Best Date to Retire

How this is calculated

Five separate rules attach money to a federal retirement date. They come from four different rulebooks, none of them refers to the others, and they do not point at the same day. This page applies each one to the dates you give it.

1. The commencing date, and the gap it can open

5 U.S.C. § 8464(a)(1)(A)(i) provides that a FERS annuity “commences on the first day of the month after … separation from the service”. There is no exception for separating early in a month, and the annuity is not backdated. So the days between your separation and the first of the next month carry no salary and no annuity:

separate 31 January  → annuity commences 1 February — no gap
separate 1 February  → annuity commences 1 March — 27 unpaid days

One extra day worked, twenty-seven days of pension forgone. Two further branches of the same subsection commence the annuity the day after separation whatever the date: § 8464(a)(1)(B) for a discontinued-service or involuntary retirement under § 8414(b)(1)(A), § 8464(a)(1)(C) for a disability retirement under § 8451, and § 8464(a)(2) for a separation at the expiration of a term. Choose the matching option in the tool and the gap disappears, because for those retirements it never existed.

2. The CSRS three-day rule, which FERS does not have

This is the rule most often repeated at retirement seminars and most often applied to the wrong system. 5 CFR 831.701(b)(3) commences a CSRS annuity the day after separation for an employee “retiring after serving 3days or less in the month of retirement”. A CSRS employee separating on 3 February is paid salary for three days and annuity from 4 February — both, in the same month.

It is worth being precise about where that rule lives, because it changes who it applies to. It is not in 5 U.S.C. § 8345(b), the CSRS commencing-date statute, which states only the first-of-next-month rule. It is not in § 8464 either, and nothing in 5 CFR part 842 mirrors it for FERS. It is a CSRS regulation, and a FERS employee who relies on it loses the rest of the month.

3. The first cost-of-living adjustment, in twelfths

5 U.S.C. § 8462(c)(1) makes the first adjustment “the product … of (A) one-twelfth of the applicable percent change … multiplied by (B) the number of months (not to exceed 12 months, counting any portion of a month as a month)” the annuity has been payable. Adjustments take effect on 1 December, so the count runs from your commencing month to the November before it:

annuity commences 1 January  → payable Jan–Nov — 11/12
annuity commences 1 July  → payable Jul–Nov — 5/12

The proration happens once. Its effect does not: every later adjustment is applied to the figure this one leaves behind, so a smaller first increase compounds against the annuitant for the rest of their life. The size of that effect over thirty years is what the FERS COLA calculator shows, and this page uses the same engine to compute the rate.

4. The pay period boundary

5 U.S.C. § 6303(a) accrues annual leave “for each full biweekly pay period” — half a day under three years of service, three-fourths of a day from three to fifteen, a full day at fifteen and over. Leave part-way through a pay period and that period’s accrual is never earned, and § 6307(a) treats sick leave the same way, at half a day per full period at every length of service.

Buried in the middle bracket of the same sentence is a rule almost nobody quotes: the accrual for “the last full biweekly pay period in the year is one and one-fourth days”. An employee with between three and fifteen years earns 10 hours for that final pay period rather than 6.

This page reports the accrual a date leaves behind but does not count it against the date, and the reason is worth stating. Finishing a pay period means working the rest of it, and those days pay roughly four times what the accrual is worth — a full period earns eighty paid hours to bank 6. Charging the forfeited accrual without also crediting the work would recommend leaving a week early to save six hours of leave, which is a losing trade.

5. The leave year ceiling, and the lump sum

5 U.S.C. § 6304(a) lets annual leave accumulate “until it totals not more than 30 days at the beginning of the first full biweekly pay period” of the following year; subsection (b) raises that to 45 days for certain posts outside the United States and subsection (f) to 90 days for the Senior Executive Service and senior-level positions. Anything above the ceiling is forfeited at that moment. Because § 5551(a) pays out the balance you actually hold, separating on or before the last day of the leave year cashes out the whole of it and separating afterwards does not.

The boundary is a pay period date rather than a calendar one. A leave year ends the day before the first full biweekly pay period of the next calendar year, so leave year 2026 runs to 9 January 2027 and leave year 2027 to 8 January 2028. This page derives both from a single anchored fourteen-day grid — OPM publishes leave year 2026 as beginning 11 January 2026 — which is also why the 26-pay-period and 27-pay-period leave years come out right without a table to maintain.

