Your annual guide to picking a good time to go.
Once you’ve made the decision that you’re ready to retire, it’s time to select a specific date within your desired timeframe. Last week’s column provided a general guide to deciding when to go. Now let’s look at some specifics related to picking a date next year.
Your retirement coverage under the Civil Service Retirement System (including CSRS Offset) or the Federal Employees Retirement System (including transfers to FERS) will be an important factor in choosing the best date.
You can choose a retirement date on the first, second or third day of any month and your retirement will commence the following day. So, for example, if you retire on Oct. 1, your salary will end close of business that day and your first retirement benefit will be paid on Nov. 1, covering the remainder of October. If you retire on any day after Oct. 3, then your first retirement benefit will be paid on Dec. 1, covering the month of November. You would forfeit the October CSRS retirement benefit.
The best dates for CSRS in 2018 will be Jan. 3, Feb. 2, March 2, March 31, April 3, May 3, June 1, June 30, July 3, Aug. 3, Aug. 31, Oct. 3, Nov. 2, and Nov. 30. Jan. 3, 2019 would also work, because it’s within the 2018 leave year.
All immediate, optional FERS retirement benefits commence the first day following the month of retirement. This means that regardless of retiring Oct. 1, 2, 15, or 31, your first FERS retirement benefit will be paid on Dec. 1 for the month of November. Your salary will cease on the last day of your federal employment. If your goal is to have your retirement benefit begin in October, then Sept. 30 would be the best date. FERS employees should focus on choosing a date at the end of the month, even if it is a Saturday or a Sunday, since these days can be included in the computation of service credit.
Retiring at the end of a leave period can be good, even though your salary will stop on that date and your retirement won’t start until the first day of the following month. This is because you will be paid your salary for the days that you worked during that last month, which could be more valuable than the retirement benefit you would forfeit. Because the benefit is computed very differently under FERS than CSRS, be sure to consider the tradeoff of salary for retirement benefit when you are choosing an end of the leave period retirement date that isn’t near the end of the month.
Also, remember that your payroll office pays your salary two weeks behind and the Office of Personnel Management may take a few months to process your retirement application. So your first retirement payment may not arrive on the first day of the month. You may receive several interim retirement payments from OPM until your claim is finalized and monthly payments begin.
Is it important to you to receive a large lump sum payout of your annual leave? If the answer is yes, the end of the leave year is the time to plan your departure. FERS employees would benefit from a Dec. 31, 2018 departure and CSRS employees might choose Jan. 3, 2019. Although this won’t be the end of the leave year, it will allow you to accrue 25 leave accruals and receive your first retirement benefit for the month of January (payable on Feb. 1).
If maximizing your lump sum annual leave payout is not that important to you, then remember you will be paid for your accumulated and accrued annual leave regardless of the exact date you retire.
Are you ready to explore some specific dates in 2018? Follow the link below to download the calendar.