There’s more to retiring from your federal job than closing your eyes, pointing at a date on the calendar, and telling your boss, “I’m done.” As an employee who benefits from the Federal Employees Retirement System (FERS), your separation impacts many things, including post-retirement cash flow, non-monetary benefits, tax status, and more.
In other words, it’s a good idea to have a FERS retirement date strategy in place.
More than One
There are three “best dates” to consider for your final departure. Let’s take a look.
End of a Pay Period: More Leave
You collect accrued annual and sick leave when you work a full pay period before your official retirement. On the other hand, if you leave in the middle of that period, say goodbye to an additional eight hours of accumulated leave and four hours of sick leave.
End of the Month: Avoiding Gaps
You’ll begin receiving your annuity payment on the first day of the month after you retire. If you opt to leave on the 30th or 31st, there won’t be a gap between your final paycheck and first annuity payment.
End of the Leave Year: Maximizing the Lump Sum
For most Feds, the leave year represents a 12-month period that:
- Starts with the first full biweekly pay period of the calendar year, and
- Ends on the day before the first biweekly pay period of the next calendar year
In actual numbers, the Office of Personnel Management (OPM)’s leave-year calendar starts on January 11, 2026, and ends on January 9, 2027.
Annual and Sick Leave Payouts/Calculations
How much you receive post-career goes beyond “High-3” calculations and service years. Unused annual and sick leave also plays a role.
Annual Leave
Annual leave means time off for vacations and personal reasons. When you separate from the job, any unused leave, up to 240 hours (rolled over from previous years), is paid out in a lump sum.
But what happens if unused leave exceeds 240 hours? Anything above that limit falls under the “Use or Lose” category. Specifically, if you don’t take those extra hours before your retirement date, they will be lost forever. The “Use or Lose” date in 2026 is November 28. Your best bet to avoid those losses is to retire before the end of your leave year.
Learn more about your retirement benefits at our No-Cost webinars, featuring Ed Zurndorfer -
Sick Leave
Sick leave is for medical, dental, and eye doctor appointments. That time off is also available to care for an ill family member.
Unused sick leave has no cash value upon retirement. But it does boost your annuity payments. The more leave collected, the higher your post-retirement payout. And unlike annual leave, there are no limits on how much unused sick leave you have.
Other “Best Date” Considerations
Be sure to start strategizing for your retirement and determine your “best date” to leave as soon as possible. Research your agency’s calendars. Furthermore, be aware of the deadline to prepare and submit the necessary paperwork and applications. Check with your Office Personnel Folder for documentation, including start dates, pay increases, and promotions.
The CERTIFIED FINANCIAL PLANNER® (CFP®) pre-retirement checklist also suggests that you:
- Verify pay periods and leave-year timing
- Identify annual and sick leave accrual
- Learn about tax implications on retirement payments
- Be sure that you’re mentally and emotionally ready to retire
Strategize Before You Separate
Serving Those Who Serve suggests retirement “best dates” for the maximum lump sum and benefits payouts. Additionally, your best day to retire as a federal employee should be based on your mental and emotional readiness, and your post-career goals.
The experienced, Fed-focused CFP® team at STWS is ready to help you prepare for and decide on that “best date,” one that fits your unique situation. To book a no-obligation consultation, visit the STWS website or email [email protected].
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
