Every fall I’m inundated with questions about the best date to retire. And my usual answer is, "It all depends." However, this is an unusual year, one where the calendar really works for CSRS and CSRS Offset employees. Let me explain.
The last pay period in the 2008 leave year ends on Saturday, January 2, 2009. The new leave year begins on Sunday, January 3. What this means is that if you are a CSRS-covered employee whose pay period ends on Friday, January 1, 2009, you can retire at the end of business on that day and get credit for any annual and sick leave you earned during that pay period. The fact that January 1 is a holiday won’t affect your ability to retire then. Of course, if your pay period ends on a Saturday, you can retire at the end of business on January 2 and reap the same benefit.
Another benefit of retiring at the end of the leave year is that you’ll receive a lump sum payment for all your unused annual leave. Not just the carry-over amount, but any use-or-lose leave that would be forfeited if you retired after January 2.
Further, if you retire at the end of business on January 1, you’ll be on the annuity roll for 29 days in January, which means that your annuity for that month will only be reduced by 1/30th. If you retire on Saturday, January 2, you will lose an additional day of annuity for the month. However, these annuity offsets are one-time events that have no effect on subsequent months.
There’s one additional benefit to retiring in the time frame we’ve been discussing. If you’re on the annuity roll in January, you’ll be eligible for 11/12ths of the COLA that will be added to your annuity in January 2010. To be eligible for the full amount, you’d have to be on the annuity roll no later than Wednesday, December 31, 2008. But then you wouldn’t get credit for any annual or sick leave you would have earned if you stayed to the end of the pay period.
The calendar doesn’t work as well for FERS employees. To be on the annuity roll in January, you’d have to retire no later than Wednesday, December 31, And, as I just pointed out, you wouldn’t get any credit for annual leave that you would have earned if you’d stayed to the end of that pay period. As for getting credit for sick leave, you can forget that for now. As a FERS employee, you don’t get any credit for unused sick leave at retirement. Although legislation has been introduce in Congress to change that, there’s almost no chance of it being enacted this year.