Is December 31st Really the Best Day to Retire?
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- Опубликовано: 30 окт 2024
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hawsfederaladv...
I talk with feds all the time that are looking to retire and the most common answer to “when would you like to retire” is hands down December 31.
OPM is always swamped in the first months of each year dealing with the surge of retirement applications.
But is December 31 really the best day to retire?
Well, sometimes. But certainly not all the time.
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This year, December 31 works out well. End of year, end of pay period, end of month--all in one. I'm doing it!
Great point!
I want to also but because of inflation and TSP, I worked another year and may again in 2023, not sure yet
DDay: 12.31.2032 last day of PP is 01.01.2033
Any way I squeeze it, that one comes out ahead.
July 1 is the best!
One of my co-workers filed for retirement, effective 12/31/2021. After hearing that, I checked my situation and determined I could also retire on that date and would have sufficient income to make it through retirement: Military retirement, VA disability, FERS retirement, mutual fund, and TSP. Needless to say, I filed my application for December 31st and I can’t wait. Your videos also helped solidify my decision to retire, so I greatly appreciate you!
Great to hear!
I have thought my retirement date would be right around my birthday, right when I turn one of those magic numbers to qualify me for something. Also, awesome way to celebrate a birthday.
Day after Valentine’s Day would be my days. Looking for romantic bargains
Fun fact. December 31, 2022 is the end of a pay period, end of a leave year, end of the calendar year, and the end of the month all on the same day. I don't remember another time that it's happened in my 34year+ career, but I'm sure it probably has.
Good point!
In🌑vestin is a good way of having a passive income when you retire. That way you can live comfortably and still have a portfolio to leave for your kids when you are gone 🇱🇷
That's the date I'm going out.
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① *⑥⑤⑦* ⑧④ *⑤* *⓪* ④ *⓪* *①*
Sick leave not added to your years of service. 239 hours = 0 months, 240 hours = 1 month, 479 hours = 1 month, 719 hours = 2 months, etc.
Sick Leave is converted to months and days via a specific chart that you can google, not whole months. 239 hours is rounded up to 244 hours and converted to 1 month and 12 days. It is added to your service for purposes of calculating your pension.
5k subscribers!!! Congrats Dallen! You're the man.
Thanks for the support!
Nice work - love these videos!
Great to hear! Thanks for being part of the community!
I hope and pray the rest of Fed service is not like the USPS: but for me. No matter how much more I could have made, waiting longer would not be worth it. I left on a 3 week vacation and after just a few days knew going back to that ...... was not worth waiting. I was not even 62. I called and arranged for my retirement and never stepped foot in the USPS office again.
Yeah…. I hate that effen place. I’m going the end of this year!👍
I determined a few years ago that I would go at my MRA, actually about 6 months after I started. Even though I will not have 30 years. I will loose about $450/month because of this. But, sense I have been investing in IRAs and the TSP, I will not run out of money once I start SS at age 62.
This based on an annual income of around $50k. I figure I am only living on around $30k now. So I will have more money to spend in retirement than while working.
3 years to go. Ugh!
Best Date to Retire is End of the Financial Tax year, 4 April.
Start the New Tax year,... Fresh
I believe that tax year ends Dec 31st. Taxes are not due until April 4.
Going out mid year (end of June). There is a new factor to add into best retirement date now, and that is to add prorated COLA for 2023. No one talks about factoring in a prorated COLA bump, and maybe that’s because COLAs have not been very large historically. But starting 2022, that has changed. This year by retiring in June, I get 50% of the COLA for 2023, which could be as high as 9% this year. Inflation and compounding COLA changes the game on best retirement date.
ALSO, If you retire DEC 31st, I’m fairly sure you won’t get the full COLA in 2024. I believe you have to have started retirement by Dec. 1st 2022 to get full COLA in 2024.
Great video. Thanks for touching on the different dates and explaining the cause and effect.
My pleasure, Have a great day!
