Last March, I wrote a short article about when to
retire. There are situations in which
one day can make a significant monetary difference to you as a retiring federal employee. (See Retirement and the Federal Employee: What a Difference a Day Can Make!) In summary, I discussed:
- Finish the pay period, in order to get
your usual increment of sick and annual leave,
- Better to retire the last part of the
month instead of early the next month, because you will not —unless you are in
the old CSRS system—be paid your annuity for the month in which you retire,
- January is better than late December,
so you are paid for your accumulated annual leave at the higher rate of the new
calendar year. (Of course, this only works
when no pay freeze is in effect!)
There is another situation I did not mention but that may impact your decision. Let me explain.
In calculating the FERS annuity supplement, a retiree
receives earnings credit only through the end of the previous year. For example, if you retire as a FERS employee on May 24, your earnings history will run through December 31 of the year before. You will not receive credit for the year of your retirement. You see what’s coming, don’t you?
If Joe is eligible to retire on December 29, the last day
of the pay period, he might be wise to postpone his retirement until on or
after January 1 of the next year (the next calendar year, not the next fiscal year). This way, when his supplement is calculated
he will get full credit for his earnings in the year just ended. If his retirement date is effective on
December 29, he will receive -0- credit.
How much difference will it make for Joe?
For each year of FERS service, the average
employee who retires is paid an annuity supplement of approximately $42 per
month. Joe is 58.5 years old when
his retirement starts. So, from
retirement to the day his supplement ends (age 62) is 3.5 years, or 42
months. By waiting one work day or a bit longer to retire, Joe will
receive (42 * $42), or roughly $1,764 more! But the “cost” of this benefit is the one-time loss of one month’s
Of course, knowing how it works is not quite enough. In order to have a really good idea of what
to do, you will need to run your individual numbers.
So, if you are thinking of retiring in December, you might
want to put it off until January. Good
For more information on calculating your future retirement, visit my website.