For federal employees (FERS) and many structured pension plans, it is generally better to separate the day before your birthday to ensure your annuity begins on the following day. For Social Security, if you were born on the 1st of the month, the Social Security Administration (.gov) treats your birthday as if it were in the previous month.
Delaying your start date past full retirement age can increase monthly benefits. For example, choosing a start date after your birthday may yield higher payments. Carefully select the benefit start date on your application to optimize your monthly amount without losing eligibility.
For example, people born between 1943 and 1954 could retire with full Social Security benefits at age 66. Meanwhile, those born in 1955 could retire at age 66 and two months, and those born in 1956 could retire at age 66 and four months. Those born in or after 1960 can retire at age 67 to receive full benefits.
Your last day of service can be the day before your 55th birthday.
Dec 31 is optimal for retirement, leave, and taxes unless you for some reason expect a huge tax year the following year like if you're making a large tsp withdraw for a big purchase.
Retire at the End of the Month
If you work the entire month, your retirement will start the next day, at the beginning of the new month. So, for example, if you wait to retire on August 31st, you will receive your first monthly retirement benefit for the entire month of September.
December is also when annual bonuses are handed out, so retiring after your bonus is received allows you to leave with more savings. If your employer matches your 401(k) contributions, it may be better to retire in December to get the maximum matching you qualify for.
Other timing issues to consider
For example, you may choose to retire at the end of the month to eliminate any gaps between your last official paycheck and the start of your pension benefits, some of which are distributed at the beginning of the month.
The secrets to a happy retirement involve staying active physically, mentally, and spiritually. Happy retirees often engage in intellectual activities such as reading, learning new skills, or delving into creative ventures like painting or writing.
The $1,000 a month rule is a retirement guideline suggesting you need about $240,000 saved for every $1,000 per month in desired income, based on a 5% annual withdrawal rate (5% of $240k is $12k/year, or $1k/month). It's a simple way to set savings goals, but it doesn't account for inflation, taxes, or other income like Social Security, so it's best used as a starting point, not a complete plan.
Best Dates to Retire in 2025
Retiring on December 31 is always a good option and allows you to begin with a fresh start in the new year.
Even retiring at 55 or 57 means your pension may be smaller due to fewer contributions and less investment growth. Taking benefits early can also reduce what you receive – particularly in final salary schemes. There's also the risk of drawing down too quickly (taking money out of your pension).
Social Security considerations
But the increase in payments stops once you reach age 70, so if you turn 70 in the year you retire, you should wait until after your birthday to start receiving benefits. That helps reduce your taxes for that year and maximizes your payment, too.
For example, you can choose to retire January 1, January 15, January 29 or January 30 and your annuity would commence (i.e., start to accrue) February 1. This is typically why most employees covered by FERS opt to retire at or near the last day of the month, so they avoid a lapse in the accrual of income.
So, let's kind of dig in. So, the separation date is typically the last day that you're paid for employment, typically your last day in public service. But your retirement date is the first day of the month after you've separated and you've applied to retire.
You can start your retirement benefit at any point from age 62 up until age 70. Your benefit will be higher the longer you delay your start date. This adjustment is usually permanent. It sets the base for the benefits you'll get for the rest of your life.
Retirement Regret #1.
Retiring as soon as possible can be a priority, but retiring too early can be a big mistake. For one, premature retirement can mean gambling with your financial security in the future. If you leave work too early, you could be forfeiting some key, higher-earning years to build up your savings.
Moynes refers to as the 3 D's: depression, divorce, and cognitive decline. This period can be incredibly challenging as retirees struggle to find a new sense of purpose and direction without the familiar structure of their careers.