Retirement date dilemma

[CorMaGa34]

The agency I work for is under the NSPS pay system. Considering a retirement date of 31 Dec 07, If I get to sell all the annual leave (A/L) accrued by then, I may be able to receive approx over $9,000. That minus tax may be reduced to est. $6,000.

The NSPS final pay out may be around 19 Jan 08, efective date of new increase, plus awards/bonuses as a result of the 07 performance appraisal, which I know I would get should I stay in. (I have already been told I would not get any of it if I am not in the payroll then). If I retire 31 Jan 08, I also lose the ability to sell accrued A/L (unless an exception is made).

Should I stay until 31 Jan 08, I will be able to not only increase my SS and retirement monthly pension, but also I know I would receive a cash award, plus an increase in salary as a YA2 under NSPS. Likewise, this is the only year where we may receive equivalent to a COLA increase. Both increases in salary will weigh on my retirement+SS pension, and considering my age and health I think I could easily have 40+ yrs on this "plane of existence"

My question is: Does anyone agree/disagree in that I would be better off by staying in until 31 Jan 08??? All your opinions/comments would be most welcome and appreciated. I need convincing ideas that will help me make a decision, and time is of the essence. Thanks to all who may want to help me in this.

CorMaGa34

 

[tspgo_com]

The agency I work for is under the NSPS pay system. Considering a retirement date of 31 Dec 07, If I get to sell all the annual leave (A/L) accrued by then, I may be able to receive approx over $9,000. That minus tax may be reduced to est. $6,000.

The NSPS final pay out may be around 19 Jan 08, efective date of new increase, plus awards/bonuses as a result of the 07 performance appraisal, which I know I would get should I stay in. (I have already been told I would not get any of it if I am not in the payroll then). If I retire 31 Jan 08, I also lose the ability to sell accrued A/L (unless an exception is made).

Should I stay until 31 Jan 08, I will be able to not only increase my SS and retirement monthly pension, but also I know I would receive a cash award, plus an increase in salary as a YA2 under NSPS. Likewise, this is the only year where we may receive equivalent to a COLA increase. Both increases in salary will weigh on my retirement+SS pension, and considering my age and health I think I could easily have 40+ yrs on this "plane of existence"

My question is: Does anyone agree/disagree in that I would be better off by staying in until 31 Jan 08??? All your opinions/comments would be most welcome and appreciated. I need convincing ideas that will help me make a decision, and time is of the essence. Thanks to all who may want to help me in this.

CorMaGa34

Please read Nancy's article on Retirement Planning. Go to www.tspgo.com and click on the link "Retirement Plan". Scroll down the page. It's the second article on the page. I think it might help you on your decision.

Good luck!

 

[EW_ret]

I would not stay any longer than necessary, especially if you forfeit $9,000 payment in accrued annual leave. Getting a bonus, COLA, and pay increase does not exceed that lost benefit. The increase in federal annuity and social security benefits that the pay increase would bring is miniscule since its less than one month at increased pay. You say you would "lose the ability to sell accrued annual leave" if you stay until January 31, 2008. Does that mean you cannot cash in any annual leave, or you lose the carry over (> 240 hours)? Are you CSRS, or FERS?

 

[CorMaGa34]

Thanks for your reply: I am under FERS. I would have to forfeit the 208 hrs of USE OR LOOSE.

I guess the bottom line question was: would the benefit of staying until 31 Jan 08 would quantify $9,000 for the next 30/40 yrs of retirement if I received a cash award, plus a salary increase, and by how much $ would that increase affect my SS and ret pension retiring at a higher salary???

 

[CorMaGa34]

TSPGO,

Thanks for your reply. Read her article, I guess quantifying the benefit is the question. Losing over $9,000 vs. gaining a cash award, a salary increase that would increase both SS/Ret pensions???

 

[EW_ret]

I would compare the lost bonus with the lost payment in annual leave (208 hours). The effect of one pay period at the increased pay does very little to increase you FERS pension, and social security supplement. You would have to go through the numbers. The high-three year average salary takes the trialing 78 pay periods. The increased pay has 1/78 impact on high three average pay. The social security benefit would hardly change at all since it’s based upon the high 35 years of earnings.

Thanks for your reply: I am under FERS. I would have to forfeit the 208 hrs of USE OR LOOSE.

I guess the bottom line question was: would the benefit of staying until 31 Jan 08 would quantify $9,000 for the next 30/40 yrs of retirement if I received a cash award, plus a salary increase, and by how much $ would that increase affect my SS and ret pension retiring at a higher salary???

 

[Sunnyskies]

Since I retired as CSRS I don't have very much knowledge about FERS, but here's how I would approach the problem.

Make two columns -- one for a December retirement and one for the January retirement. Plug in the figures and make a comparison. I think there are various calcluators available that will help you figure out what your retirement would be with and without the raises you mention. Maybe another member can direct you to one. How much of the $9000 you will forfiet will be made up by your bonus -- that's going to be the biggest difference.

Your raise won't have a significant effect on your base for retirement. They way I look at it, there's no guarantee you'll live long enough to recoup the $9000. I'd leave at the end of the year and start enjoying life!!

 

[CorMaGa34]

Thank you Sunnyskies!

I will start the spreadsheet, and hopefully someone else can direct me to one so I don't have to reinvent the wheel. However, you and EW are making me think I better retire in Dec.

Thanks again for your input, and G L, Happy tradings!

CorMaGa34

 

[tspgo_com]

Thank you Sunnyskies!

I will start the spreadsheet, and hopefully someone else can direct me to one so I don't have to reinvent the wheel. However, you and EW are making me think I better retire in Dec.

Thanks again for your input, and G L, Happy tradings!

CorMaGa34

We are aware that every case is different. I have attached a document with estimates (I hope you can read them). One for retiring on 12/31/07 and the other for retiring on 3/31/08. In my case the difference in the annuity is $288.00/year.

Forfeiting $9000.00 would take me 31.25 years to break even. I would take the money now and run.

 

[CorMaGa34]

Tspgo,

I did not find the document attached. Your analysis sounds pretty good, I would like to see the spreadsheet. Is it in your tspgo.com site? I didn't find it there either.

Thanks so much for the advise, I really appreciate your taking the time to do this on a Saturday!!!

Gracias and happy trading!

CorMaGa34

 

[tspgo_com]

We are aware that every case is different. I have attached a document with estimates (I hope you can read them). One for retiring on 12/31/07 and the other for retiring on 3/31/08. In my case the difference in the annuity is $288.00/year.

Forfeiting $9000.00 would take me 31.25 years to break even. I would take the money now and run.

Sorry. The attachment did not work. It said it was to big.
Use this calculator (Use the FERS Annuity Calculator). It should give you similar results:

http://www.fedcalc.com/calculators.php

 

[CorMaGa34]

Tspgo,

Thanks so much! I did it and came up with 32 yrs to make up the "lost" use or loose!!

BTW I also like the new changes to your website, good improvements, keep it up!!! G L and happy tradings!!!

 

[Rustynutt]

Was about to ask the same question, but wasn't thinking of use or loose (never accumulated that!).
Where I'm at, it's very common to have use or loose extended into the next year. Guess it really depends on the relationship you have with your immediate management, at least that's the case where I'm at.

Without looking at the provided link, I’m thinking that going out after Dec 31st, (2012 for me) would be better tax wise as I’d have less income to report for the following year (assuming I have annual leave for a payout). AIRC, the first installment of pension comes one month after retirement, giving a bit of a withholding cushion for a lump sum such as a 200 hr A/L payment would be in January, tax wise.

I’m going back to the link to look over. Saving that much A/L could end up being a heck of a severance check