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Return to Article: Best Dates to Retire: Tax Considerations

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  I'm eligible to retire on my birthday, February 24, 2011. It's the Thursday before the end of the pay period. Does it matter if I go on my birthday, or should I wait until that Friday to end out the pay period. Also February has 28 days. I cannot leave in the beginning of a pay period which is the last day of the month of Feb. Please advise.

  Dovella Tolliver Posted March 17, 2009 5:03 PM
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  How does the day you retire affect your Social Security if you are a FERS employee. I understand you can only earn a certain amount before SS takes back a percentage of it. This could be important if you are counting on the full amount.

  Sylvia Posted January 9, 2009 9:50 AM
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  Tammy, You mentioned in your article that if you are not trying to cash in 448 hours of unused annual leave before the end of the leave year, then you might consider April 3 if you're CSRS because all annual leave will be paid at the new year's salary rate. Would that not also be the case if I chose February 2 as my retirement date?

  Thanks, Ed

  Ed Stroh Posted September 12, 2008 10:27 AM
• 56508
  

  Does the "best-day-to-retire" refer to the last day of work or the first day of retirment?

  hildari Posted August 15, 2008 11:22 AM
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  This is really a question for Tammy, rather than a comment. I'm asking that you not post my email address. And I really don't care whether my comment gets posted, just so long as Tammy comments on the topic in the manner she prefers. ********************* In this column, Tammy mentions that a "few months at the new salary rate could help you get a bigger high-three average salary." However, unless the employee has received a grade or step increase within the past 3 years, it would seem that any increase in the high-three may be somewhat illusory.

  More specifically, it is my understanding that if one works part of the year, one does not receive the full cost of living increase the following January. Hence, while one would indeed have a higher "high three", one who worked part of the year would essentially give back some or all of this increase when he received a smaller cost of living increase the following year.

  Shaina Posted August 14, 2008 6:37 PM
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  Tammy,

  You missed one big advantage od Spring retirement. If you take part in the medical FSA program: Front load all the medical expenses you can into the first few months of the year. You can then be reimbursed for the medical expenses even though the monies are not taken from your salary later in the year (you are retired). This is how the program works and can essentially result of hundreds (if not thousands) of dollars worth of free medical care.

  Gary Posted August 13, 2008 6:22 AM
• 56097
  

  What are the plusses and minisus of retiring on your birthdate verses the end of the month verses the first day of the nesxt month? Early summer.

  James. Bremmer Posted August 8, 2008 12:23 PM
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  An added bonus of sorts for not choosing Jan. 2 (for CSRS) in the Washington, DC area is that there will be a four-day weekend coming with the back-to-back holidays of Monday, Jan. 19, and Tuesday, Jan. 20.

  T L DeVaughan Posted August 8, 2008 12:23 PM
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  It is my understanding that if I want to make a deductible contribution to an IRA in 2009 then I have to retire by 31 Dec 2008. Once I work 1 day in 2009 than I am considered covered by a retirement system in 2009 and my IRA contribution has to be made with after tax dollars. Is this correct?

  Scott D McLennan Posted August 8, 2008 10:32 AM
• 56085
  

  Why wouldn't a FERS employee who is retiring in mid-year want to stay past July 4th? You mentioned a CSRS employee might want to retire on the 4th, why not the FERS employee?

  Teresa Floore Posted August 8, 2008 9:52 AM
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  If you are going to consider all tax consequences, you need to also consider your date of retirement with reference to the next year's percentage of the COLA that you will or will not be receiving in your retirement package.

  Richard m. Schwarz Posted August 8, 2008 8:48 AM
• 56076
  

  I am trying to decide on my retirement date. Being covered by CSRS, I understand the general recommendations. I am considering January 2, 2009 and January 1, 2010. For the 2010 date, am I correct that January 1 would be the best ending date being a holiday (last work day would be December 31), last Friday of the leave year, etc? I do not plan to work after retirement on either date.

  Jay Joseph Posted August 8, 2008 8:38 AM
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  I am 63 years old. I had 22 years of service under CSRS and retired in 1995 at age 50. I returned to work under CSRS Offset in 2002. I already qualify for SS benefits. I plan to retire at the end of 2009. No one seems to know what my offset will be. (I dont't plan on applying for SS until age 66 or later.) Will my offset be based on what I would have recevied at age 62, or what I would have received when I retire in 2009?

  John Myers Posted August 8, 2008 8:30 AM
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  I just want to thank you for all the great, well-researched, and timely information you've provided over the years. I look forward to your articles. They are well written, and I often forward them to colleagues and friends.

  Bill Posted August 8, 2008 7:43 AM
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  Whenever you put your retirement papers in that you want to retire on a certain date, how long does it take to get your first retirement check? Is your leave in a separate check? The comments in your story make it seem as if it takes months to get your checks started. I don't plan to take another job.

  Linda Dunlap Posted August 8, 2008 7:01 AM