Trends over the past decade tell us that around 100,000 federal employees retire every year. Before thousands of civil servants do so in 2024, they’ll have to take care of certain financial concerns, including exactly when they should stop working.
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Deciding your employment end date is more complicated than simply picking a preferred date. While you should always retire when it meets your needs and interests, it makes sense to strategically retire when you can minimize the time between your last paycheck and your first annuity payment — and maximize your retirement benefit and payout for unused annual leave.
According to the Congressional Research Service, in 2022, 98% of civilian federal employees were enrolled in the Federal Employee Retirement System (FERS) of benefits, which covers employees hired since 1984. A further 2% were enrolled in the Civil Service Retirement System (CSRS), which covers those hired before 1984.
For those covered by FERS, your retirement date must be no later than the last day of the month in order to be on the annuity roll in the following month. Once you retire, your retirement date becomes the first of the following month. Your first FERS annuity check then will be sent to you on the first day of thefollowing monthafter retirement.
For example, if you’re in the enviable position of retiring at the end of the month — on Jan. 31 — your retirement date will be the next day, Feb. 1. Your first FERS annuity check would arrive on Mar. 1.
If you are enrolled in CSRS, you must retire no later than the third day of a month and be on the annuity roll in that month. However, your first month’s annuity would be reduced by 1/30th for every day you weren’t on the annuity roll.
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Common sense dictates that you should retire on the last day of the month to shorten the gap between getting paychecks and getting annuity payments. This could present a difference of between four-to-five weeks and seven-to-eight weeks, depending on the day of the month you set as your retirement date.
For example, Mar. 30, 2024, is a good date to retire, because it lands at the end of the week and the month. However, a better date is one that falls at the end of the month which also happens to be at the end of a pay period, so you won’t have to wait as long for your annuity and to make the most of your accrued annual or sick leave pay. There are only three such dates that fall on a Friday or Saturday in 2024: May 31, Jun. 29 and Nov. 30.
Here are the five best dates to retire in 2024.
5 Best Dates To Retire in 2024
1. Saturday, March 30, 2024:
Retirement date: April 1, 2024. Annuity payments begin: May 1, 2024.
2. Friday, May 31, 2024
Retirement date: June 1, 2024. Annuity payments begin: July 1, 2024.
3. Saturday, June 29, 2024
Retirement date: July 1, 2024. Annuity payments begin: August 1, 2024.
4. Saturday, November 30, 2024
Retirement date: December 1, 2024. Annuity payments begin: January 1, 2025.
5. Tuesday, December 31, 2024
Retirement date: January 1, 2024. Annuity payments begin: February 1, 2025.
At the risk of overloading the U.S. Office of Personnel Management, more federal employees retire on Dec. 31 than any other day of the year. Retiring at the end of the year makes sense for a lot of people, not only to start the new year freshly retired, but to ensure they get the highest lump-sum payment possible for their “use it or lose it” annual leave.
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This article originally appeared on GOBankingRates.com: 5 Best Dates To Retire in 2024
December is often selected as a favored month for retirement due to several reasons: Year-End Financial Planning: Retiring at the end of the year allows you to maximize your retirement contributions and take full advantage of any employer-matched funds for that year.
December is often selected as a favored month for retirement due to several reasons: Year-End Financial Planning: Retiring at the end of the year allows you to maximize your retirement contributions and take full advantage of any employer-matched funds for that year.
As a general rule, the end of the month is good for those with pensions, as those often start on the first day of the month after retirement. In this scenario, retiring on the 31st means that you won't have a gap in pay.
May 31, June 29 and Nov. 30 are dates at or near the end of the month in 2024 which are also the end of a two-week leave period. Tuesday, Dec.31, 2024 would be a good date for FERS employees to retire if they are trying to maximize their lump sum annual leave payment.
You have a pension plan that provides an additional year of service credit on January 1, credits that are used to calculate the size of your pension payout. By waiting until the new year to retire, you might also receive a cost-of-living increase.
If you don't have enough money in cash to make it through the first months of retirement and would need to start taking withdrawals from your retirement accounts immediately, you may want to consider retiring near the end of the year or the beginning of the year.
Retiring on the last day of the month is typically the best option. This enables you to collect all your paychecks during this period. You may also benefit from collecting any holiday pay that might be offered by your employer for that month.
If you're retiring before reaching FRA but expect to earn more than $1,580 a month in income, and you will reach FRA sometime during the year you plan to retire, you should probably wait until after your birthday to retire and claim Social Security retirement benefits.
67-70 – During this age range, your Social Security benefit, if you haven't already taken it, will increase by 8% for each year you delay taking it until you turn 70. So, if your benefit will be, say, $2,500/month if you start at your full retirement age, it would be more than $3,300/month if you can wait.
More federal employees retire on December 31st than any other day of the year. This has to do with the accrual of annual leave and making sure you get the highest lump-sum payment possible for your use or lose annual leave.
You may request that your benefit begin in August with the first payment in September. By requesting that your benefit begin in your birthday month, you will receive the maximum possible monthly payment for the rest of your life.
Employees must be age 50 or 52, depending on the CalPERS formula, for a service retirement. The earliest possible retirement date is the day following an employee's separation of employment (last day on pay status).
Summary. If you withdraw $20,000 from the age of 60, $500k will last for over 30 years. Retirement plans, annuities and Social Security benefits should all be considered when planning your future finances. You can retire at 50 with $500k, but it will take a lot of planning and some savvy decision-making.
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
Bottom Line. With $100,000 you should budget for a retirement income of around $5,000 to $8,000 on top of Social Security, depending on how you have invested your money. Much more than this will likely cause you to run out of money within 25 – 30 years, which is potentially within the lifespan of the average retiree.
Retiring at the end of the year may allow you to spread your income over two tax years, potentially resulting in lower taxes in your first year of retirement. However, this depends on your specific income sources, such as pensions, Social Security, and retirement account withdrawals.
Generally, a Reservist is eligible for Non-Regular Retirement once they have 20 Qualifying Years of service. Also known as a Good Year, a member accrues a Qualifying Year after they have earned a minimum of 50 retirement points in their own Anniversary Year.
The traditional retirement age in the U.S. is typically considered 65 (67 for younger generations), but many people choose to retire before or after this age.
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