3 Bad Days or 6 Lucky Numbers

Do you know your lucky numbers for retirement? The author lists six important ones for federal employees in their retirement planning.

A client recently quipped that she was, “3 bad days or 6 lucky numbers away from retirement.” When a federal employee becomes eligible to retire, there’s something wonderfully freeing that occurs. Retirement is now within the employee’s control, and if things go too wrong, you’re too unhappy, you just can’t take it any more, you can simply “retire.”

Yet for most federal employees, they don’t retire as soon as they become eligible. They do, however, become a member of an exclusive club known as the 3 Bad Day Club. You know…if you have three bad days in a row (yes, they must be consecutive), the next day is your retirement date. You might have also heard it called the KMA Club (you can figure that one out for yourself).

Just being retirement eligible, doesn’t necessarily equate to being financially ready. For those of you who haven’t reach the 3 Bad Day Club milestone, you may be working on the 6 lucky numbers plan. Your mind may have immediately raced to dreams of choosing those magic numbers that would make you an instant millionaire by winning the lottery. That would likely be enough to allow you to retire!

Six Lucky Numbers

It turns out that there are six lucky numbers within your federal benefits that you can manage. The lucky six are:

1. 30

There are rules within the CSRS and FERS systems on how you become eligible to receive an unreduced pension. Once your reach a certain age with a certain number of years of service, the 3 Bad Day Club membership card arrives in the mail. But what if you “just can’t take it any more?”While working until you meet full eligibility is often your best option, there are certainly other key points in time that can get you at least the pension portion of your retirement. Once you have five years of creditable service, you are eligible for a pension at age 62. Granted, it’s small, but at least there’s something.

What if you make it to your minimum retirement age but don’t have 30 years of creditable service? With at least 10 years of service, you have two options – take your pension immediately with a reduction while maintaining your federal health benefits, or postpone receiving your pension until age 60 (with 20 years or more of service) or age 62 (with less than 20 years of service). If you postpone, you’ll be eligible to pick up the federal health benefits at the same time you pick up your pension.

2. 55

If you retire or separate from federal service in the year you are turning 55, you may begin withdrawing from your TSP without the IRS’s 10% early withdrawal penalty. In an IRA, you have to be 59 1/2 to avoid the penalty.

55 is also the age when a CSRS employee with at least 30 years of service becomes eligible to retire.

3. 4

This is the number of hours of sick leave you’ll accrue each pay period. While you are working, your sick leave acts as a short-term disability policy that allows you to be paid at your regular pay while out with an illness or short-term disability situation. This valuable benefit is converted to months and days at retirement and added to your creditable service. You are rewarded at the end of your career for unused sick leave.

4. 240

Each year, you can preserve and rollover up to 240 hours of unused annual leave into the next calendar year. Once you hit your 15th “work” anniversary, you accumulate 8 hours of annual leave per pay period meaning you accrue 208 hours of annual leave each year.

At the end of your career, any unused annual leave hours will be paid out to you in a lump sum. Many of those hours may have been accrued at a much lower salary and are paid out at your last (hopefully higher) rate.

Bonus – If you wait to retire until the end of the year, IF there is a cost of living adjustment for current employees, you’ll receive the COLA on your unused annual leave payout.

5. 10

“How much should I be contributing to the TSP?” is a question that’s often posed by federal employees.

With so many things vying for your resources (e.g., housing, insurance and food), it can be difficult to think about saving for retirement. The recommendation to save 10% of everything you earn is an age-old piece of advice that still works today. 10% saved throughout an entire career, with the appropriate allocation, will likely lead to the accumulated amount and income resource you’ll need for retirement.

If you’re behind, don’t fret, or head to the local Qwik Mart to buy your lottery tickets. You can make up a lot of ground at the end of your career when your pay will likely be higher, your children may be through college and off your payroll, and saving for retirement becomes all important.

6. 65

While you may not have to think about this benefit while you’re working, if you are retired when you reach age 65, you will be asked to make a decision around electing Medicare benefits. Federal retirees are part of the only group health plan in the country that allows them to opt out of Medicare. This is both good news and bad news, because it requires some thought before making your decision.You’ll want to elect Part A, which covers room and board in the hospital, hospice and home health care. You already paid for this benefit while you were working, so it is free at age 65.

The decision around Part B is trickier, since it comes with a premium of at least $134/ month, possibly more based on your two years’ prior income. If you don’t make the election within your enrollment period at age 65 and later decide you want to enroll in Part B, there’s a 10% penalty for each year you’ve waited to enroll.

Whether you’re already a member of the 3 Bad Day Club or just hoping for 6 lucky numbers, there are options within your federal benefits that you can utilize now to enhance your career and retirement.

About the Author

Ann Werts (you might have known her as Ann Vanderslice before her marriage) is the founder of Federal Benefits Made Simple, a financial services firm based on the Denver Federal Center campus. After selling her practice in 2021, she continued to teach classes for federal agencies and meet with employees until her retirement in April 2024. In retirement, she continues to work with agencies and individual federal employees to answer both common and complicated questions relating to federal benefits. You can reach her at ann@ask-ann.com.