Discover the best date for federal employees to retire in 2025. Maximize your FERS or CSRS benefits as you plan your transition to retirement
The Best Dates for Federal Employees to Retire in 2025: A Guide
The best date to retire from federal service is typically considered December 31st, allowing employees to carry over the maximum amount of annual leave. The second-best time is at the end of a pay period that also ends the month, avoiding forfeiture of any accrued annual leave. With this is mind, here are the best dates to retire from the Federal Government for the remainder of 2024, plus 2025 and 2026 as well:
FERS: Best Dates to Strategically Retire from US Federal Government
| 2024 | 2025 | 2026 |
|---|---|---|
| November 30 | May 31 | May 31 |
| December 31 | October 31 | October 31 |
| December 31 | December 31 |
What are the Key Dates in the 2025 Calendar Year?
In 2025, several key dates stand out as optimal for federal employees to retire. These include May 31, October 31, and December 31. Retiring on December 31 allows employees to benefit from the full accumulation of annual leave from the previous year, which is converted into a lump-sum payout once federal retirees officially leave their post but are still awaiting OPM to approve their application. May 31 is another strategic date, as it aligns with the end of a pay period and provides a seamless transition into retirement. December 31 is traditionally a popular retirement date because it marks the end of the calendar year and the leave year.
Thinking about retiring soon? Try our free FERS Calculator Tool to estimate your retirement income!
What are the Best Dates to Retire from the Federal Government in 2025 for FERS Employees?
Choosing the right retirement date is important for federal employees because it can significantly affect their benefits. The timing of retirement can influence the calculation of annuities, the payout of unused annual leave, and the commencement of pension benefits. For instance, retiring at the end of a pay period or the last day of the month can ensure that employees receive full credit for their years of service and thus maximize their annuity.
What Role Does Annual Leave and Sick Leave Play?
Accrued annual leave is paid out in a lump sum upon retirement, providing a financial buffer during the transition. (And because the end of the year is a common time for feds to retire, it leads to an upsurge in OPM’s backlog of pending retirement claims. This means retiring at the end of the year will likely result in a longer processing time, making the need for a larger annual leave payout more necessary.) Retiring at the end of the leave year can maximize this payout, as employees can accrue the maximum allowable hours of annual leave, which is 240 hours carried over from previous year plus up to 248 accrued in retirement year. Sick leave, on the other hand, is converted into additional service credit, which can increase the annuity for both FERS and CSRS retirees. Therefore, managing leave balances strategically is crucial for maximizing one’s federal retirement.
Knowledge is Confidence!
Choosing a Retirement Date Can Impact Timing of Pension
The rules state that your pension will accrue on the first day of the month after the month of your retirement. Then, the first payment should be paid in the month after that. So, what is the optimal retirement date? It is the last day of the month.
Here’s an example. Let’s say an employee decided to retire on the last day of March, submitting their retirement application to OPM. The pension accrual starts on the first day of the following month, April 1st. Their first FERS payment date should be the month after, May 1st.
Everything sounds great and easy, right? Well, what if March 31 happens to be on a Wednesday, and this employee decides instead to retire on a Friday since it is the end of a pay period? Because they waited until April 2nd to retire, the pension accrual now begins on the first of the following month, May 1st. The first pension of their federal retirement paycheck will now be June 1st. They’ve delayed their FERS pension by a month!
Planning for Retirement Under FERS and CSRS: Maximize Your Benefits
The Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS) are two distinct retirement plans. FERS, established in 1987, is a three-legged system that includes a basic FERS pension, Social Security benefits, and the Thrift Savings Plan (TSP). CSRS, on the other hand, is a legacy system that provides a defined benefit pension. There is no Social Security component for CSRS and their participation in the TSP is limited. While CSRS offers a more generous pension, it does not include Social Security benefits or TSP contributions. One minor difference is that CSRS employees can retire between the last day of the month and the first three days of the next month with no impact on their annual leave accrual. Therefore, December 31 – January 3, 2025 are optimal dates for CSRS, just as only December 31 is for FERS.
Federal Retirement Benefits Experts Can Help You Plan for Retirement from Federal Service
Seeking advice from federal retirement experts can provide valuable insights and guidance for employees planning to retire. Employees can consult with financial advisors with experience in federal retirement planning, like here at PlanWell Financial. Additionally, attending our retirement seminars and workshops can provide opportunities to learn from experts and ask questions about specific concerns. By leveraging expert advice, employees can make informed decisions and optimize their retirement benefits. Sign up for a Free FERS Retirement Workshop.
What Strategies Can Be Used to Maximize Federal Employee Benefits?
To maximize their benefits, federal employees should focus on strategic planning and timing. This includes understanding the nuances of their retirement plan, including different factors such as years of service, high-3 salary, and leave balances. Employees should also consider the impact of life events, such as marriage or divorce, on their retirement plans and make necessary adjustments. Consulting with federal retirement experts here at PlanWell can also help employees navigate the complexities of federal retirement and make informed decisions.
Reach Out to Us!
If you have additional federal benefit questions, contact our team of CERTIFIED FINANCIAL PLANNER™ (CFP®) and Chartered Federal Employee Benefits Consultants (ChFEBC℠). At PlanWell, we are federal employee financial advisors with a focus on retirement planning. Learn more about our process designed for the career fed.
Preparing for federal retirement? Check out our scheduled federal retirement workshops. Sign up for our no-cost federal retirement webinars here! Make sure to plan ahead and reserve your seat for our FERS webinar, held every three weeks. Want to have PlanWell host a federal retirement seminar for your agency? Reach out, and we’ll collaborate with HR to arrange an on-site FERS seminar.
Want to fast-track your federal retirement plan? Skip the FERS webinar and start a one-on-one conversation with a ChFEBC today. You can schedule a one-on-one meeting here.
