When is the best time to retire from the Federal Government's workforce? On Dec. 31st, probably.
It is relatively easier for a CSRS employee to pick their retirement date than a FERS one, but CSRS workers are now only 4% of the federal workforce. For them, all they have is their pension to keep track of while those under FERS have to coordinate their pension, TSP, and social security benefits. With CSRS, it is more clear-cut: the end of the “leave year” is the most logical date to retire. This is when they can carry over a maximum of 240 hours of leave from the prior year. For CSRS, that date is January 3rd, 2019. The end of the leave year is also a reasonable time for a FERS retiree to stop working. The date for FERS is the actual end of the year: New Year’s Eve 2018. This is considered common knowledge, which can be seen in the uptick of claims for retirement benefits each December, creating the massive backlog at OPM.
If the current month happens to be June however, and waiting until winter seems like an unappealing prospect for someone who is eligible for retirement, the next best time to retire is at the end of the month; any month. FERS retirement benefits commence the following month after retirement so if you retire on the last day of a given month, accumulation of benefits begins the following day. The same is true for CSRS (and CSRS Offset) employees, except they get the option of waiting until the first three days of the next month, too. So while a FERS worker would have to retire by June 30th to start earning benefits in July, a CSRS retiree could wait until July 3rd.
For a CSRS employee with 30 to 40 years of service, picking the right date can be crucial when calculating retirement benefit amounts. In contrast, a FERS employee with only a decade or less of service may face fewer drastic implications based off what exact date they stop working.
Until Next Time,
**Written by Benjamin Derge, Financial Planner. 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 Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.
When to Retire