So, you’ve made up your mind that you’re going to retire. Great! Now you have to decide the date of your departure. Let me assure you up front that you can retire on any day of the week you want to, even on a holiday, and at any point during a pay period. However, you need to keep one thing in mind. There are rules that govern when a retirement annuity starts. And they are different for CSRS and FERS employees.
If you are a FERS employee, even one with five or more years of prior CSRS service, you must separate from the service no later than the last day of a month if you want your annuity to start the following month. For example, you’d need to leave by October 31 if you wanted to receive an annuity for November. If you missed that last day of the month cutoff, your annuity wouldn’t start until December. What a difference a day makes!
If you are a CSRS employee, you may retire up to the third day of the month and still receive an annuity for that month. Of course, each day you wait before retiring reduces the amount of your annuity by one day. For example, if you separated on July 3, the amount of your July annuity would be based on 27 days. Yes, I know that July has 31 days in it. However, for annuity purposes, OPM divides the year into 12 30-day months. That way the monthly annuity payments are steady. They don’t rise and fall depending on the length of a given month.
Now you know the ground rules for when an annuity begins. In next week’s column, we’ll talk about how to pick a departure date that maximizes the dollar value of your retirement.