For most people, the best time to retire — strictly from an income standpoint — is never.
But for federal employees, picking the best day to retire can boost the value of an annuity and unused annual leave and vacation.
Tammy Flanagan, with the National Institute of Transition Planning, figures out the best day or days each year for folks to retire.
For those looking to leave at the end of this year, the best days, she said, are Dec. 31 for workers under the Federal Employees Retirement System and Jan. 3 for those under the old Civil Service Retirement System.
Timing it right will allow them to get the most pay, carry over the most unused annual leave and cash out most of that leave at the higher pay rate that goes into effect in early January.
So what about next year? For those looking at the popular retirement months of December and January, she advises FERS employees to consider Dec. 31 (same as this year) and CSRS workers to leave on Jan. 3 (same as this year). Same dates for the same reason.
If you follow those departure dates, you can carry over the maximum amount of unused annual leave — up to 240 hours from 2006 and another 200 hours earned in 2007. By law, that leave must be paid to the employee at the rate that is in effect had they remained on the job until the annual leave period expires.
In other words, if your hourly rate is $26 and it goes up to $28, most of the maximum 440 hours you could carry over would be worth an extra $2 for each hour.
If you don’t want to wait and you plan to retire next year, Miss Flanagan recommends March 30, April 30, Aug. 31 or Sept. 30 for an end-of-the-month departure or Feb. 2, March 2 or Aug. 3 because those dates would mean retirement at the end of a leave period.
Want more? The best-date-to-retire issue is hotly debated in many federal offices. Check out Miss Flanagan’s column in the November issue of Government Executive magazine.
Speaking of leave
I confused a couple of readers in last week’s column about the greater amount of annual leave, or vacation, now available to members of the Senior Executive Service. Bottom line is that leave accrual hasn’t changed for non-SES workers. That means they earn 13 days of annual leave in each of the first three years of service. After that, they earn 20 days for each year up to 15. After 15 years of service, they earn 26 days a year.
Pay vs. pensions
Federal retirees under the old Civil Service Retirement System are guaranteed a 3.3 percent cost-of-living adjustment in their January checks. The same increase to catch up with inflation will go automatically to military retirees and people who receive Social Security benefits.
Those retired under the newer Federal Employees Retirement System don’t get COLAs until they reach age 62. At that time, they get a “diet” COLA that next year will be worth 2.3 percent.
Federal workers outside the U.S. Postal Service depend on Congress and the White House for their annual raises. These increases have nothing to do with the cost of living. This year, the White House has proposed a 2.2 percent raise for civilian and military personnel. A rider in one of the unfinished appropriations bills, which the lame-duck Congress may or may not approve, would boost the raise for both civilian and military people to 2.7 percent.
So the COLA is a lock for retirees. For feds, the pay raise is still up in the air.
Mike Causey, senior editor at Federal News Radio AM 1050, can be reached at 202/895-5132 or mcausey@federalnewsradio.com.
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