyback Cost: How Much Does It Cost?

The cost to buy back military service is based on your military earnings during the period you want to credit.

Buyback Formula

Cost = 3% of Military Basic Pay + Interest (if after 3-year window)

Interest Rules: The 3-Year Window

Timing of Deposit	Interest Charged
Within 3 years of federal civilian hire date	No interest charged
After 3 years of federal hire date	Interest accrues from hire date until payment
Military reservists called to active duty	Special rules apply; interest may be waived

Detailed Example: A veteran with 4 years of military service who earned $60,000 total in basic pay, now earning $70,000 as a federal employee:

Buyback cost (within 3 years): $60,000 × 3% = $1,800
Pension increase: 4 years × 1% × $70,000 (high-3) = $2,800/year
Break-even period: $1,800 ÷ $2,800 = less than 8 months of retirement!
Over 20 years of retirement: $2,800 × 20 = $56,000 additional income

How to Make the Deposit

To initiate military buyback:

Request a military service deposit estimate from your HR office
Receive DD-214 verification from the National Archives
Make payment via check, money order, or payroll deduction
Keep records of payment confirmation

Dual Military and Civilian Retirement: Can You Get Both?

Many veterans wonder if they can receive both military retirement pay and FERS pension. The answer depends on several factors.

Scenario 1: You Buy Back Military Service

If you buy back your military service, you generally must waive your military retired pay to receive credit for those years in FERS. This means:

You receive your full FERS pension (including credit for military years)
You do NOT receive separate military retired pay
This is usually the better financial choice for most veterans

Scenario 2: You Don't Buy Back Military Service

If you don't buy back your military service:

You keep your full military retired pay
You receive your FERS pension (but military years don't count toward it)
Your total retirement income may be higher or lower depending on circumstances

Concurrent Retirement and Disability Pay (CRDP)

Veterans with a VA disability rating of 50% or higher may qualify for CRDP, which allows simultaneous receipt of:

Full military retired pay (no waiver required)
VA disability compensation (tax-free)
FERS pension (if military service was bought back)

CRDP effectively eliminates the requirement to waive military retired pay for disabled veterans, making it possible to "triple-dip."

Combat-Related Special Compensation (CRSC)

Similar to CRDP but specifically for combat-related disabilities. Veterans can receive:

VA disability compensation
CRSC payments (tax-free) to replace waived military retired pay
FERS pension

Veteran Preference in Federal Hiring and RIFs

Beyond retirement benefits, veterans receive significant advantages throughout their federal career.

Hiring Preference

5-Point Preference: Added to passing examination score for eligible veterans (honorable discharge, served during wartime, or received campaign badge)
10-Point Preference: For veterans with service-connected disabilities, Purple Heart recipients, or spouses of deceased/disabled veterans
Veterans Recruitment Appointment (VRA): Non-competitive hiring authority for eligible veterans

Reduction in Force (RIF) Protection

During layoffs, veterans receive additional retention preference based on their veteran status and years of service, making them significantly less likely to be laid off than non-veteran colleagues.

Other Veteran Benefits

Additional leave: Some agencies offer extra annual leave for veterans
Flexible scheduling: Priority for flexible work arrangements to accommodate VA appointments
Career advancement: Veterans Employment Opportunities Act (VEOA) provides additional promotion pathways

TSP and Social Security for Veterans

Veterans should consider how their military service affects their overall retirement strategy.

TSP Contributions During Military Service

If you contributed to the Blended Retirement System (BRS) TSP during military service:

You can roll over your military TSP balance into your civilian TSP account
This consolidates your retirement savings and simplifies management
Contact TSP.gov for rollover instructions

Social Security Considerations

Active duty military service earns Social Security credits. Key points:

Military earnings count toward your 35-year Social Security calculation
Some veterans have special additional Social Security earnings credits for military service
VA disability compensation does NOT count as taxable income for Social Security purposes

Veteran FERS Retirement Benefits: The Complete Guide