It’s not too late to retire in 2009, and it’s not too soon to at least begin planning to retire in 2010 or 2011. For this year and the next two years, the calendar is working in favor of many of you. Let me explain.
As my regular readers know, my position is that there is no one best date to retire. However, each of you can pick the best one for you if you know how.
First, you must figure out if you are ready to retire. To do that, you have to answer three questions: Do you meet the age and service requirements to retire? Are you financially able to retire? Are you emotionally prepared to retire?
The first question is an easy one to answer. You either meet the requirements spelled out in law or you don’t. However, the other two questions are ones that only you can answer. The first requires the computer-age equivalent of paper and pencil; the next two require a good deal of soul searching and reflection.
If you’ve decided that you are ready to retire, here are the tools you’ll need to pick your date:
* Know when your annuity begins. Ideally, you’ll want to retire on a date that affords a seamless break between work and retirement. To come as close as possible to achieving that, you need to know the law.
If you are a Federal Employees Retirement System employee, you must retire no later than the last day of a month to be on the annuity roll in the following month.
If you are a Civil Service Retirement System employee, you have more flexibility. You can retire up to the third day of a month and be on the annuity roll in the same month; however, your annuity for that month will be reduced by 1/30th for each of those three days that you are still on the payroll.
* Get credit for unused leave. If you retire before the end of a pay period, you won’t get credit for any annual or sick leave you would otherwise have earned. Gaining additional hours of annual leave is important because they are paid to you in a lump sum at your hourly rate of basic pay.
* Get credit for “use or lose” leave. If you have accumulated more annual leave than you can carry forward into the next leave year, you’ll want to retire no later than the day before the new leave year begins. Otherwise, that excess leave will be lost along with the dollars you would have received in your lump sum payment.
Therefore, if you are leaning toward retiring at the end of a year, it’s important to know when the leave year ends. In 2008, it ended on Jan. 3, 2009, and many CSRS employees took advantage of that fact, giving up three days of their January annuity payment in order to gain the annual and sick leave they earned in that final pay period.
In 2009, the first-month annuity reduction will be even less, because the leave year ends on Jan. 2, 2010. The same is true in 2010, when the leave year ends on Jan. 1, 2011. (And yes, you can retire on a holiday.)
Dec. 31, 2011, the end of the leave year in 2011, is a magic date for both FERS and CSRS employees.
FERS employees can walk off the payroll and onto the annuity roll without losing a day of pay, and any CSRS employee can do the same without losing a day of annuity.