Handsome fella 😁 Great Advice
Thanks for sharing :)
Going out October 31st. I’ve been burning sick leave since January. After last year at the Post Office, I’m through. Age 62 with 36 years in. Also I’ll have 450 hrs of AL
What are ya gonna do ?
@@quarry64 He’ll find something.
Good luck. Originally I was going out July 31, had 7 months sick time but not too much AL. So I decided to go out December 31 with less SL & more AL. Can’t wait.
congrats on your retirement.job well done 👍🏿
🌓🌑Plan ,save and in-vest. With a good portfolio and enough passive income stream you can retire even today 🥂💵
i appreciate your videos, im 55 and I wish I could retire someday
Despite my comment just made... I do love this guy and the informative videos :) GOOD WORK !!!!!
If you retire 31 DEC, what year will your AL payout be recognized. I am worried that this would put me in a different bracket for capital gains tax.
Great question. Here is a great video that can help with this question:
ruclips.net/video/im6JrL9Gz58/видео.html&pp=ygUiaGF3cyBmZWRlcmFsIGFkdmlzb3JzIGFubnVhbCBsZWF2ZQ%3D%3D
You get taxed on your AL payout the year you receive it. If you retire Dec 31 then you will be taxed the following year. No, his other video doesn't address it either.
Hello, in listening to this video it sounded like you said that sickleave could be used to kick you into the required 20 years and age 62 to get the extra 10%. When I attended the retirement seminar provided by our HR specialist, I believe they indicated that sickleave cannot be included or used to get you the years of service that is required to meet the 10% bonus. They indicated that only your actual work time, without your sickleave Hass to meet the 20 year requirement. Please advise. Thank you and I like your channel.
I will be 62 in November 2022 I have over 36 yrs of service . right now is July of 2022 I have 1900 hrs of sick leave if I retire now do I get the 10% bonus??
You get it with out worrying about the SL.
I started as a Fed on Dec. 3, 2001, with plans to retire at the end of the last pay period this year (total of 20 years and a few weeks). My HR shop provided a retirement estimate and said my three-month overlap receiving Federal and military pay when leaving the Air Force wouldn't count toward retirement; that I'd only have 19 years 9 months or thereabouts. They acknowledged that my 900 hours of sick leave would give me 5-1/2 months of time toward retirement (again pushing me over the 20 year mark), but they caveated this saying OPM, in a cost-cutting measure, could re-evaluate the clause of using sick leave for calculating total Federal time sometime in the future, causing me and potentially thousands of other Feds to lose the 1% bump. I decided to move my retirement to March 31, 2022, to ensure I had 20 years without the sick leave added in. Maybe you could make this another RUclips video!
🌑🌓Well friend you can still make your retirement dreams come through. Save ,plan and in-vest. With a good portfolio you can retire even today.🇱🇷
Did you "buy back" your military time? I retired from the Army and was on terminal leave when I started for the government (about 6 weeks). This is the first I heard that being on terminal leave while working for the federal government would impact retirement date.
@@bleebu5448 No. No military buyback (but I wish I had).
@@JDHarrington Except in very few cases, it doesn't make sense to buy back time if you retired. Maybe if you retired as an E6 at 20, and then really shined as a civilian GS-14/15 etc, adding the 20 years to your civilian retirement might get you higher a pension than military/civilian combined. But, there are other military retiree benefits besides pay, like medical. some states don't tax military pensions etc.
@@bleebu5448 I'm not too sure about that, at least for enlisted folks. When I first retired, civil service HR stated I would need to repay all the money the military paid me over my 25 year career. I didn't hear the three percent part of that discussion (still a sizable amount). Second, they didn't explain that I'd still receive my entire USAF retirement while working for the Federal government - that I wouldn't lose it until I retired from civil service. Knowing both at this point, means I could've bought back my retirement time for the price of a new car (about $18K at the time). After 20 years, that would be $48K due to the finance charges they would charge me. Then, a pretty good deal, now, not so much...
I am retiring this december 2024 and will have with sick leave about 18.5 years. Does it matter if i retire at the end of the pay period december 28th, 2024 or december 31 2024?
