Retiring from federal service can be as simple as picking a date on a calendar, but there are certain days to retire on that are more beneficial and can ensure you’ll receive the maximum benefit due to you. When you’ve decided that you are both financially and mentally prepared for retirement, there are some key things to consider, which are included below. But use your best judgment—personally, there will be good and bad days to retire—you may have a health condition or you might just want to add to your years of service—which you’ll need to take into consideration, and the “best dates” will change from year to year depending on a variety of factors. The most important thing is to choose the date that is right for you (of course, if you can get extra benefits out of it—read: extra money—that doesn’t hurt either).
Last Day of the Month
Under FERS, the last day of the month is generally the best to retire. FERS begins retirement benefits on the first day of the month after your retirement date. So, for example, if you retire on October 3, you won’t begin accruing benefits until November 1, and you’ll only receive your regular salary and benefits through October 3. But if you retire on October 31, not only will you be paid your regular salary and benefits throughout the entire month of October, you’ll start accruing your retirement benefits on November 1 (note that under either scenario, your first check won’t come until somewhere around the first of December because your annuity will be paid in arrears). Under CSRS, you can retire either on the last day of the month, or within the first three days of the following month and your benefits will still begin on time. So, for example, under CSRS, if you retire on October 2, rather than September 30, your retirement benefit will start to accrue on October 3, but your first payment (received on or around November 1) will be prorated for 28/30 days (instead of the typical 30/30).
If you choose to leave federal service before the end of a leave period, you will not receive credit toward your final accrual (meaning you lose some payout days). Under this model, it is typically the last day of the month (regardless of whether that day falls on a weekend) on which you’ll want to retire. For example, in 2015, the best dates to maximize your leave accrual are January 31 (a Saturday), February 28 (a Saturday), March 31 (Tuesday), April 30 (Thursday), May 30 (Saturday, although not the end of the month, it does mark the end of the leave period); June 30 (Tuesday), July 31 (Friday), August 31 (Monday), September 30 (Wednesday), October 31 (Saturday), November 30 (Monday), and December 31 (Thursday).
End of Year Retirement
If you’ve been with the federal government for long enough, you’ve probably noticed that a wave of retirements happen on December 31, and there’s good reason for that. You are typically limited carrying over 240 hours of annual leave from year to year. So, if you carry over the full amount, and do not take any annual leave during the year in which you intend to retire (and you retire on December 31), you have the potential to receive a payout for 448 hours (the carryover plus the 208 you would earn through the year). These hours are then multiplied by your hourly salary, and four to six weeks after your retirement date, you’ll receive a lump sum payout. There will be taxes withheld from this amount (and they might be at a higher rate than normal depending on how your payroll office decides to do the calculation), but retirement and TSP contributions, or your insurance premiums, will not be deducted. CSRS employees still have the three-day grace period into January in which to retire. (Note, however, that this is a general rule, and there are off years when CSRS leave ends prior to January 3, so keep an eye on when the leave year ends when you are planning to retire).
FERS and CSRS have different policies for annuity payout dates. FERS requires that employees be off payroll for a full month before receiving an annuity, while CSRS allows that three-day grace period. So, a FERS employee who chooses to retire on December 31 will receive the first annuity payment around February 1 of the following year. A CSRS employee can retire up until January 3 and still receive the first annuity payment around February 1 (and it will be prorated for 29/30, 28/30, or 27/30 days worked). If a FERS employee waited until January 3, his or her first annuity would not be paid out until around March 1.
If you are a FERS employee with many years of service and annual leave accrued, it is always a good idea to look at whether it is in your best interest to work until the end of the leave year or to work into January to receive credit for your January annuity. Depending on the lump sum payout, it may end up being better to forgo the January annuity, but each person’s calculation will be different.
Best Dates for 2015
So, with the all of the benefits, leave periods, etc. aligned, what are the very best dates to retire in 2015?
CSRS (and CSRS Offset): January 3 (2016)
FERS (and TransFERS): December 31
I will be retiring Oct. 31, 2014. When will my first annuity check come in?
Is Sept 1, 2, 3, 2016 end of a pay period a good date to retire? In CSRS.
I am CSRS, 240 hrs. accumulated of A/L from last year. None A/L taken this year and no plans to take it this year. I am planning to retire on January 02, 2016. Is there a different if the retirement date is January 03, 2016. That I know because the PP# 26, end on January 09, 2016 I will lose the 8 hrs. accumulated, since the entire PP was not worked, therefore the maximum will be 200 hrs. instead of 208 for this year?.
This November I will turn 56, with 33 years Federal service. I’m think of retiring on 1/31/17. When will my first Annuity check, and carried over leave time?
I forgot to add: I’m under FERS