With 2014, retirement planners will see a number of their clients pick actual retirement dates in the New Year. For many the date will be tied to a work anniversary or perhaps a personal convenience but for some clients, selecting the date has definite benefits implications.
If your client is a federal or state government employee, specific retirement dates have particular significance. But just the fact that your client takes formal retirement next year will involve new regulations.
“2014 is an unusual year,” according to Ann Vanderslice, president of Ann Vanderslice Retirement Planning Strategies in Lakewood, CO. “As of Jan. 1, 2014, federal employees will fall under new regulations. They can collect all unused sick leave toward their compensation pay-out. In the past they could collect one-half.”
But that doesn’t mean your clients should submit their walking papers as soon as the clock strikes on January 1. For one thing, you can’t actually retire on a holiday. Secondly, the last pay period for 2013 actually ends on January 11, 2014. Your clients will want to skip that, Vanderslice said.
Still, 95% of her clients are federal employees or military personnel, and they are “right in the thick of it” when it comes to deciding which date to make the last day on the job, according to Vanderslice.
There are certain no-brainers when it comes to recommending dates to these clients, Vanderslice said. Among these are the leave periods that occur every two weeks through the year for most federal employees. If an employee picks the end of a leave period for retirement, they will earn full credit for the two weeks worked. If your client retires before the end of the leave period they will not earn the last leave accrued.
As to picking the last day of the month, Vanderslice said that strategy will entitle your client to full salary for that month and their first retirement check will be for the full following month.
Still, the most important factor in all of this , is when your client is personally ready to retire. “If a retiree doesn’t have a lot of unused leave built up, their best opportunity to retire is when they are eligible and ready to go,” she said.
Another retirement planner that serves many government employees and military personnel is Philip Maliniak, owner of Virginia Financial Planning. Maliniak said many of his clients traditionally target late spring and early summer for retirement, when they hit the anniversary of their employment.
But a new wrinkle has been added to the federal employee retirement strategy such as ongoing distrust in the government’s ability to avoid further financial crisis like the recent shutdown, Maliniak said.