Q. I will be retiring from civil service under CSRS with 40 years of service. I will also be drawing my reserve retirement next year when I turn 60. I have three years and nine months of unpaid military service, and it would cost approximately $26,000 to buy back the service. I know when I turn 62, the Social Security windfall elimination provision will reduce my Social Security annuity. I have less than 20 years of significant earnings. I’m wondering if it is worth paying the $26,000 to buy back the three years and nine months.
A. Only you can make that decision. Knowing how much you’d have to deposit, you can estimate how long it would take you to recover that amount in your annuity payments. Then you’d have to offset that by what the deposit money would have earned if you had invested it.
Worth taking into consideration is the fact that with 41 years and 11 months of service, you would have reached 80 percent, the maximum payable annuity. Since you would be making a deposit for more years than those needed to reach that level, the excess deposit would be repaid to you when you retired. You could either accept that refund or use it to purchase additional annuity, which isn’t subject to the 80 percent limit.