Expert's View

Last week I posed three questions that you should consider when asking “am I ready to retire?“. And you shouldn’t put in your paperwork before answering yes to all three of them: Are you professionally ready to retire? Can you afford to retire? What are you going to do with your time after you retire?

If you’ve passed that test and made up your mind that you’re going to retire, it’s time to decide the date on which you want to leave. And the field is wide open. 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, there are rules that govern when your retirement annuity will start. And they are different for CSRS and FERS employees.


If you are a CSRS employee, you can retire up to the third day of the month and still receive an annuity for that month. However, each day you wait before retiring will reduce the amount of your first month’s annuity by one day. For example, if you separated on December 3, the amount of your December annuity would be based on 27 days.

If you are a FERS employee, even one who will have a CSRS component in your annuity, you’ll need to 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 no later than November 30 if you want to receive an annuity in December. If you missed that last day of the month cutoff, your annuity wouldn’t start until January. What a difference a day makes!

Once you are on the annuity roll, you’ll be entitled to an annuity payment on the first day of the following month. That’s because, like your biweekly pay, it’s retroactive. So, for example, if you are on the annuity roll in December, your first annuity payment would be due on January 1.

At least that’s would happen in a perfect world. In fact, for that first month – and possibly for a number of months to follow– you’ll receive an interim payment, which is a percentage of the full amount. By starting your annuity at a reduced level, OPM is giving you some money to live on while they finalize your retirement. That way they can avoid a common problem in the past: overpayments for which you’d be liable. Once your annuity amount is finally determined, you’ll receive a payment to make up the difference.

Next week I’ll talk about how to pick a retirement date that maximizes the dollar value of your annuity.