Helping Federal Employees and Annuitants Understand Their Benefits

 

CSRS & FERS Retirement Eligibility

When can you retire!



Newsletter Sign Up

Retirement Assistance

Now Available

Take Charge of Your Federal Career - 2nd Edition

ORDER ONLINE

Also available at bookstores

Job Search

Retired?
Job Options

what
job title, keywords
where
city, state, zip
jobs by job search

Post a Job

Updated 8/3/2016

 

There are two primary federal retirement systems, the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS). We discuss both options and show you how to determine your eligibility date. You may or may not be financially, emotionally, or physically prepared to retire on your eligibility date. Each person must evaluate their own unique personal situation before making this critical decision.

This section will help you determine when you are eligible and then visit the annuity page to determine what your monthly annuity payment will be when you leave. Explore the Phased Retirement option. Final rules were published in early August of 2014. 

Is It Your Time To Leave! 

Use our retirement cost analysis spreadsheet to determine exactly what you will have to live on in retirement and left over after paying your monthly bills. Two free reports are available for download; How to be Emotionally and Physically Prepared When You Retire and How to be Financially Prepared When You Retire. Share these free reports with others in your organization to help them prepare as well.

To determine when you first become eligible for either CSRS or FERS retirement use the Eligibility Menu on this page to get started. There is much more to consider with this life altering decision and we offer many planning tools on this site to help you decide if the time is right for you to leave. The sooner you start planning the better off you will be when you actually leave. If you have questions about unique eligibility issues not fully covered here visit our "Ask the Expert" section to talk with our benefits and finance experts. Linda Sherman, our Benefits and HR forum host, has 18 years experience in human resources and benefits and she also has an extensive finance background.  

Flag Header

Eligibility Menu

 

 

 

Annuity Assistance 

The Best Date to Retire

 

“Retirement is wonderful if you have two essentials — much to live on and much to live for.” – Author Unknown

Each year someone asks what the best retirement date is for the upcoming year. There isn’t one stock answer to this because of so many mitigating personal and regulatory factors and the significant differences between CSRS and FERS laws.

For the most part, voluntary CSRS retirements are best the first three days of the month and your annuity will start on the next day. If you retire on the 3rd of the month you will get paid through the 3rd and your annuity will start on the following day. Your first annuity check will be for a partial month, less the three days you worked. However, if you choose to leave on the 4th or later your annuity won't start until the first of the following month. The end of the month works best for FERS employees in many cases. Under the FERS system your retirement begins on the first day of the following month. This is also allowed for non-voluntary CSRS retirements.

You also need to consider your annual leave accrual and when your 80 hour work week ends. This way you might end up with additional annual leave to be paid out shortly after you leave. Then mix in your sick leave to determine how many months of additional time will count towards your total annuity calculation. If you turn in 2090 hours, a few hours over a full year, that will add a year to your annuity calculation. FERS and CSRS employees now receive full credit for their sickleave balance.

Don’t confuse your “Annuity Start Date” with your “Date of Final Separation” that you list in block 2, Section B of either the SF-2801 CSRS Retirement Application or SF- 3107 FERS Retirement Application forms. Your retirement annuity starts the day after you separate even though your retirement commences at the close of Business on the "Date of Final Separation."

Unlike most personnel actions, retirements are always effective at the end of the work day. If you select Friday as your retirement date, and Friday is a scheduled workday, then the retirement is effective after your scheduled hours for Friday.  If you are a CSRS employee working Monday through Friday, and you are considering retirement dates of Friday the first, Saturday the second or a Sunday the third, Friday might be the best day to retire.  This is because Saturday and Sunday are your days off, so you do not receive pay for those days from your job. However, the annuity could begin on Saturday.

Pay Attention to the Details When Planning Your Exit

To determine how much you will have to live on estimate your gross annuity and complete our retirement costs spreadsheet. After determining that you have the resources to retire comfortably, the following discussion will help you set your most advantageous retirement date.

Any day can be a great day to retire, provided you meet the eligibility requirements and you are personally ready to retire. The retirement day can be a workday, a non-workday or even a holiday.  Retirement dates often coincide with special dates such as, your birthday, attaining 30 years of service, the holiday season, the end of the year or another personal event. However, the selection of a retirement date can have significant financial consequences.  Some points to consider when selecting the perfect date include:

1. Annuity Commencement. Annuities only start on specific days.  Consider selecting a retirement date that minimizes the days in a non-pay status.  To avoid days in a non-pay status, work until the beginning date of your retirement annuity.

  • FERS – The voluntary retirement annuities always begin on the first of the month. FERS retirees can minimize their days without pay by selecting the last work day of the month as the retirement date. If a FERS retiree selected a September third retirement date, the first annuity payment would be on November first.  By simply changing the retirement date to August 31st, the first annuity payment would be on October first – one month sooner.
  • CSRSA CSRS annuity may begin on the first, second, third or forth of the month.  Many CSRS employees retire on the third so the annuity begins on the fourth.  If you retire on the first through the third, your annuity is reduced for that first month to compensate for the days worked.  For example, if you worked on the third, your retirement would be reduced by 3/30’s (10%) of a month.  The annuity on the following month would be the full annuity and is always paid on the first of the month.