Great question. This video is a great resource to figure out if the extra 3 days make a difference. Another great video specifically on sick leave is this:
ruclips.net/video/iqw0mXHOB_8/видео.html&ab_channel=HawsFederalAdvisors
this was great... thank you!
You're so welcome!
Your advice has been a huge help. Picked a date to leave based on month end pay period and when my 19 and a half years plus 6 months of sick leave get me to 20. And out the door I go!
Great to hear!
Are you sure you could use your sick leave to get you to 20 and retire? I’m not so sure you could if you need to do 20. Definitely confirm that.
@@mgranvee8549 you can't. It gets added on after the 20 or 30
@@serapheumcorrect
?, I retired Dec, 31 2021. I just received my special supplement amount and will start to receive with back pay. It is based on my social security 62 years of age from last year statement. I made a lot more money 21-22 and my current 62 year social security statement is $160.00 higher. How come they didn’t use my most recent social security value. Thanks. I am going to call them Monday. I thought this would be an interesting question for you. Thanks
Wouldn’t be better for example at the start of a new year to get the pay raise adjusted for your high three? It’s going to be a big raise for 2023. Possibly 5 percent or higher. Why leave December 31?
The pension is calculated base on what your actually earned for your "high 3". Not what your "rate" is.
Fantastic information as always, Dallen. Comprehensive and knowledgeable. Thanks for this service.
You are very welcome!
In🌑vestin is a good way of having a passive income when you retire. That way you can live comfortably and still have a portfolio to leave for your kids when you are gone 🇱🇷
Would love to retire tomorrow! 😆
🌑🌓Plan ,save and in-vest. With a good portfolio and enough passive income stream you can retire even today 🥂💵
I am retiring Jan 2022. Will I be getting the 5% COLA? How does it work?
You have to be retired in the year that the inflation happened to receive the COLA.
will be 62 in november 2021.i will retire on december
31st 2021 with a union pension and SS.
REMEMBER YOUR HEALTH IS YOUR WEALTH.
Yes absolutely correct. But you have to have a good portfolio and income stream to sustain you when retired to leave healthy. Plus having a good portfolio is a good legacy to leave for your kids when you are gone .
If your anniversary date is DEC 25, sounds like a plan to me.
I have to figure if working the extra year is worth it or not ?
Question: If the last pay period of the year falls on the first week of the new calendar year, can you claim the full accumulates annual leaves if you retire at the end of the last pay period?
I'm have no idea what the "10 percent bonus " you referenced... Could you please explain. Thanks in advance .
I'll assume that's a serious question. For a FERS pension, you get 1% for every year of service up to 19 years. For 20 or more years of service, you get 1.1% for every year. The .1% is the bonus.
@@rods6741 Your answer is wrong. Generally, the 10% bonus or 1.1 multiplier is if you retire after age 62 with at least 20 years of service. The bonus applies across the board, i.e., not for service years 20 or more.
Another great lesson! Thanks
My pleasure!
Thanks!
You bet!
I am retiring in Jan. 2022, will I be getting the 5% COLA? How does it work? Thank for all your videos.
Your pension will be based on your date of retirement. COLAs are added in January of the following year.
My job has a perk that retirees get paid out for their full year PTO so everyone retires on Feb 1st 😊.
Your additional sick leave is not used for retirement eligibility, it is an added bonus. So I don't believe it can be used for the 10% bump.
It actually can be used for the 10% bump assuming someone is already 62.
@@PlanYourFederalBenefits That is correct for now. But NASA HR states that Congress is considering changing the rules to NOT let it be factored into the pay bump, AND could do so retroactively, meaning if you get it initially, they will stop it and try and collect what was already given. It's all about cutting the deficit.
NASA HR is spreading BS. Congress passed law in 2009 so FERS employees get full SL credit in effect 1/1/2014. Why change back?
Have you considered a video on SCD dates? Normally covers military members with campaign time. How does the SCD impact your retirement/benefits?
I will have 20 years almost exactly at 60. Pooof… where did he go?
