Trends over the past decade tell us that around 100,000 federal employees retire every year. Before thousands of civil servants do so in 2024, they’ll have to take care of certain financial concerns, including exactly when they should stop working.
See: This Is the Minimum You Need Saved for Retirement in Every State Find: 3 Things You Must Do When Your Savings Reach $50,000
Deciding your employment end date is more complicated than simply picking a preferred date. While you should always retire when it meets your needs and interests, it makes sense to strategically retire when you can minimize the time between your last paycheck and your first annuity payment — and maximize your retirement benefit and payout for unused annual leave.
According to the Congressional Research Service, in 2022, 98% of civilian federal employees were enrolled in the Federal Employee Retirement System (FERS) of benefits, which covers employees hired since 1984. A further 2% were enrolled in the Civil Service Retirement System (CSRS), which covers those hired before 1984.
For those covered by FERS, your retirement date must be no later than the last day of the month in order to be on the annuity roll in the following month. Once you retire, your retirement date becomes the first of the following month. Your first FERS annuity check then will be sent to you on the first day of thefollowing monthafter retirement.
For example, if you’re in the enviable position of retiring at the end of the month — on Jan. 31 — your retirement date will be the next day, Feb. 1. Your first FERS annuity check would arrive on Mar. 1.
If you are enrolled in CSRS, you must retire no later than the third day of a month and be on the annuity roll in that month. However, your first month’s annuity would be reduced by 1/30th for every day you weren’t on the annuity roll.
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Common sense dictates that you should retire on the last day of the month to shorten the gap between getting paychecks and getting annuity payments. This could present a difference of between four-to-five weeks and seven-to-eight weeks, depending on the day of the month you set as your retirement date.
For example, Mar. 30, 2024, is a good date to retire, because it lands at the end of the week and the month. However, a better date is one that falls at the end of the month which also happens to be at the end of a pay period, so you won’t have to wait as long for your annuity and to make the most of your accrued annual or sick leave pay. There are only three such dates that fall on a Friday or Saturday in 2024: May 31, Jun. 29 and Nov. 30.
Here are the five best dates to retire in 2024.
5 Best Dates To Retire in 2024
1. Saturday, March 30, 2024:
Retirement date: April 1, 2024. Annuity payments begin: May 1, 2024.
2. Friday, May 31, 2024
Retirement date: June 1, 2024. Annuity payments begin: July 1, 2024.
3. Saturday, June 29, 2024
Retirement date: July 1, 2024. Annuity payments begin: August 1, 2024.
4. Saturday, November 30, 2024
Retirement date: December 1, 2024. Annuity payments begin: January 1, 2025.
5. Tuesday, December 31, 2024
Retirement date: January 1, 2024. Annuity payments begin: February 1, 2025.
At the risk of overloading the U.S. Office of Personnel Management, more federal employees retire on Dec. 31 than any other day of the year. Retiring at the end of the year makes sense for a lot of people, not only to start the new year freshly retired, but to ensure they get the highest lump-sum payment possible for their “use it or lose it” annual leave.
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This article originally appeared on GOBankingRates.com: 5 Best Dates To Retire in 2024
December is often selected as a favored month for retirement due to several reasons: Year-End Financial Planning: Retiring at the end of the year allows you to maximize your retirement contributions and take full advantage of any employer-matched funds for that year.
December is often selected as a favored month for retirement due to several reasons: Year-End Financial Planning: Retiring at the end of the year allows you to maximize your retirement contributions and take full advantage of any employer-matched funds for that year.
July 31. As a general rule, the end of the month is good for those with pensions, as those often start on the first day of the month after retirement. In this scenario, retiring on the 31st means that you won't have a gap in pay.
To maximize the retirement benefit, employees may decide to retire on their birthday or a subsequent birthday quarter to increase their benefit factor. If planning to retire at the beginning of a calendar year, consider the cost-of-living allowance (COLA) when choosing a retirement date.
You have a pension plan that provides an additional year of service credit on January 1, credits that are used to calculate the size of your pension payout. By waiting until the new year to retire, you might also receive a cost-of-living increase.
The current full retirement age is 67 years old for people attaining age 62 in 2024. (The age for Medicare eligibility remains at 65.) See Benefits By Year Of Birth for more information.
The traditional retiree feels a boost in happiness starting around age 57, or eight years earlier than age 65. Therefore, the 45-year-old retiree may start feeling a rebound in happiness perhaps starting as early as age 37.
As a result, your CPP benefits if you started payments in January would be 4.3 per cent higher than if you started it in December. (That's if you are 65 or over, otherwise the figure is 4.2 per cent.) A couple of numerical examples may help.
The normal retirement age is typically 65 or 66 for most people; this is when you can begin drawing your full Social Security retirement benefit. It could make sense to retire earlier or later, however, depending on your financial situation, needs and goals.
Bottom Line. With $100,000 you should budget for a retirement income of around $5,000 to $8,000 on top of Social Security, depending on how you have invested your money. Much more than this will likely cause you to run out of money within 25 – 30 years, which is potentially within the lifespan of the average retiree.
you'd want to retire at the end of a pay period in order to get credit for any hours of annual and sick leave you earned during those two weeks. If your greatest desire is to maximize your financial interests, you'd retire at the end of a pay period before the beginning of the new leave year.
According to the 4% rule, if you retire with $500,000 in assets, you should be able to withdraw $20,000 per year for 30 years or more. Moreover, investing this money in an annuity could provide a guaranteed annual income of $24,688 for those retiring at 55.
The 3% rule in retirement says you can withdraw 3% of your retirement savings a year and avoid running out of money. Historically, retirement planners recommended withdrawing 4% per year (the 4% rule). However, 3% is now considered a better target due to inflation, lower portfolio yields, and longer lifespans.
The 4% rule limits annual withdrawals from your retirement accounts to 4% of the total balance in your first year of retirement. That means if you retire with $1 million saved, you'd take out $40,000. According to the rule, this amount is safe enough that you won't risk running out of money during a 30-year retirement.
For calendar year plans with a 1-year stability period, 2024 lump sums for this participant are 6%-17% lower than 2023 lump sums. This is on top of an even larger drop in lump sum values between 2022 and 2023.
There's no single correct amount to save for retirement. For example, a $500,000 nest egg may be a good amount for some retirees, while others may need more, depending on where they live and how many dependents they have. If you want to figure out what size your nest egg should be, a retirement calculator can help.
Introduction: My name is Eusebia Nader, I am a encouraging, brainy, lively, nice, famous, healthy, clever person who loves writing and wants to share my knowledge and understanding with you.
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