Buying back your years can meaningfully increase your pension. But only if the math works.

What You Can Typically Purchase

You may have heard that you can purchase additional service credit through CalSTRS or CalPERS. Maybe you left teaching for a few years and withdrew your contributions. Maybe you took an approved leave of absence. Maybe you worked in a position that was not covered before you started your current career.

CalSTRS allows members to purchase service credit under certain qualifying circumstances. The most common situations include redepositing contributions you previously withdrew when you left the system, credit for an approved leave of absence, prior service in another California public school system, and in some cases service credit for time worked in other qualifying educational roles.

How the Cost Is Calculated

The cost is based on your age at the time of purchase and your current compensation. The rate is set each fiscal year by the Teachers' Retirement Board.

You can pay via a lump sum, a rollover from a qualifying retirement account like a 403(b) or IRA, or through installment payments via payroll deduction. The purchase must be completed before you retire.

Is It Actually Worth It?

Buying back service credit essentially means prepaying for a higher pension. The question is whether the increased monthly benefit you receive over your retirement justifies the cost you pay upfront. That answer depends on how much the purchase costs, how many years you have until retirement, how long you expect to collect your pension, and what else you could do with that money.

In some cases the math works out clearly in your favor. In other cases especially if the purchase is expensive and you are closer to retirement the break-even point may be further out than makes sense.

We are honest with clients when the numbers do not make sense. We are also the people who will catch it when they do.

The Strategic Angle Worth Knowing About

Buying back a year of service credit might push you over the 25 year threshold that triggers the single highest year final compensation calculation. Or it might get you to 30 years and unlock the career factor enhancement.

In those situations the value of the purchase can multiply well beyond the straightforward math. A service credit purchase that barely breaks even on its own might be a very smart decision if it crosses one of those thresholds.

If you think you might have eligible service credit to purchase we can help you pull together what you have, get a cost estimate from CalSTRS, and run a proper analysis before you commit to anything. This ties directly into how your pension is calculated → and the tier you fall under →.