When you think of the right date for retirement, you might be thinking, “as soon as possible”! But even if you’re feeling antsy to retire, federal employees have a few things to consider before setting a date. If you’re a FERS employee, you need to carefully consider the program guidelines before submitting your notice.
If you want to be on the annuity roll during a particular month, then you have until the last day of the preceding month to retire. Then your actual payments will begin during the following month. In other words, if you want to begin receiving your annuity payments on December 1, then you must retire by October 30 in order to do so.
Delaying by even one day can make a difference in when you begin receiving your annuity payments. For example, if you don’t retire until November 1, then you won’t be on the annuity roll until December, and then you will begin receiving your payments on January 1.
The date that you choose to retire also affects your annual cost of living adjustment (COLA). After you retire, your COLA for the next year will be based upon the month in which you were first on the annuity roll. For each month that you aren’t on the annuity roll, your COLA is reduced by 1/12th. So for example, if you wait until February 1, 2016 to retire, instead of January 30, then you would lose 1/12th of your COLA in 2017.
Then, of course, is the issue of your unused annual leave. When you retire, you will receive a lump sum payment for unused leave hours. However, most federal employees are limited to rolling over 240 leave hours from one year to the next. So if you have accumulated more than 240 leave hours, it might be wise to retire before the end of the year, so that you don’t miss the opportunity to be paid for those hours.
There are many variables which will influence the timing of your retirement, and the above factors are just a few of the things you should consider. For a more in-depth review of your personal situation, or for help choosing the right time to retire, please contact our office and schedule an appointment.
