The Set Up
A reader (let’s call her Buffy) recently asked me if I could help her and her husband (let’s call him Angel) determine if “buying years back” from Angel’s pension would be worth it. For those of you unfamiliar with the concept of “buying years back”, it basically means under certain circumstances a worker can pay the pension fund to add years onto their final pension calculation. I only learned of the concept of “buying years” after starting this blog. Although the concept appears common in many European retirement systems, and the Canadian national system; the feature is reserved for public pension systems at the local, state, and (non-military) federal level in the U.S. The worker usually qualifies through special circumstances like prior military service (that fell short of pension eligibility), or previous participation in a separate public pension system (e.g. a teacher who moves from one school system to another).