Retirement is an exciting milestone, but it can also be shrouded in questions and uncertainties, especially regarding finances. For federal employees transitioning into retirement, a common query is: “When will I see my first check?” Understanding the timeline for your initial retirement payment and what to expect thereafter will help ease the transition into this new phase of life.
Timing Your First Payment
After you retire as a federal employee, your first annuity payment is typically scheduled for the first day of the month following your retirement. However, there are a few key points to note:
- Payment Schedule: If you retire at the end of a month, you can generally expect your first payment to arrive the following month. For instance, if you retire on November 30, your first payment will be on December 1.
- Interim Payments: If your retirement application is still processing when your first payment is due, you may receive an interim annuity. This payment is designed to provide you with some income while your full annuity is calculated. It’s important to keep in mind that interim payments can be 60-80% than your final annuity amount and are subject to adjustments once the full computation is done. Be prepared that it may take 60 days or longer to receive your first interim payment.
- Adjustments: Upon finalization, if there is any discrepancy between what you were paid as an interim and your actual annuity, the Office of Personnel Management (OPM) will make appropriate adjustments. This could result in a one-time reimbursement or a reduction in future payments.
Annual Leave Payments
In addition to your annuity, you may also receive payment for any unused annual leave. Here’s how it works:
- Leave Payout: Upon retirement, any remaining annual leave is converted into a lump-sum payment. This payout is typically issued shortly after your retirement date and is calculated based on your pay rate at the time of retirement. It’s an essential financial cushion as you start your post-retirement life. Do note that it can take 30-45 days to post.
- Tax Implications: Both your interim annuity and annual leave payout may be subject to federal income tax, so it’s advisable to set aside a portion for tax purposes. Understanding the overall tax implications of these payments can help you better plan your finances.
Additional Considerations for Retirees
While waiting for those first payments, retirees should also keep in mind the following:
- Health Benefits: Your health insurance coverage as a federal employee usually continues into retirement, but it’s crucial to verify your options and ensure that you have completed any necessary steps to maintain this coverage.
- Pension Plan: Familiarize yourself with the specifics of your pension plan, including options for survivor benefits or how to adjust your payment plan if necessary. This information can be instrumental as you begin managing your finances.
- Financial Planning: Transitioning out of a regular paycheck means it’s more important than ever to engage in effective financial planning. Consider consulting with a financial advisor who understands the unique needs of federal retirees to help you create a sustainable budget moving forward.
Are you looking for assistance? We can help!
While the transition to retirement can be daunting, knowing when and how you will receive your first payment can help make the process smoother. With a clear understanding of the timeline for your annuity and annual leave payout, along with awareness of important considerations, you’ll be better prepared to enjoy the financial aspects of your retirement.
If you are looking for a guide to help you plan your retirement, Benchmark Financial Group can help. It all starts with gathering your information, discussing your goals, and preparing a plan so that we may help you maximize your income in retirement. With the right strategy, you may get your income equal to or exceed your pre-retirement net income. To get started, schedule an appointment today with Benchmark Financial Group by filling out the form online or calling David Raetz at 913-534-8256 to discuss your financial needs. Benchmark Financial Group is happy to help you navigate your options and determine the best path to move toward your financial goals.
*Securities and Advisory Services Offered Through CreativeOne Securities, LLC Member FINRA/SIPC and an Investment Advisor. Benchmark Financial Group, LLC and CreativeOne Securities, LLC are not affiliated.
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