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Updated August 3, 2026. Quick answer: buying service credit is worth it when you draw the pension long enough to recover the cost — and the two things that decide that are your plan’s multiplier and whether the plan has a COLA. Some purchases never break even, and the calculator will tell you so.
More on public pension systems, topic by topic: Massachusetts retirement late entry and make-up payments, Massachusetts retirement repaying withdrawn deductions and Massachusetts teacher out-of-state service credit.
More on public pension systems, topic by topic: Arkansas LOPFI service credit purchase.
More on public pension systems, topic by topic: NJ PFRS service credit purchase.
More on public pension systems, topic by topic: Mississippi PERS returning to work.
Service purchase rules for more systems: Louisiana LSERS retirement decisions, Missouri MPERS retirement decisions, Arkansas LOPFI retirement decisions, Arizona CORP retirement decisions, Oklahoma OPPRS retirement decisions, DC police and firefighters retirement decisions, Iowa MFPRSI retirement decisions, Oklahoma OLERS retirement decisions and Kentucky SPRS retirement decisions.
Service purchase rules for more systems: Kentucky CERS retirement decisions, South Dakota SDRS retirement decisions, Louisiana LASERS retirement decisions, South Carolina PORS retirement decisions, Indiana 1977 Fund retirement decisions, Louisiana Sheriffs’ Pension retirement decisions, Louisiana Parochial Employees’ Retirement decisions, North Dakota TFFR retirement decisions and Oklahoma Firefighters Pension retirement decisions.
Service purchase rules for more systems: NYC TRS retirement decisions, Michigan MERS retirement decisions, Colorado FPPA retirement decisions, Connecticut MERS retirement decisions and Georgia PSERS retirement decisions.
Service purchase rules for more systems: Norfolk County Retirement System decisions, Bristol County Retirement System decisions and Cambridge Retirement System decisions.
Service purchase rules for more systems: Ohio Highway Patrol Retirement System decisions, Maryland LEOPS retirement decisions, Middlesex County Retirement System decisions, Worcester Regional Retirement System decisions and Louisiana Firefighters Retirement System decisions.
Service purchase rules for more systems: Minnesota PERA Police and Fire retirement decisions, Washington LEOFF retirement decisions, Louisiana MPERS retirement decisions, San Antonio Fire and Police pension decisions, Austin Police Retirement System decisions and Pennsylvania PMRS retirement decisions.
Service purchase rules for more city systems: LAFPP retirement decisions, Houston firefighters retirement decisions, Kansas City school retirement decisions, Tampa fire and police pension decisions and Atlanta firefighters pension decisions.
Service purchase rules for more city systems: Portland FPDR retirement decisions, Wichita Employees’ Retirement System decisions, Detroit police and fire retirement decisions, Baltimore fire and police retirement decisions and Jacksonville police and fire pension decisions.
Service purchase rules for more city and county systems: Cincinnati Retirement System decisions, St. Louis Employees Retirement System decisions, Kansas City employees retirement decisions, Metro Nashville pension decisions, Memphis city retirement decisions and Montgomery County Maryland retirement decisions.
Service purchase rules for more city and county systems: Oklahoma City ERS retirement decisions, Tampa general employees retirement decisions, Tulare County TCERA retirement decisions, StanCERA retirement decisions, SJCERA retirement decisions, SBCERS retirement decisions and Imperial County retirement decisions.
Service purchase rules for more city, county and fund systems: Chicago police PABF retirement decisions, Chicago firefighters FABF retirement decisions, Chicago Laborers’ Fund retirement decisions, Fort Worth ERF retirement decisions, Atlanta general employees pension decisions, Jacksonville general employees pension decisions, Miami FIPO retirement decisions and Sonoma County SCERA retirement decisions.
Service purchase rules for more city and county systems: San Francisco SFERS retirement decisions, Chicago teachers CTPF retirement decisions, Milwaukee ERS retirement decisions, Fairfax County ERS retirement decisions, VCERA retirement decisions, KCERA retirement decisions and Boston Retirement System decisions.
Service purchase rules for more city and county systems: Houston HPOPS retirement decisions, Philadelphia pension retirement decisions, Detroit GRS retirement decisions, Baltimore ERS retirement decisions, Sacramento SCERS retirement decisions, CCCERA retirement decisions, FCERA retirement decisions and SamCERA retirement decisions.
Service purchase rules for more city and county systems: Phoenix COPERS retirement decisions, Austin COAERS retirement decisions, Dallas ERF retirement decisions, Dallas DPFP retirement decisions, Chicago MEABF retirement decisions, SBCERA retirement decisions and ACERA retirement decisions.
Service purchase rules for city and county systems: SDCERS retirement decisions, SDCERA retirement decisions, Denver DERP retirement decisions, Seattle SCERS retirement decisions and Houston HMEPS retirement decisions.
Service purchase rules for specific systems: Mississippi PERS retirement decisions, Ohio Police & Fire retirement decisions and Nebraska NPERS retirement decisions.
Service purchase rules for specific systems: Montana TRS retirement decisions, Delaware state pension retirement decisions, Vermont VSERS and VSTRS retirement decisions and New Jersey PFRS retirement decisions.
Service purchase rules for specific systems: Hawaii ERS retirement decisions, Michigan MPSERS retirement decisions, Rhode Island ERSRI retirement decisions, Massachusetts state retirement decisions and North Carolina LGERS retirement decisions.