I am 54 years old., eligible for retirement at 56.5 years, and planning on retiring on 12-31-2023. My eligibility date is 11-18-2023. I will have 38 years and 11 months, with sick leave add 4 more months and will get ss supplement, pension and TSP. I am very ready for retirement. I picked December 31st for tax and A/L. i will have 240 + 208 to cash out. The only thing scary is can i get the TSP at 56.5 and will i have a choice on the monthly amount?
You can access the TSP at 56.5 and you will be able to pick a monthly payment option.
Does the 10% bonus also affect Active Duty military pension? I hit 20 years at age 57, but if I get 10 extra percent at age 62, plus the extra 5 years added on to make it 25 years, I would definitely consider staying.
Yes, if you have at least 20 years of civilian time then you can get the 10% bonus at 62
I'm looking at retiring on 12/31/2021 and will have approximately 450 hours of annual leave. Because the annual leave cash out obviously won't be sent until sometime in January, will it be considered income from 2021 or 2022? Also, if the annual leave is paid in January will the new 2022 COLA be included when calculating the amount?
Not sure about the tax but, no the leave pay will not include any cola as the cola is effective as of 1 Jan and your last effective day is 31 Dec.
This year 12/31/2021 the perfect day. End of pay period, end of month, on day before end of leave year. That means you can have AL in excess of 240 because you have separated before the end of Leavenworth year. The lump sum AL WILL be paid at the new 2022 rate because the new tables are the law and when the pay is processed in 2022 the current tables are used.
Also, the other reason 12/31/2021 is great because your lump sum AL will be paid in 2022 and therefore be earned wages in 2022 that will be part of an overall lower earnings year because of a pension. ( Don't get crazy on TSP withdrawal to have higher taxes but that's another story)
Would the calculation of sick leave into the years of service less than taking sl itself meaning is it more worth to use SL and get paid for the entire amount?
Yes, if you are sick, it is better to use the SL. Or, if you have a hip/knee/shoulder that needs work, do it while employed and take the SL.
Yes, use up your SL.
Question>>> ATC gets paid out for sick leave (40% on the dollar), they also receive the SS Supplement that is means tested. If they retire on Dec 31, is the check that they receive the next calendar year for the sick leave or annual leave payout considered as regular income that becomes part of the ss supplement means test??
No, that doesn't count account your means test.
My date is Jan 2027...! I might go longer but I'm not sure yet
Should I wait until Dec 2027?
Your clock is broken!
Sure is :)
Great videos very helpful thank you .!I have a question: what’s the max hrs of annual leave payable when you retire. Implant to retire in 5 months I have 580 hrs . Do I get paid for all of that??
You will receive payment for the full amount.
Question for you, why don't you use it?
I'm unclear on the month. If I started on the 20th and I retire on the 20th is that a full month? Or should I stay until the 31st?
The 20th to the 20th would be a full month for calculating for years of creditable service. However, some people still decide to wait until the end of the month to retire because their pension starts the 1st of the following month.
In🌑vestin is a good way of having a passive income when you retire. That way you can live comfortably and still have a portfolio to leave for your kids when you are gone 🇱🇷
If the 20th is the end of the pay period, it's a good day to go. But you could always work to the end of the month. You will not "earn" the AL/SL for the partial pay period.
Dallen, I just realized that you must have a closet full of white business shirts 🤪
How about mixing in a light blue or lavender once in a while buddy! Lol.
haha, you are right on. White shirts are just my style :)
If I retire on Dec 31st, and get the annual leave lump sum a month or 2 later. In which year would the taxes fall under? This is important, because the extra income could push my wife’s Medicare premium into the next bracket.
I was wondering the same thing. My understanding is that taxes are due on the year It is paid. If you retire in 2021 and its paid in 2022, it is taxed as 2022 income
I retired 31Dec18 and lump sum AL was paid in 2020 for the 2019 tax year. There’s a big difference in 12 and 22 percent tax rate. I think I paid payroll tax since the leave was accrued during working years. BTW, no regrets on retiring at the end of the year.
