Q. I was recently told by a more senior colleague that it is valuable to accrue the maximum amount of vacation days you can in your first year, such that you get the greatest value/return when you finally retire (assumes you don’t use this maximum amount and roll it over year over year). Is this true? Why is that the case? Is it because when you retire (if you have unused vacation days), you can request their value in payment/cash rather than taking them as time off?
A. While there’s nothing wrong with that approach, it’s also a little goofy. From a lump-sum payout maximization point of view, what’s important is that when you retire, you have carried over the maximum amount from the previous year and added to it as much annual leave as you can up to the day you retire.
