The Best Day To Retire Revisited

It depends. It depends on when you want to retire, when you can really afford to retire, and whether your spouse or significant other is ready for the pleasure of your company 24/7. For the rest of your natural lives.

That said, according to Tammy Flanagan, a benefits expert with the National Institute of Transition Planning, in most cases "the best date to retire is either the end of the month or the end of the leave period, or the end of the year." She has been doing long-range best-day forecasts for us for a dozen years.

The "it depends" rule gives you a lot of leeway. You may want to leave at the earliest possible moment. You may not want to wait for the very best day for a variety of reasons. But for financial purposes, that is getting paid the maximum amount for the maximum amount of annual leave with a tax break, the best days, again, are Dec. 31, 2006 for FERS employees and Jan. 3, 2007 for folks under the old CSRS system.

But wait! There's more! Because you may want to retire at another time.

In brief, retiring the last day of the month insures that your annuity begins the following month and you will get that payment the month after that. So if you retire in August, the annuity starts in September and you get the first payment in October. Retiring mid-month doesn't get your pension payment any faster, but you lose X number of days, those you don't work, in salary.

Retiring at the end of a pay period may entitle you to extra annual leave for which you would be paid.

For feds who want to retire in December or January, here's the rule: this year the best date for workers under the newer FERS system is December 31, 2006. For those under the CSRS system the best date is January 3, 2007. Those are the same magic dates as last year.

Retiring on those dates will permit the maximum amount of annual leave to be carried over and insure that the lump sum payment of some of the leave, maybe even most of it, will be paid at the new, higher, 2007 pay rate. Assuming there is a pay raise.

The pay period for most ends Jan. 7, 2007. That would also be the start date for any new 2007 pay raise. So unused annual leave that you would have taken before Jan. 7 will be paid at the old (2006) rate, whereas unused annual leave that you would have taken after the start of the first pay period in January will be paid at the new higher rate. That's true every year.

For high-paid feds with lots of annual leave, getting paid for it at the new higher rate (this year it was 3.44 percent in the Washington-Baltimore area) is huge. Thousands and thousands of dollars.

Tammy Flanagan is a regular on the For Your Benefit radio show. You can hear it on your computer, at FederalNewsRadio.com, or on your radio in the Washington area at 10 a.m. every Saturday. The station is WFED AM 1050. Listen up and call in if you have question. About the best-date to retire, or any other date.

If your target retirement date is earlier, you can get details from Tammy's new column by clicking here.

And to reach me: click here