Day to Retire
The
In the early days of my career with NITP, I was contacted by Mike Causey, former author of “The Federal Diary” column in The Washington Post and current columnist and program host at Federal News Radio (www.federalnewsradio.com), who asked me to share the formula for choosing the “Magic Retirement Date.” Over the years, this idea of there being a “magic” date to retire each year has become somewhat of an urban myth. Keep in mind that choosing a specific retirement date has little to do with affording retirement or with being mentally prepared for this major transition in your life, which should be done long before selecting your specific retirement date. Choosing the “best date” has everything to do with maximizing your benefits in your final days of federal service and in the first days of your retirement. If you are lucky, you may also receive guidance from a retirement specialist who was trained, as I was, to help you. If you do not have an experienced retirement specialist available to help you, then hopefully you will be able to learn the fine art of selecting the “magic” retirement date, whether you are covered by the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS), by reading the tips I’ve outlined here.
Realize that It’s Personal
There are good dates to retire every month of every year, but the best date for you will depend on what you are trying to accomplish. For instance, I had a letter carrier who told me that he had to retire before October 1. I asked him why, and he said it was because that’s when the holiday catalogs start being delivered — and he was not going to do that again after delivering mail in a leather pouch for more than 50 years! That made sense to me, and I couldn’t argue with his logic. Federal supervisors might enjoy retiring before they have to complete those dreaded performance appraisals one more time. Others have told me that they want to retire in the spring so that they can enjoy their first days of retirement when the weather is sunny and warm. Yet others have said they want to retire before the cold winter weather arrives so that they can sleep in when the roads are icy and there is a bitter chill in the air. I also can’t argue with either of those choices. Aside from these personal reasons for choosing a certain date, there are also some finan24
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cial reasons why specific days of the month work better than others.
Know when your salary ends and retirement begins
The date you enter on your CSRS or FERS retirement application will be the last day you will be in a pay status at your agency. You will retire at the “close of business” on that date. If you retire in the middle of a pay period, you will not accrue annual or sick leave for that last pay period, not even a prorated amount. To earn your final leave accrual, you must complete your 80 hours of work for the final pay period. That being said, there is nothing wrong with retiring in the middle of a pay period, just don’t expect to receive leave accrual. Following your retirement, you will receive another full paycheck and possibly a partial paycheck if you retire in the middle of a pay period. This is because you have always been paid your salary two weeks behind. (Remember when you started your career and you didn’t get paid right away?) Your lump-sum payments for your accumulated and accrued annual leave and, if eligible, your Voluntary Separation Incentive Payment (VSIP or “buyout”) will be your final separation payments from your agency. That’s when you will know that you are fully off your agency’s payroll.
Know when your retirement benefit will commence
Under FERS, all voluntary retirements begin the first day of the month following your retirement (when you have met the age and service requirements). For instance, if you are old enough and have enough service to retire and choose to retire on October 3, October 18 or October 31, your first FERS basic retirement benefit would be paid for the month of November (and that payment would be dated December 1), regardless of which date you chose to retire in October. With this in mind, it usually makes sense to retire on the last day of the month so that you will be paid your salary for the final month you worked and then receive a retirement benefit for the following month. Under CSRS, the rules are a little more generous, but also more complicated. Most voluntary retirements under CSRS start the first day of the month after you retire, just like FERS, but there are a few exceptions. There is a three-day rule that