Expert's View

Last week we looked at the rules governing when your are eligible to retire and when your annuity begins. In short, FERS employees have to retire by the last day of a month in order to begin receiving an annuity in the following month. CSRS employees can retire up to the third day of that month.

Now it’s time to think about picking a retirement date that will increase the dollar value of your annuity.


Your annuity computation will be based on a fixed formula and two variables: your high-3 (the highest three consecutive years of basic pay, actually the highest 36 consecutive months) and your total years and full months of service, including credit for unused sick leave as service time.

There are several reasons why there’s such a spike in federal retirements around the turn of the year.

First: Annual pay adjustments are effective as of the first full pay period of a year, so you can maximize the high-3 factor by retiring as close as possible to having spent a full year at your highest pay level.

Second: When you retire, you’ll be given a lump-sum payment for any unused annual leave.

Most employees can carry no more than 240 hours (30 days) of annual leave from one leave year to the next, but those who have more than that can retire just before the new leave year begins and get the benefit of the full amount. Note that it’s a matter of the leave year, not the calendar year. The current leave year ends January 4, 2020.

That leave is paid out projected forward as if you were still at work. The effective date of annual pay raises coincides with the start of the new leave year. Any unused annual leave that crosses past that date will be paid at that higher hourly rate.

With these tips at hand, you should be able to pick a retirement date that improves the dollar value of your retirement. Next time I’ll let you know when you will receive your first cost-of-living adjustment (COLA) and how much it will be.


Read more about retirement eligibility and MRA under FERS and CSRS at

See also, Holding Your Retirement Plans Close to the Vest