Buying Back Miliatary Time.

Civil Service Discussion.

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crondanet5
Posts: 4330
Joined: Tue Aug 19, 2008 8:51 pm

Re: Buying Back Miliatary Time.

Post by crondanet5 »

Let us not forget that the military retired pay is coming in now and FERS retirement is sometime in the future. Be sure to calculate how much military retirement pay would be lost between now and expected FERS retirement date. Also include at least a 1% per year increase in military retired pay in that figure.

jdeacon
Posts: 136
Joined: Fri Mar 05, 2010 4:38 pm

Re: Buying Back Miliatary Time.

Post by jdeacon »

michimichi wrote:
jdeacon wrote:Michimichi,

Well there are exceptions. For example, military academy graduates are on active duty while they attend the academy for 4 years but that time does not count towards retirement (unless they had prior enlisted service). As a result, the vast majority of academy graduates who retire from active duty after serving an additonal 20 years of military service can buy back their four years of "academy" time if they become civil servants. I know of several retired officers who have done that. My example in the January post above was such a case.

Gotcha - so they buy back their time that didn't count toward the military retirement, thus keeping their pension AND getting a few years toward FERS. Nice!

You got it ---it is very nice!

BigMike
Posts: 220
Joined: Wed Sep 29, 2010 12:45 pm

Re: Buying Back Miliatary Time.

Post by BigMike »

crondanet5 wrote:Let us not forget that the military retired pay is coming in now and FERS retirement is sometime in the future. Be sure to calculate how much military retirement pay would be lost between now and expected FERS retirement date. Also include at least a 1% per year increase in military retired pay in that figure.


Cronda, there is no military retired pay that would be lost prior to FERS retirement. You would continue to draw your military retirement check even after you have "bought back" your time. Your military retirement check only stops when your FERS retirement check with the combined retirements begins.

However, for comparison purposes to determine if buying back will increase your retirement or not the cost of living increases expected in your military retirement should indeed be factored in.

crondanet5
Posts: 4330
Joined: Tue Aug 19, 2008 8:51 pm

Re: Buying Back Miliatary Time.

Post by crondanet5 »

Thanks for enlightening me. And your point is well taken. The question is would the increase from the bought back time for the retired military federal civilian employee be worth the loss of the military retired paycheck or would the retiree make more money having both a military retired check and a FERS retirement check? That will take some time to determine.

BigMike
Posts: 220
Joined: Wed Sep 29, 2010 12:45 pm

Re: Buying Back Miliatary Time.

Post by BigMike »

crondanet5 wrote:Thanks for enlightening me. And your point is well taken. The question is would the increase from the bought back time for the retired military federal civilian employee be worth the loss of the military retired paycheck or would the retiree make more money having both a military retired check and a FERS retirement check? That will take some time to determine.


You have stated the equation accurately. You are also correct that it is NOT a simple thing to calculate. There are many unknowns.

The one that could be the most difficult to project is what the civilian salary will be at retirement (both with the military time added and without). You must look into the future and project at retirement what your civilian grade and step will be along with what that grade and step will be paying at the time of retirement.

Another unknown is whether or not one should plan on the system still being based on a "Top Three" scenario or if the government will have made good on what it has been threatening for quite some time to go to a "Top Five" system.

At best you can only come up with approximate numbers. I would suggest doing several scenarios at different grades, different salary estimates, and different systems (i.e. Top Three or Top Five). If you do some worst case scenarios and some best case scenarios and some middle ground ones you should be able to see if you would be in the ball park or not. You may find that the most accuracy you can get is an "if this then it works" or an "if that it doesn't."

When you are first starting your civilian career is when it will be the hardest to project these things. Unfortunately that is when the buyback cost is cheapest because there is no interest if you finish buying back within the first two years. I waited 23 years before buying my time back and it was still very lucrative for me even with the interest having driven the buy back from about $8K to $21K! At least I was so close to my civilian retirement time I knew within a very tight range what my numbers were and could clearly see what the effect would be.

I just thought of one more caution. Getting all of the paperwork done can take an extraordinary amount of time. You cannot wait right up until the time you want to retire to start if you do decide to do the buyback. I started my paperwork in Nov 2011 and it took me pushing all of the different agencies that had a part to play very hard. Even then I didn't complete the process and get my proof that I had paid until Aug 2012. I had to re-schedule my desired retirement date twice in the meantime.

I retired at the end of Aug 2012 but OPM has still not completely gotten my pay straight because DFAS is still processing my paperwork. :x

DFAS IS THE MOST INEFFICIENT AGENCY IN THE GOVERNMENT in my not so humble opinion! Now I feel better, but I digress.

I am on interim pay (about 80%) until they get it fixed. However, I am fine so far since I had planned ahead with plenty of reserve funds knowing that could happen. I know it will all get fixed eventually and I will get my back pay they owe me but it would have been better to have started sooner so that it wouldn't take this long after retirement to get my pay straightened out.

I apologize for being so long winded but am just trying to help others in any way I can since I just went through this and know first hand what it is like.

Mike

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