Ask The Experts: Retirement

By Reg Jones

Military buyback

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Q. I served four years active duty from 1972 to 1976. I started working for the Veterans Administration in 1983 until current under CSRS. Human Resources at that time was having issues and the staff overhauled. I was not informed about the military buyback until several years later, when I was told it was called Catch-62.

I am told I now have 34 years federal time, however only the 30 years at VA count toward retirement pension. I sent the forms to check what I would have to pay back, and was told it is around $6,000 because of the interest the government added. Is it worth it for me to try to pay $50 a month to try to buy back some of the time if I plan to retire within next five years?

A. You are asking for an opinion, which I can’t give. You’ll have to make up your mind based on what you’ll get for what you give. You already know what you’d have to give today. Here’s how to estimate what you’d get. If you make a deposit for that period of active-duty service, each month will increase your annuity by 1/6 percent. So, if you had five years of active-duty service, your annuity would be 10 percent higher than it would be if you didn’t make that deposit. Whether it’s worth the cost is hard to determine because the answer is based on unknowns, such as how long you’ll live after you retire, and hard-to-determine things, such as what you’d have earned if you invested the money instead of making the deposit. One final thought: If you decide to make the deposit on a monthly basis, interest will continue to accumulate on the unpaid balance.

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