Service purchase rules for specific systems: West Virginia PERS and TRS retirement decisions, Alaska PERS and TRS retirement decisions, NDPERS retirement decisions, Montana PERS retirement decisions and MainePERS retirement decisions.
Service purchase rules for specific systems: Missouri LAGERS retirement decisions, SERS of Ohio retirement decisions, OCERS retirement decisions and NHRS retirement decisions.
Service purchase rules for specific systems: PERSI retirement decisions, Arkansas ATRS retirement decisions and PSPRS retirement decisions.
Service purchase rules for specific systems: Utah Retirement Systems retirement decisions, UCRP retirement decisions and Arkansas APERS retirement decisions.
Service purchase rules for specific systems: ERS of Texas retirement decisions, Pennsylvania SERS retirement decisions, Nevada PERS retirement decisions and LACERA retirement decisions.
Service purchase rules for specific systems: NYCERS retirement decisions, ASRS retirement decisions and TMRS retirement decisions.
What the two inputs that matter actually do
The multiplier is what your plan pays per year of service — commonly between 1% and 2.5% of final average salary. It sets how much pension a purchased year actually buys, and a plan at 1.5% needs the credit to be substantially cheaper than a plan at 2.5% before the arithmetic works.
The COLA is the one people forget. The same purchase recovers in about 15.2 years in a plan with a 2% COLA and about 17.5 years in a plan with none — more than two years of difference on an ordinary purchase, before anything else is considered. And COLA treatment varies enormously between systems: some compound, some compute every year against the original annuity, and some pay nothing unless the legislature acts.
Worked examples, including the ones that fail
| Case | Extra pension a year | Years to recover | Total over the horizon | Verdict |
|---|---|---|---|---|
| Typical: 1 year bought, 2% multiplier, 2% COLA, 25-year retirement | $1,600 | 15.2 yrs | $51,248 | recovers |
| No COLA system - the same purchase, nothing indexed | $1,600 | 17.5 yrs | $40,000 | recovers |
| Rich multiplier, cheap credit - should recover fast | $7,125 | 5.9 yrs | $305,883 | recovers |
| NEVER BREAKS EVEN - expensive credit, thin multiplier, short retirement | $900 | 46.7 yrs | $10,800 | never breaks even |
| Late purchase near retirement, short horizon | $4,400 | 18.0 yrs | $67,982 | never breaks even |
| Low multiplier but long retirement - slow, still recovers | $2,240 | 15.4 yrs | $90,872 | recovers |
Two of these six never break even, and that is not a contrivance. The second one is the case that actually happens: a large purchase made close to retirement, where the cost is high because the benefit starts almost immediately and the horizon is short. Buying service credit late is when it is most tempting and least likely to pay.
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How our partner relationships workWhat this calculator does not include
- What the money would otherwise have done. Paying $28,000 for credit means not having $28,000. The comparison is against whatever else it would have been doing, not against zero.
- Tax. Pension income is taxable; the purchase may be made with pre-tax rollover money in some systems, which changes the arithmetic in ways only your own numbers settle.
- Survivor value. If you elect a survivor option, purchased credit can keep paying after your death — which lengthens the effective horizon and is a real argument in favour that the payback figure alone misses.
- Reaching an eligibility threshold. Sometimes a purchase is not about the extra pension at all — it buys the years that let you retire earlier, or that trigger retiree health eligibility. That can be worth far more than the payback period suggests, and this calculator cannot see it.
That last one is the most common genuine reason to buy, and it is why the payback number is a starting point rather than the answer.
How this was checked
The arithmetic was implemented twice, independently — once as an annual calculation and once as a month-by-month ledger — and the two were compared across six cases. They agree to within 0.08 years, which is exactly the rounding you would expect from monthly rather than annual steps. Two of the six deliberately never recover, because a calculator whose examples all work is not telling you anything.
Related: the lump-sum versus monthly decision · the federal equivalent for military service.
Figures verified against a recomputation of the calculator's own formula (all six worked examples reproduced, with the annual and month-by-month methods agreeing within 0.08 years) and the OPM FERS and CSRS annuity computation pages (1% to 2% multipliers) on September 30, 2026; the 2.5% top of the multiplier range and the COLA rules of individual state systems were not re-checked against an official source.
General information drawn from IRS, Medicare, HUD and state statute and regulation, not legal, tax or financial advice. Continuing-care law is state law and differs materially between states; every figure here is year-labelled and every source named. Powers of attorney, guardianship and trusts are governed by STATE law and differ change, and interest rates published by the IRS change every month - never rely on a rate quoted on any page, including this one. We are not a law firm or a tax adviser, and this is not legal or tax advice.
Service-credit purchase rules by system, added September 3, 2026
The public pension systems below each publish their own service-credit purchase rules, cost basis and eligible service types: New Jersey PERS · New Jersey TPAF · North Carolina TSERS · Virginia VRS · Massachusetts MTRS · Minnesota PERA · Minnesota TRA · Missouri PSRS · Missouri MOSERS · Maryland MSRPS · Colorado PERA · Tennessee TCRS · Indiana PERF · Indiana TRF · Kentucky KTRS · Kentucky KERS · South Carolina SCRS · Alabama RSA · Louisiana TRSL · Oregon PERS · Connecticut SERS · Connecticut TRB · Iowa IPERS · Wisconsin WRS · New Mexico PERA · New Mexico ERB · Oklahoma TRS · Oklahoma OPERS.