Golden Retirement Dates in 2021, by Leslie “Kathy” Hollingsworth

Retiring on any of these days provides a golden opportunity for federal workers. The dates are:

  • January 30 (was a suitable date)
  • February 27 (was a suitable date)
  • July 31
  • December 31

The last date is quite popular amongst retirees, being the last day in 2021. Let’s examine why this date is so “magical.”

First, December 31 marks the end of all leave windows in the year. Retirees who do not take any of these leave days off, and have a previous balance of about 240 work hours or more from last year, will have over 440 hours of unused yearly leave in the total payment they are expecting. Retirees who retire before this “golden” day do not accrue as much unused yearly leave as those who take advantage of the date.

Second, payment will fall in 2022 and not 2021, since it takes about seven weeks after retirement for the FERS to process payment. This means retirees who take advantage of the golden date need not be bothered about tax on their payments in 2021.

Third, the lump sum calculation for unused leave will use the 2022 payment ratio. This is especially beneficial, as the ratio might increase in 2022. Another magical thing about the day in question is that it marks the end of 2021. Retirees can look forward to the following day after retirement. It will be both New Year’s Day and the beginning of their rest period.

For retirees aged 72 years or more, the system requires that they receive specific amounts (RMD) from the balance available on their TSP. You might want to factor this in before choosing to stop working, especially if you are close to age 72.

The reason for this is not far-fetched. If a federal worker who is 72 years of age or older retires on New Year’s Eve in 2021, the retiree will have to receive two RMDs in 2022. The first one will be for 2021 and the second for 2022, but as a result of the end of the year retirement, the retiree will receive and pay taxes on the two RMDS in 2022. If such a retiree opts to wait for just a month more, this can be averted.

For federal workers under the FERS or the CSRS schemes, the last days of the month are great days to retire.

You should note that the CSRS scheme starts counting retirement days immediately, only if a worker retires on day one, two, or three in a month. The case is different for workers under the FERS scheme. For participants under the CSRS scheme, here are some excellent retirement dates:

July 2 (because it marks the closure of the 13th leave period of 2021)

December 3 (because it marks the closure of the 24th leave period of 2021)

The first, second, and third days of the month are also great for federal employees under the CSRS scheme since retirement starts counting from the next day. Suppose these first three days fall on a weekend. In that case, employees who work only on weekdays will not receive their pay for that period. Their first payment after retirement will also take a small hit. For example, it is better to retire on October 1, 2021, since it falls on a Friday, instead of waiting until the next Sunday.

Federal employees under the postal service and some other agencies’ employees do not have the same leave periods. As such, a different set of rules apply. For retirement that occurs as a result of exceptional circumstances, such as a disability or deferred service, retirement will begin to count at a completely different period. For employees in the firefighting service, law enforcement agencies, and others, this date does not apply, as they have compulsory retirement dates.

For employees leaving service after putting in at least ten years of service and who are of the minimum retirement age, the FERS scheme allows them to defer the receipt of retirement benefits. Suppose such an employee does not defer payment receipt; in that case, the FERS will deduct retirement benefits every month until the retiree becomes 62 years old. To avoid the deduction, retirees can choose for their retirement to start counting at a later date.

Overall, the retirement date still lies in the hands of the retiree. Many factors, such as personal events, health reasons, and others, can influence the date of retirement.


Other leslie "kathy" hollingsworth Articles

Let’s Talk: Generational Habits and Conversations About Money and Retirement Planning. By: Kathy Hollingsworth

Three Strategies for Early Retirees to Reduce Health Insurance Expenses. By: Kathy Hollingsworth

TSP Finds that New Workers Are Investing More in Age-Appropriate Lifecycle Funds. By: Kathy Hollingsworth

Delaying Your Well-Deserved Retirement For Two More Years Might Be Worth It. By: Kathy Hollingsworth

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