Retirement date


Q. I was told to retire on the last day of the month. However, that day falls during the middle pay period.  Which would be most financially beneficial: Stay with that day and lose eight hours of annual cash in pay or complete the pay period and retire the first week of the next month, thus getting the eight hours of annual pay but losing the benefits of retiring at the previous month’s end?

A. In a perfect world, the leave year would end on Dec. 31 and the new leave year would begin on Jan. 1, the same day that the annual pay raise would go into effect. On top of that, you’d have lots of annual leave to cash in. By retiring on Dec. 31, you’d be on the annuity roll without a break on Jan. 1. And your lump-sum payment for unused annual leave would be computed at the new higher hourly rate.

Any shift away from that perfect combination produces variables that can be expressed in the form of questions. How many days will I be in a pay status before my annuity kicks in? How much annual and sick leave will I lose if I retire before the end of a pay period and what is its value? What is the tax impact on a salary versus an annuity? Etc.

It’s up to every retiring employee who loves number games to play with the possibilities. For the rest of us, it’s better to pick the date that seems best to retire from an emotional point of view and not worry about the few dollars that might be gained or lost in making that decision.


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to

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