David Fielder discusses retirement maximization strategies such as the FERS Flu.
I get asked about getting the FERS Flu be soon-to-be retirees at most retirement seminars. It’s a good question and if you call Shared Services and ask their opinion. However, if you aren’t retiring in the next three months, they will tell you to send a letter with your request. If you ask your manager whether you should use your sick leave before retirement, the chances are that you won’t get an with your best interests in mind. Here is the nitty-gritty on whether or not you should use your accumulated sick leave. You can make the choice for yourself.
Let’s look at what you get for your sick leave. Before January 2014, FERS employees were receiving credit for 50% of their sick leave. After January 2014, FERS employees started receiving full credit for sick leave. For example, if a postal employee had one year of accumulated sick leave then that would be added to the calculation of his pension. Please be aware, however, that sick leave cannot be used to meet service requirements. For example, if you have 29 years of service, one year of accumulated sick leave, and y
our minimum retirement age (MRA) is 30 years of service, you must work an additional year to reach your MRA. Once you fulfill your 30-year requirement, however, you will be paid for 31 years because your year of accumulated sick leave is factored into your pension.
The government standard for a full year of work is 2,087 hours. Let’s look at an example of what sick leave is worth. If you have an average salary of $56,000, then a full year of sick leave would add 1% more to your pension. To take it a step further, having the full year of sick leave would add $560/year to the employee’s pension. Now, what if you took two months of sick leave just before retirement, how would that affect your pension? If you take 160 hours of sick leave, then that may reduce your pension by as much as $42.88 a year. Keep in mind, as an employee in this example, you will get paid his full salary of $4,666 while on sick leave.
If the employee is retired for 30 years then he will have sacrificed $1,286.00 in pension payments during retirement ($42.88 x 30 years), however, he would receive $4,666 in income during his month of sick leave. Kind of a no-brainer huh?
David Fielder President
Postal Benefits Group
About David Fielder of Postal Benefits Group
The figures mentioned in the article are hypothetical and for illustrative purposes only. The formula and calculations have not been verified or reviewed for accuracy by PSRetirement.com or any of its affiliates. Please contact your financial professional with any questions. The opinions in this article do not necessarily represent those of PSRetirement.com.