As a federal employee, you enjoy some of the most robust employee benefits in the country. After working with federal employees for more than 20 years, I’ve noticed that those great benefits don’t matter all that much if you aren’t aware of them and don’t actually figure out how to use them to your advantage. The earlier in your career you engage with those benefits, the more choices you have later in your career.
But thinking about benefits is not high on the list for most new, or even mid-career, employees. For many agencies, orientation is a passing obligation without much implementation. Without outright declaring as much, you’ve been placed in the YOYO Retirement System – You’re On Your Own!
If you’re reading this article, that’s a great start to engagement. You’re interested enough to pay attention to what you might be missing out on. For every employee who continues investigating, there are four or five others who aren’t paying attention (a situation often exacerbated by remote work – where there’s no water cooler talk). My goal is to find ways to reach them, as well!
Now, I can’t make you interested if you’re not. You know the old saying, “You can lead a horse to water, but you can’t make him drink.” I’d follow that up with, “But you can salt his oats.” In other words, what are ways to entice employees to ask questions and create a personal strategy around their federal employment?
Is it the thought of early retirement? Or financial independence? Does subsidized healthcare for life make a difference to you? Rather than just letting your federal career happen, are there places you can apply leverage for a better or faster outcome?
Sick Leave
Let’s start with a topic you may not have given much thought to – sick leave.
Each pay period, every full-time federal employee earns 4 hours of sick leave (part-time employees earn prorated sick leave). This is the safety net that allows you to be paid for time off when you are ill, or you’re caring for a family member who is ill, or to go to medical appointments. It is also essentially a short-term disability policy.
Short-term disability as a specific benefit is not covered by the federal government. However, by accruing sick leave during your career, if you were to have a significant health care challenge lasting, say, four months, as long as you had at least 696 hours of accrued sick leave, you would receive your full pay the entire time you were off. And, you would accrue sick leave while you were on sick leave.
This is a no-cost benefit that may have you tempted to use it as you earn it. After all, what happens to unused sick leave as you approach retirement?
The sick leave hours that accrued like clockwork every pay period get converted into months and days, and sometimes years, months, and days to be added to the calculation of your pension.
Here’s how it looks:
This example is retiring on December 31, 2024, and the retirement service computation date is June 15, 1991. Subtracting the service computation date from the retirement date provides the actual creditable service.
In this case, the pension would be based on 33 years and 6 months (the days aren’t included in the pension calculation). If the example had 962 hours of unused sick leave, that would add 5 months and 16 days to the creditable service for a total of 34 years vs. 33 1/2 years.
| Year | Month | Date | |
|---|---|---|---|
| Retirement Date | 2024 | 12 | 31 |
| Retirement Service Computation Date | 1991 | 6 | 15 |
| 33 | 6 | 16 | |
| Unused Sick Leave | 5 | 16 | |
| 33+1 | 11+1=12 months = 1 year | 32=1 month (2 days left over) | |
| Total Pension Service | 34 |
Depending on your last three years’ salaries (High-3), this additional six months may not seem like much of an increase in that pension. For easy math, on a High-3 of $100,000, the sick leave adds $500/year or ~$42/month to your pension.
This might have you questioning whether it would be better to just use up that sick leave before retirement. Getting paid out for your sick leave by taking it prior to retirement would provide ~$45,000 in benefits (based on that $100,000 salary). Not using the sick leave only adds ~$42/month to your pension for the rest of your life.
It appears using up your sick leave at the end of your career is a better financial option. Unfortunately, if you aren’t actually sick (which you hope you aren’t!), you can’t just sit out your last five months of service before retiring.
Think of having sick leave added to your creditable service as the icing at the end of your career. You’ve had the “insurance” while working that you’d still be paid your salary if you developed a significant illness. If you’re fortunate enough to never need to use much sick leave during your career, you receive a bump in your pension for a benefit you never paid for.
Managing your sick leave balance throughout your career is an easy way to provide both protection while you’re working and an increase in your pension for retirement.
