Micah Shilanski 00:03
Have you ever wondered if it really makes sense to retire at the end of the year, or should you just wait till January, well, the next pay period in the following year, really what are the pros and cons? Well if you have then stay tuned for this FERS Federal Fact Check. Hi, I’m Micah Shilanski with Plan Your Federal Retirement, and we have a good question that came in from Joyce, and she’s asking, she says: Hi, my name is Joyce, and I’m trying to determine the best date to retire, either December 31st or January 11th of 2025 at the end of the last pay period. Just want to know the advantage is possibly waiting to retire at the end of a pay period, and if it would receive my annual lump sum and the January pension, or would it start in February? Thank you so much for your help in answering this question. Joyce, you’re very welcome. Some pros and cons with this retirement, your pension is effective the first of the following month under FERS, what does that mean? If you retire on 12.31 your pension is effective on January 1st. Please note I said effective not payable, right? Effective is when you’re supposed to get paid for it, payable is after OPM finally processes your retirement, you will get back paid to that date, so if you go out on January 11th, your retirement is effective the first of the following month, which would be February 1st. So those last 20 plus days or so, you’re not getting paid for in January, versus if you retired on 12.31 you’re paid all through those and your pension starts the first the following month. So that’s kind of the advantage that’s there. Now, when does your leave check come? Your leave check normally comes the next pay cycle, so normally, if you go to retirement on 12.31 obviously it’s going to be January, the first to the second they cycle that you’re going to be paid a lump sum for your annual leave, your sick leave is always counted towards your retirement, now, which is absolutely a fantastic benefit, you retire January 11th, the same thing happens, generally the next pay period, or the following one, is when your leave is going to get cashed out and paid in, and your pension is effective the first of February, again notpayable, that’s whenever OPM gets around to it. So I’m a big fan of kind of the end of the month or closer to the end of the month, but more importantly, Joyce, this is your retirement date, what makes the most sense we can get down to the nat’s penny about the most dollars, but what are you going to be happy with in retiring? I got some clients that stay and work through the middle of March because they don’t want to retire in the middle of winter in Alaska, right? They want to retire when springtime is coming, there’s nothing wrong with that, as long as they can financially afford to retire, and number two, they are mentally ready to retire. If you have questions about how to apply your federal benefits to your personal situation, then pick up the phone, give us a call, sit down with one of our financial advisors that understand your federal benefits, and we’ve helped 1000s of people land their retirement successfully and we might be able to help you out as well. Till next time, Happy Planning!