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Air Force Service

Fort Belvoir, Virginia, 22060, United States
$50,000 per year
November 30, 2018

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The Best Day

To Retire

A Publication of Federal Navigators

Strategies for getting the most

out of your Federal Employee


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Securities offered through Securities Service Network, Inc., Member FINRA/SIPC.

Due to various state regulations and registration requirements concerning the dissemination of information regarding investment products and services, we are currently required to limit access of the following pages to individuals residing in states where we are currently registered. Investment products and services available only to residents of AK, AL, AZ, CA, CO, DC, DE, FL, GA, IL, IN, ME, MD, MA, MI, MO, MT, NM, NV, NH, NJ, NY, NC, OH, OR, PA, RI, SC, SD, TX, VA, WV, WI.

You should consult with human resources, OPM and a financial professional before making any decisions about your benefits. Fee-based advisory services offered through SSN Advisory, Inc., a registered investment advisor. These services are available only to residents of DC, DE, MD, MT, NH, NY, NC, PA, SC,VA. 1. ABOUT THE AUTHORS





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About the Authors


MS, CFP®, CLU®, CEP®, ChFC®,




As a founding owner and partner of Federal

Navigators, John has been assisting his

clients as a financial consultant specializing

in retirement and estate planning for over 25

years. John is passionate about helping

people identify their deepest values, set

goals, and manage the complex decisions

and risks involved in achieving them.

Laura has been serving her clients since

1983. As an owner and partner at Federal

Navigators she strives to help her clients

seek to achieve their personal and financial

goals. Laura is passionate about serving her

community through her work and through

community service.

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Follow Laura

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Together, Laura and John are also two of the owners and partners at Medallion Financial Group, and have over 50 years of combined experience.

5 5

There are many factors involved in deciding whether you are prepared and eligible to retire from federal service. For the purposes of this report, we will assume that you have already determined that you are financially prepared for retirement, and are trying to choose which day to walk out the door. With that in mind, let’s look at some of the things you may need to consider.

The best time to start thinking

about your retirement is before the

boss does.

“Unknown - Author

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One of the benefits your exit date affects is the lump-sum use it or lose it annual leave payment. Employees are permitted to carry over a maximum of 240 hours (30 days) of annual leave from one year to the next. In your final year of work, you can also collect any unused leave from that final year as a lump-sum payment. Let’s say you carry over the maximum 240 hours into your final year. Additionally, let’s assume that you earn eight hours of annual leave per pay period, or 200 hours for the entire year. If you don’t use any of your leave during the year, you will have a total of 440 hours of annual leave paid to you in a lump sum when you retire. For this reason, the majority of Federal Employees choose to retire at the end of the year because it combines the end of a pay period and the end of the annual leave year, maximizing the lump-sum annual leave payment. Also, if you retire at the end of the calendar year, the lump sum will be paid out in the new year and apply toward the following year’s tax return, when your taxable income may be at a lower tax rate if your retired pay is lower (as it is with most retirees). If a COLA (Cost of Living Adjustment) is announced in your final year, you will receive the increase on your leave as well. The lump sum is typically be paid within two or three months after you separate, and taxes will generally be withheld at a higher rate than your normal rate. The extra taxes that are withheld (if any) will be paid back when you file your next year’s tax return. No other typical expenses such as retirement contributions, TSP contributions or insurance premiums are withheld from your lump sum.

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An employee under the CSRS system may retire on the 1st, 2nd, or 3rd of the month and still receive credit for that month in the annuity calculator. When a CSRS employee retires after the 3rd of the month, credit will begin on the 1st of the following month. Incidentally, if you retire on the last day of the month you can still avoid unpaid days because you will begin credit on the first day of the next month. Here are some examples:

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Example One: CSRS employee #1 retires on September 4, 2014. The first payment they receive will be for the month of October 2014 and can be expected around November 1, 2014. No credit will be given for the month of September 2014, because they were not off the payroll system by the 3rd of the month. As stated above, the current month’s credit will only be given if you retire on the 1st, 2nd, or 3rd of the month. Therefore, the 3rd of the month is often the chosen day for CSRS retirees.

Example Two: CSRS employee #2 retires on June 30, 2014. She can expect her first annuity check around August 1, 2014. The first check will be for the entire month of July 2014.

Example Three: CSRS employee #3 retires on January 3, 2015. He can expect his first pension check around February 1, 2015, which will cover the dates January 4 – January 31, 2015, the pro-rated portion of the month. In addition, he will be paid his salary (which is higher than his pension) through the 3rd, with the first annuity check starting on the 4th. Finally, if the 3rd is also the end of the pay period, he will accrue eight extra hours of annual leave and four hours of sick leave.

“ I'm retired goodbye tension, hello


- Author Unknown



Taking into account the annuity and annual leave, as well as taxation considerations discussed thus far, we believe the best day for a CSRS employee to retire is usually January 3. The next best day is usually the 3rd of any other month. Share this eBook!




The FERS rules are different than the CSRS. The FERS system requires a break in employment for one month in order to receive credit for that month. Share this eBook!

Example One: Jim decided to retire on November 30, 2014. His first annuity check will be for the month of December 2014, and should be received around January 1, 2015.

Example Two: If Jim had decided to retire on November 3, 2015, the first check would still be received around January 1, 2015, representing the month of December 2014. However, no credit would be given for November because he did not have the full one-month break in service to receive credit for his last month. By not leaving on the last day of the month, Jim would have 19 unpaid days before his annuity began.



For a FERS employee, we believe retiring on the last day of the month allows you to maximize your benefits. Since you are paid through the last day of the month, you will eliminate unpaid days before your annuity begins in 30 days. If you combine the last day of the month with the end of a pay period, such as June 28, 2014, or December 31, 2014, you will accrue the most sick and annual leave for that pay period.

Taking into account the FERS annuity, annual leave and tax considerations, we believe that for many FERS employees the best day to retire is on December 31. The general rule for FERS employees is to retire on the last day of the calendar year, December 31. However, if you have a large sick leave balance, you may want to consider the “end of annual leave year date,” January 10, 2015. It certainly pays off to crunch the numbers and find your personal “best” retirement date. Share this eBook!

Important Note Regarding Sick Leave: Beginning

January 1, 2014, sick leave increased to a full (100%) credit towards the FERS annuity calculation.


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These calculations can be complicated. If you are approaching retirement and would like to discuss this or any other pre- retirement issues, please call our office with your questions or request assistance from your human resources department.

Request a free Personal Benefit Analysis by clicking the button below.

After spending 30 minutes with you on the phone we will prepare an in-depth analysis of your benefits and we will spend another 60 minutes walking you through it at your request.

That’s it! There is no catch, no pressure and never any obligation to work with us. So what are you waiting for? Take a vacation from your anxiety and request a free Personal Benefit Analysis today

Do You Have

Enough To Retire?


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