Reg Jones Expert's View

Not a week goes by that some employee doesn’t ask me, “What’s the best date to retire?” My answer is, “When you are eligible to do that and when you are financially and emotionally ready to leave.” However, I go on to say that some dates are better than others. That’s because of the way the law and pay periods interact.

Under the law, CSRS employees can retire up to the third day of a month and be on the annuity roll in that same month, while FERS employees are always on the annuity roll in the following month.

Ideally, you want to retire at the end of a pay period that is closest to the month in which you want your annuity to begin. The greater the distant between the two, the more days you’ll be in a non-pay, non-annuitant status.

Looking at the 2015 calendar, whether you are a CSRS or FERS employee, Saturday, May 30 would be a good date to retire. It’s the end of a pay period and only one day away from June 1, when your annuity would begin.

If you are a CSRS employee, the next good date to retire would be September 3. That’s the end of a pay period. And the only downside would be that your first month’s annuity would be reduced by the three days you weren’t on the annuity roll. Which means you’d only get 27/30ths of a month’s annuity.

The next best date for both CSRS and FERS employees would be November 28. You’d only have a two-day delay before December, when you’d be on the annuity roll.

Everyone’s favorite month to retire is December, when both CSRS and FERS employees will get the maximum lump-sum payment for their accumulated annual leave. And when they’ve be closest to the beginning of the 2016 pay increase in January, assuming that happens. If it does, every hour of annual leave that falls after the pay adjustment will be paid at the new, higher rate.

There’s only one downside to retiring in December. In 2015 the gap between the day you retire and when your annuity begins in January would be a full five days. Not the worst fate that could befall you.