Every so often, a reader (or many readers) will ask: “I am a FERS employee planning on retiring in the near future. Would you advise me to hold off on retiring until Congress passes legislation that would enable me to get credit for my unused sick leave?”
We don’t give advice to readers on human resources issues. The issues are usually complex; the time necessary to do the research necessary to provide a reasonable answer to a complex question is considerable; and we have a very small staff with a goal of providing a free website and free daily newsletter for our readers.
Having said that, anyone who is delaying retirement in hope of getting a little more money from unused sick leave may want to engage in a bit of self-reflection about your personal goals.
Why Should I Retire?
There are a number of reasons a person may retires. Perhaps you are bored and burned-out from your job. Perhaps you and your spouse want to travel. Maybe you want to move to a different location and enjoy your life without worrying about the day-to-day issues that you are paid to resolve at work. Perhaps you want to live closer to your children.
But, perhaps, you should not retire. Some people never want to retire. They work for 50 or 60 years, knowing they are working for no financial gain in the last few years of their career, because they enjoy coming to work and there is no compelling reason to do anything else.
Delaying a decision on the question of whether or not to retire based on what you think will happen in Congress is a mistake.
Credit for Unused Sick Leave
No doubt, some readers will get more money from by getting credit for unused sick leave that will count toward their retirement annuity. How much money you will get from this will vary. For your sake, I hope being able to get by financially during your retirement is not dependent on this extra amount because it probably won’t give you that much extra.
For an example, check out John Grobe’s article on FERS, Sick Leave and Your Future Retirement. In his example, an employee with a high-three average of $60,000 and 1500 hours of unused sick leave would get an additional $400 per year.
Nothing will be definite until Congress passes a law and the President signs the bill. But, for now, it seems likely the credit for unused sick leave will pass in Congress.
Can You Wait Four More Years?
But here is the kicker. Those who have been delaying making a decision on retirement in hopes that they will get more money are probably going to be disappointed.
You will not get the full credit for your unused sick leave for the first four years the new bill is effective. Here is a statement from the press release on the conference report that outlines changes that have been agreed on:
“Phases in the allowance of unused sick leave (emphasis supplied)to be applied toward length of service for purposes of computing a retirement annuity under the Federal Employee Retirement System.”
The credit feature for FERS employees with unused sick leave is not going to happen overnight.
This means you will get to count your sick leave toward your retirement but it will probably be at a rate of 50% of what it will be worth four years later. The reason: A large number of federal employees are expected to retire over the next four years. It will save the government money to delay the full implementation until this large number of retirees has closed the door of the federal building for the last time.
Keep in mind that even if the legislation is passed and signed by the president in the next few days that implementing regulations or guidance will probably have to be issued before you will know how the new law is going to be interpreted and applied.
Some readers will decide to accumulate their sick leave and retire four years later than they planned. If your job is fulfilling, you enjoy going to work most days and don’t know what you will do after you retire, delaying your retirement may be the right decision.
For others, trading off the ability to do what you want in retirement during those four years in return for a relatively small amount of money will not be a serious question. The beach is beckoning; the greens on the golf course are awaiting; and the kids want to see you now rather than later.
Keep in mind: you may be healthy and financially able to do what you want in retirement today. Your situation may look considerably different four years from now so decide what is most important to you and act accordingly.
When you were in high school, you were looking forward to a long life. A couple of years of delaying what you wanted to do often made sense. If you are considering retirement, you are probably 55 or older. That gives many people a different perspective.
Only you can decide this question: What is the monetary value in four years of your life and what would you like to be doing during those four years? Once you have answered that, you can probably decide whether you should wait to get the extra credit for unused sick leave–assuming you have not had to use it while you are still working.