@@teemakarov9375 Thanks for the confirmation on the tax years. All the stars are aligned for me to retire Dec 31, 2022.
I think there are going to a lot of retirements on that date!
Does the 10% bonus apply to Federal LEOs with FERS Enhanced Retirement?
No, it generally does not apply to LEO's.
Are you well versed in LEO federal retirement?
Yep :) I do lots of work with LEO folks. Have a great day!
Great question. Yes, here is a fantastic video about that: ruclips.net/video/RvzaLL8C99I/видео.html&pp=ygUbaGF3cyBmZWRlcmFsIGxlbyByZXRpcmVtZW50
We also meet with many special provisions employees. Feel free to schedule a meeting with us here: app.hawsfederaladvisors.com/whatservicemakessense
My EOD is Dec 31st.
Good to hear!
Please I need help I been federal employee since may7 2001 and love to retire sept30 22 for age factor I will be 62 till 22can you advice me what is the best month for me please
Dec 31 is the "best" day for you. But, and day that is the last day of the pay period and the closest to the end of the month is a great day to retire.
The reason Dec 31 2022 is a "best day" is because it is the end of the pay period and end of the month. Thus you receive SL/AL credit for working the full pay period/month. And your 1 pension check will be Feb 1.
You could have retired at the end of Sept 2022. But as it is the middle of the pay period, you don't receive the SL/AL for that pay period. Your pension check would start Nov 1.
I am csrs do I get the 10 percent bonus
Unfortunately, It only applies to FERS
Why is your clock always 10:10 ?
I didn't like the ticking so I took out the batteries :)
Great content. Is there a 10% bonus for special retirement police,fire or atc?
Only if they don't qualify for the normal special provision retirement.
In🌑vestin is a good way of having a passive income when you retire. That way you can live comfortably and still have a portfolio to leave for your kids when you are gone 🇱🇷
I sure like your show! Thank you
Great to hear it is helpful!
Really enjoy the content. If I have a year of SL can I get the 10% bonus if I retire at age 61? I have over 30 years. Thanks
Yes, you can!
@@PlanYourFederalBenefits can you provide a reference to this language? I haven't seen it. I'm not how to approach my HR with this concept. I really appreciate you!
@@PlanYourFederalBenefits "Sick leave service credit is used for annuity computation only - it cannot be used for eligibility purposes."
You have to reach age 62.
March 31 2052. I’ll be 57 for a month and 34 years of service. Keep thinking about waiting until 62 for that 10%, but extra 5 years of retirement sounds great
Thanks for sharing!
I was going to put my retirement date as 12/31/2021. Someone told me put 1/1/2022 so I get paid for that holiday. Sounds good but can it hurt me somewhere? Thanks.
I think your first retirement check would not happen until March 1 versus February 1 if you go on December 31.
You might loose annual leave
You will lose any annual leave over 240 and your pension will be delayed an extra month. Not worth it for a days pay.
@@kevinhanson48 That’s what I thought too. Thanks
Well I always say it's good to In🌓vest is so there will be an income coming from when you retire. Currently enjoying my retirement and making $800 weekly from my investments 🥂
FERS Registered Nurses can cary over 685 hours
Wow that's even better than firefighters. We did 432 hr carryover.
@@grissomfire I do not even see WHY there is a Max! Whatever you accumulate should stay with you! (But then again no one asked for MY opinion! 😂)
First, I really enjoy your videos...very informative and well presented. In this video I think I heard something I didn't previously know. If a 62yo fed employee retires with 19 years and 3 months of service & 9 months (equivalent) of sick leave, will that employee also qualify for the additional 10% on his/her FERS pension?
Yes!
All the (retirement) briefings I've had said "No". Your sick leave will be added on to your total time, but you have to be over 62 w/ 20 yrs service w/o the sick leave added on to get you there. You cannot use the sick leave to get you to 20.
@@joemama163 I am unable to find anything on the OPM pages to say yes.
But, for the Special Supplement, you have to have 30 years of actual service at MRA to receive it. So it makes sense that you would need actual 20 years at 62 to receive the 1.1%.