Unlike most personnel actions, retirements are always effective at the end of the work day. If you select Friday as your retirement date, and Friday is a scheduled workday, then the retirement is effective after your scheduled hours for Friday.  If you are a CSRS employee working Monday through Friday, and you are considering retirement dates of Friday the first, Saturday the second or a Sunday the third, Friday might be the best day to retire.  This is because Saturday and Sunday are your days off, so you do not receive pay for those days from your job. However, the annuity could begin on Saturday.

2. End of pay period. Consider retiring at the end of a pay period for maximum leave accrual.  If you retire at the end of a pay period, you receive additional hours of leave accrual, four hours of sick leave and eight hours of annual leave (if you earn eight hours per pay period). The eight hours of annual leave is paid in a lump sum after retirement and the four hours of sick leave may be used to increase the amount of service used in the annuity computation.  For retirement purposes, the term “end of the pay period” means the end of your bi-weekly scheduled work hours.  Therefore, if you are working a compressed work schedule and you complete your 80-hour tour-of-duty on Thursday, you can retire at the end of the day on Thursday to receive the maximum annual leave accumulation for the pay period.

3. End of the leave year. Maximize the lump sum annual leave payment by retiring at the end of the leave year.  If you accumulated the maximum annual leave carryover from the prior year (usually 240 hours) and you accumulated additional annual leave in your last year (up to 208 hours if you earn eight hours per pay period and did not take annual leave), the result could be 448 hours of annual leave paid to you upon retirement.  There are two additional benefits to receiving the lump sum annual leave payment at the end of the leave year:

  • If there is a pay increase in January, the increased pay is used to compute the lump sum annual leave payment as if you actually worked during the period.  For example, it you retire on December 31st and federal employees are due to receive a 3% pay increase effective on January seventh, the lump sum annual leave is payable for the first week at your current pay rate and the remaining days at the pay rate including the 3% pay increase.
  • Potentially, the taxes due on the lump sum payment will be less if you are retiring at the end of the year.  For example, if you retire at the end of 2010 and the lump sum payment occurs in 2011, then the taxes on the lump sum payment will be due with your 2011 taxes.  Since your taxable income is normally less as a retiree, thus the taxes due on the lump sum annual leave payment would be less.

4. Creditable Service. Maximize the full months of creditable service used in the retirement annuity computation.

The annuity is computed using only whole months of service. Additional days of service are not used in the computation.  For example, if you are retiring with 30 years, 8 months and 29 days of federal service, your annuity is computed using 30 years and 8 months of service.  The 29 days of federal service are not used in the computation.  If you worked one additional month and did not use your sick leave for the month, the years of service would be 30 years and 10 months of creditable service.  By working one additional month, you receive two months of service – one month for the extra month worked and an additional month when combining the eight hours of sick leave with the 29 days that would have been lost. For more information on how sick leave is used in the annuity computation see: http://federalretirement.net/sickleave.htm.

5. TSP Contributions. Maximize your TSP contributions for increased deferred compensation.  You can contribute up to 100% of your bi-weekly earnings to TSP before you retire to maximize the amount in TSP, as long as the contribution does not exceed the annual contributions limit, currently $16,500 in 2010.  Contributions to TSP, 401ks and IRAs can only come from earned income. The retirement annuity is not considered earned income, therefore, this may be your last opportunity to build this tax-deferred retirement fund.

6. COLA. Consider the Cost-of-Living Adjustment (COLA) for a maximum annuity increase in the year after retirement.  The COLA increases the annuity amount for the next year based on increases in the Consumer Price Index.  The COLAs are effective on December first of every year and are included in the payment the annuitant receives in January.  If you have been retired less than a full year, the COLA is simply prorated by one-twelfth of the COLA for each full month you received benefits. In deciding which day to retire, the COLA consideration is only important if you are not retiring at the end of a month.  If you select the third as your retirement date, you will not receive a full COLA for this month when the COLA is due the following year – hence losing one-twelfth of the COLA increase for this partial month.  This only occurs in the first year of retirement.  In the second year of retirement you will receive the entire COLA.  For more information on COLAs see: http://www.opm.gov/retire/annuity/cola/2009cola.asp

You likely cannot utilize all of these suggestions in selecting the optimum retirement date.  Occasionally, the stars align and you can use several of these suggestions at once. The key to selecting a retirement date is choosing a date that is most beneficial to you; to retire informed and without regret.

 

Additional Resources to help you select the best retirement date:

 

Leave Year Beginning & Ending Dates 2011 through 2020

The beginning and ending dates of leave years 2011 through 2020 shown below apply to most employees. However, some agency payroll systems use a different pay period schedule. Employees should contact their agencies to verify the beginning and ending dates of a particular leave year.

 

Leave Year

Leave Year
Beginning Date

Leave Year
Ending Date

Date for Scheduling
"Use or Lose"
Annual Leave

2011

January 02, 2011

December 31, 2011

November 19, 2011

2012

January 01, 2012

January 12, 2013

December 01, 2012

2013

January 13, 2013

January 11, 2014

November 30, 2013

2014

January 12, 2014

January 10, 2015

November 29, 2014

2015

January 11, 2015

January 09, 2016

November 28, 2015

2016

January 10, 2016

January 07, 2017

November 26, 2016

2017

January 08, 2017

January 06, 2018

November 25, 2017

2018

January 07, 2018

January 05, 2019

November 24, 2018

2019

January 06, 2019

January 04, 2020

November 23, 2019

2020

January 05, 2020

January 02, 2021

November 21, 2020

 

Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Our Email Newsletter

 

FedRetireSoftware

 

Return to Top of Page
Go to Home page