Picking the Optimal Retirement Date

What is the best date for federal employees to retire? These are some important considerations.

One of the most common questions that federal employees have once they become eligible to retire and decide to leave is: “What day should I retire?” There are some important considerations to make when choosing the best day to retire and much like other areas of federal retirement, there is no “one size fits” all answer.

The following will cover some of the most important aspects of picking a day to consider.

Retire at the End of the Month

You have probably heard that it is best to retire at the end of the month. Many potential federal retirees have heard this advice but do not understand why.

The main reason you would want to choose to retire at the end of the month has to do with how the federal retirement system is set up to commence your retirement payments. When you separate from service, your retirement payments start the very first day of the following month, meaning if you retire on the 31st of the month, your first payment will start the following day whereas if you retire in the middle of the month, you would be losing credit for half of the month for compensation because your pension would not be starting until the 1st of the next month. (The exception is for federal employees under the Civil Service Retirement System (CSRS) who are allowed to retire the 1st, 2nd, or 3rd of the month and still have their pension start the following day.)


Tim has decided to retire on March 31st. His pension will be based on starting on the first of the next month and he would be getting credit for all of April towards his retirement when he is back paid once his application is finalized, so there is no time that he would be potentially losing.

John has decided to retire on April 15th. Since his retirement will start on the first day of the next month following his separation date, he would be losing out on half of the month’s worth of compensation.

Retire at the End of the Year

Along the same lines as retiring at the end of the month, retiring at the end of the year also has some benefits to consider.

By retiring at the end of the year you could be maxing out your annual leave payout. Any unused annual leave gets paid out as a lump sum, usually within 30 days of your separation date, which can help bridge the gap to getting your interim payments started or your full pension where there can be a lengthy wait.

You could consider retiring at the end of a pay period at the end of the year because that can also help in maximizing your annual leave payout. That is because you must work a full pay period to get credit for that period’s annual leave accrual.

Note that there is a limit to how much annual leave can be carried over from the previous year, which is dependent upon your agency. Also, the “leave year” does not end on the same day every year.

Another advantage to retiring at the end of the year is maxing out your TSP contribution for the year. In 2024, you are allowed to contribute $23,000/year with a catch-up contribution for those over the age of 50 of $7,500/year for a total contribution limit of $30,500. By retiring at the end of the year, you would have more contributed to your TSP which also means more from the agency match as well.

OPM Backlog

You may have heard that some months may be better than others to retire based on OPM’s backlog (the number of applications OPM is working through at a given time). Although it is true that some months there are statistically more applications than other months, it does not necessarily translate to quicker or slower processing times.

The following charts from opm.gov show applications received based on the month/year and the average processing times:

Line graph showing the progression of the OPM retirement backlog from October 2022 to January 2024
MonthClaims ReceivedClaims ProcessedInventory (Steady state goal is 13,000)Monthly Average Processing Time in DaysFYTD Average Processing Time in Days
January 202312,4049,14224,8589390
February 20239,56210,92023,5006584
March 20238,3548,92922,9256981
April 20238,29810,83920,3847079
May 20236,0968,35518,1257178
June 20234,8546,60916,3707478
July 20237,2616,58417,0478578
August 20237,3836,46717,9637478
September 20236,7688,87915,8527077
October 20236,9246,09816,6787373
November 20235,2076,05915,8266669
December 20235,6627,19614,2926869
January 2024*12,9976,46720,8226668
Disability determinations are included in the pending number after approval. Average Processing Time in Days represents the number of days starting when OPM receives the retirement application through final adjudication.

*Initial retirement cases produced in less than 60 days, on average took 41 days to complete; whereas cases that were produced in more than 60 days, on average, took 118 days to complete.

Based on these data, it may be best to not retire based on how fast you think OPM will process your application.

Other Important Considerations

When picking a date to retire it is important to make sure you are eligible, know the rules around withdrawals from the TSP in retirement, and plan on a lengthy wait for your pension to get started.


For regular federal employees under the Federal Employees Retirement System (FERS) to retire on an unreduced “immediate” pension, they must have reached MRA (Minimum Retirement Age) with at least 30 years of service, be age 60 with at least 20 years of service or age 62 with at least 5 years of service. To retire before any of these thresholds could affect your benefits and pension amounts, so be sure that you are eligible or know the repercussions of retiring early.

TSP Withdrawals

You are eligible to access your TSP without a 10% penalty (taxes could still be owed) by separating from service the year you turn 55 or older if you are regular FERS federal employee.

It is important to note that if you plan on rolling all or part of your TSP to an outside IRA, any withdrawals from the IRA could have a 10% penalty for accessing the funds before the age of 59 ½ so plan accordingly.

Also, if you have been contributing to the Roth TSP, you may want to wait until 59 ½ to make a withdrawal to get the full tax savings benefits because you must have the Roth for at least 5 years and be 59 ½ to not pay any taxes on the distribution.

Interim Period

It is best to plan on a lengthy wait for your full pension to start. The interim period is the time between when a federal employee separates and the start of his or her full pension. This period could last anywhere from 2 months to 12 months.

Usually, federal retirees start receiving an interim payment around 60 days from the date they separated from service which represents anywhere from 50-80% of what their final pension payment will be. Before picking a date, plan ahead to make sure you are prepared for a potentially lengthy interim period.

Have A Plan

Retirement can be an exciting, stressful, confusing time. Give yourself plenty of time to plan so that picking the right retirement date will coincide perfectly with your specific situation and goals. Have funds set aside so the potential lengthy wait to get your pension started is not as stressful and consider maxing out your annual leave which can help bridge the gap to getting your pension started.

About the Author

Jesse Black has over 18 years of experience assisting Federal Employees with their retirement. He’s a nationally known Federal Retirement Planner. He has assisted thousands of Federal Employees one-on-one and thousands more have attended his webinars and seminars. He Co-hosts FedSmart Podcast and Co-Founded FedSmart Retirement Planners.