The lump sum itself is not simply hours times your hourly rate. § 5551(a) pays “the pay … the employee … would have received had he remained in the service until expiration of the period of the annual … leave”. 5 CFR 550.1204 projects that period forward over workdays and holidays from the day after you separate, and 5 CFR 550.1205 adjusts the payment “to reflect the increased rate on and after the effective date” of a statutory pay adjustment falling inside it. The annual raise takes effect on the first day of the first pay period beginning on or after 1 January — 10 January 2027for 2027 — so a December separation with a large balance is paid for part of it at next year’s salary.

Only part. Hours projected before the effective date are paid at the old rate, and this is where published summaries of the December advice tend to overstate the case: 240 hours is thirty workdays, of which perhaps six fall before the raise. Applying the raise to the whole balance overstates the gain by roughly a quarter.

What the ranking measures, and what it leaves out

Each date is scored on what the date costs, against a seamless transition: full pay to the last day worked, annuity from the day after, nothing forfeited, a whole first adjustment. The terms are the unpaid gap, leave forfeited to the ceiling, the raise caught in the lump sum, the part-month annuity a CSRS three-day separation collects, and the first-adjustment shortfall.

Salary is deliberately absent. Being paid for the days you work is the same rule on every date, so including it would rank the latest date in any range first, every time, and say nothing except that a federal salary is larger than a federal annuity. That is true and already known. What is worth seeing is the money that goes nowhere — and the tool reports the gross cash over a common window alongside, so you can weigh the two yourself.

What this does not model

• Agency pay period calendars that differ from the standard grid. The Postal Service is the named case, and some agency payroll providers differ by a pay period. A date within a few days of a boundary should be confirmed with your own payroll office.
• Locality pay changes and step increases falling inside the lump-sum projection. They raise the rate the same way a January raise does, under the same regulation, and the tool models only the annual adjustment.
• FEHB and FEGLI five-year continuity. To carry health and life insurance into retirement you generally need to have been continuously enrolled for the five years of service immediately before it. That is a date rule, and an important one, but it needs an enrolment history this form does not ask for.
• Tax. A lump-sum leave payment is wages in the year it is received, so a December separation and a January one can fall in different tax years — occasionally enough to reverse the ranking on this page. Nothing here models a marginal rate.
• The FERS annuity supplement and any survivor election, both of which change the annuity figure you enter rather than the choice of date.
• Restored leave, credit hours and compensatory time. Restored leave is scheduled under its own deadline in 5 CFR 630.308, and credit hours and compensatory time are paid out under different rules from annual leave.
• The interim-payment period. OPM pays a reduced interim annuity for the first few months while a claim is adjudicated. It delays cash, sometimes considerably, but it does not change the totals here.

Sources

• 5 U.S.C. § 8464 — commencement and termination of FERS annuities: the first-of-next-month rule at (a)(1)(A)(i), the day-after branches at (a)(1)(B) and (C), and the term-expiration case at (a)(2).
• 5 U.S.C. § 8345 — CSRS: the commencing date at (b)(1)(A), the involuntary and disability cases at (b)(2), and at (a) the rule that a monthly rate is rounded down to the next lowest dollar.
• 5 CFR 831.701 — effective dates of CSRS annuities, including the three-day rule at (b)(3). The only place that rule appears.
• 5 U.S.C. § 6303 and § 6307 — annual and sick leave accrual per full biweekly pay period, and the larger accrual for the last full pay period of the year.
• 5 U.S.C. § 6304 — the accumulation ceilings and the moment of forfeiture.
• 5 U.S.C. § 5551, 5 CFR 550.1204 and 5 CFR 550.1205 — the lump-sum leave payment: what it equals, how the period is projected, and how a pay adjustment inside it is applied.
• 5 U.S.C. § 8462 — the cost-of-living adjustment, and the twelfths proration at (c)(1) that makes the first one a fact about your retirement month.
• OPM — Federal Employee Leave Year Beginning and Ending Dates — the published leave year table this page’s pay period grid is checked against. Leave year 2026 begins 11 January 2026.

Last reviewed: August 2026