Expert's View

Got you attention with that column heading, didn’t I? Well, I used that hook because no matter how many times I write about the subject, there are always plenty of employees out there who are uncertain about the rules governing when to retire. So, I thought I’d share them with you again.

If you are an employee covered by FERS, you can retire no later than the last day of the month and be on the annuity roll in the following month. If you are covered by CSRS, you can retire up to the third day in any month and be on the annuity roll for that month. Of course, just like FERS employees, to receive the full amount of your monthly annuity, you’d have to have retired on the last day of the previous month. That’s because every one of those three days that you are off the annuity roll will reduce your annuity for that month by 1/30th. Yes, friends, in retirement, all months are 30 days long. This assures that you will receive 12 equal annuity payments each year.

While retiring earlier than the last day (FERS) or after the third day (CSRS) gains you nothing in your annuity, that doesn’t mean that you should never retire earlier or later than that. You may have a good reason for doing so, for example, the cutoff date for an early retirement offer or buyout, or fitting your departure to new employment or vacation plans.

Of course, I’m anticipating your next question. When is the best time of year to retire? Well, in my opinion, there is no single best time. It depends largely on your financial and emotional readiness to do so. However, there are good reasons for wanting to do at the end of the calendar year (FERS) or the beginning of the next one (CSRS).

First, if you have any use-or-lose annual leave, it can be included in your lump-sum payment if you retire before the beginning of the next leave year. In 2007, the leave year begins on January 7 for most employees. Second, since your unused annual leave will be projected forward as if you were still on the employment roll, any hours of leave that fall after the beginning of the annual pay adjustment (also January 7) will be paid at the higher hourly rate