Use It Or Lose It? Sick Leave & Annual Leave Explained
“Hi GPIS. I’m a postal employee with 28 years of service. I want to retire at some point within the next three years. I have a large balance of sick leave and annual leave built up. I’m not sure if I should try and use the leave or keep it until my retirement date. How will they affect my retirement numbers? Can you provide some guidance?” -Michael
Sick leave is a paid absence from duty. It can be used for things like personal medical needs, family care or bereavement, care of a family member or adoption related purposes.
It accrues at a rate of 4 hours each bi-weekly pay period for full-time employees.
There is no limit on how much sick leave can be accumulated.
How Sick Leave Affects Your Retirement Numbers
Your sick leave balance adds to your years of service in your annuity computation.
1 year of sick leave = 2087 hours.
The sick leave balance used for your annuity computation is based on the nearest month (it always rounds down to the nearest whole month increment.
*This is an important planning point.*
For example, if you had 336 hours of sick leave at the time of retirement, you would only be credited for one month, or 174 hours, and would lose the remaining balance (336-174 = 162 hours lost).
Below is a sick leave conversion chart based on the balance you have built at retirement.
Keeping with the same example, for an individual retiring at age 62 with a salary of $75,000, one year of extra sick leave would equal $825 more annually.
Our specialists work with you to determine a plan for maximizing your sick leave balances.
You can schedule a no-cost review here: https://gpis4u.org/free-analysis-review/
Make sure you don’t leave sick leave on the table at retirement.
Annual leave may be used to vacations, rest and relaxation, personal business, or emergencies.
The accrual rates below are from OPM’s website.
However, only a certain amount of annual leave may be carried over into a new leave year.
The current amount is 30 days or 240 hours for federal employees within the United States.
Any unused leave above this amount is forfeited at the end of the leave year.
How Annual Leave Affects Your Retirement Numbers
Your annual leave balance is paid out in your last paycheck from federal service.
For an approximate estimate, take your hourly salary multiplied by your annual leave balance.
For example: Michael has 220 annual leave hours and has an annual salary of $75,000.
75000 / 2080 = 36.06 * 220 = $7,932.69
Michael would receive an additional amount in his final paycheck equal to $7,932.69 less any federal and state taxes.
What It Means For You
Your annual leave balance can help bridge the gap before you receive your first, full FERS pension check.
Do you know how much leave time you have saved?
Do you have a plan for using it or maximizing it as you near retirement?
Our financial professionals can help you put together a plan.
“You Don’t Know What You Don’t Know” and having the information you need can help you plan ahead properly.
Contact a financial professional from GPIS today — it’s complimentary!
For additional information, you reach us by calling 866-201-7829 or by sending an e-mail to firstname.lastname@example.org.
-Sam Wiss, RICP
This material is intended for information purposes only. By responding to this offer, you may be contacted by a licensed insurance and financial professional regarding life insurance and/or annuity products. Not affiliated with, or endorsed by, the federal government or any government agency. Contact your tax advisor regarding your specific situation.
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