- Projected retirement date: 8/31/2023
- Age at retirement: 58 yrs, 3 months
- Creditable years of FERS service at retirement: 16.5
- Projected High 3 at retirement in 4 years (assumes 2.6% raises): 176,000
- Current gross annual military retirement pay: $42,840
- Military service: 21.5 years
- 3% Deposit (prior to interest): $20,122
- Deposit with interest: $26, 866
- Military pension: $42,840
- MRA + 10 reduced pension (5% per year reduction short of age 62): $23,474 ((176000*0.01)*16.5)*0.80833
- Total of both pensions: $66,314
- Voluntary retirement with 38 combined years: $66,680 (176000*0.01)*38
Buying back my military time would make me eligible for the supplemental retirement supplement (SRS) which would amount to $775 a month until I turn 62. So, that would amount to an additional $34,875 over the course of the 45 months until I reach 62 when it would stop. More than enough to cover the cost of making the buyback deposit.
However, the biggest drawback I see in all of this is that my FERS annuity wouldn’t receive any COLAs until I reach 62. So, that’s 45 months where my military pension would have grown, but the FERS pension is stagnant. Based on a conservative 1% per year COLA, that could add $1,740 annually to my military pension.
The cost of survivor benefit coverage under FERS is also more expensive. I would pay 10% of my annuity for 50% coverage. I’m currently paying 6.5% on my military pension for 55% coverage. It’s also paid up when I reach 70 years of age. I could however keep paying for the SBP on the military pension even though I’ve waived retired pay, but would have less survivor coverage.
So, I guess I’m looking for anyone that can validate my logic and let me know if I’m overlooking anything in regards to my calculus. The loss of 4 years worth of COLAs seems to be the major drawback, however I know those aren't guaranteed. Based on what I know, I don’t see a benefit to combining. Thanks.