Best Retirement Period for More Annuity Payment for Federal Workers, by Flavio J. “Joe” Carreno

Retiring, just like every other thing, needs to be well-timed. The time you choose to retire might make a considerable difference in annuities, and we will prove that in this article. To show you just how much proper timing matters, it is essential to examine the differences between FERS and CSRS regarding retirement.

Retirement Rules for CSRS Workers 

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Under the scheme, workers are eligible to retire based on how old they are and the number of years they have put into service. A 62-year-old who has put in a minimum of five years, a 60-year-old who has worked for 20 years, and a 55-year-old who has worked for 30 years are all eligible to retire under the CSRS scheme.The rule under the scheme is that retirement only starts counting immediately if a worker leaves during the first three days in a month. To receive annuity payment in that same month, workers must choose days one, two, or three of a month. Failure to do that will make a worker defer their annuity payment until the following month and cause a daily reduction in the first annuity payment.For instance, a worker who leaves on the fourth day in a month will receive an annuity payment for only 26 days for that month.

Retirement Rules for FERS Workers

The retirement age and years of service under this scheme are similar to that of the CSRS scheme. The difference between the two plans in terms of retirement age and years of service is that, under the FERS scheme, workers can retire at age 55 after just ten years of work. This, however, comes with a clause. Workers who choose to retire at age 55 after ten years of service will have to bear a reduction of 5% annually until they are 60 years of age.Unlike the first scheme, workers under this scheme have to wait until the end of a month if they wish to receive their first annuity checks in the following month.  For example, a worker who retires on or before August 31 will be on the annuity payroll for September. But a worker who retires early in September will have to wait until October to receive payment.

What is the Best Time for Retirement?

Since we have covered each scheme’s basics, the question is, when exactly can you choose to leave? Workers under the two systems can decide to retire at any point in the month; no one will take that right from any worker. However, it is essential that you choose a date that will help you get the most of your annuity payment.For workers under the CSRS plan, it is best to retire before the fourth day in a new month. For workers under the other program, it is wise to choose to leave at the end of the month. It is also wise to consider retiring at the end of a payroll period so that the period’s sick and yearly leave days will count in the final calculation.
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Bio:
For over 30-years Flavio “Joe” Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants. We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.

Disclosure:
Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Although we make great efforts to ensure the accuracy of the information contained herein we cannot guarantee all information is correct. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC insured.