When you retire as a full-time fed, you’ll be paid for your unused annual leave and your annuity computation will be credited for your unused sick leave. Alternatively, you may strategically deplete your annual leave and sick leave (with medical justification) before you retire. Here are some little-known reasons why this option may appeal to you:

While using paid leave to strategically delay your retirement, you may contribute to your TSP. By doing so, you may increase the total number of TSP contributions deposited into your account before your contributions are halted at retirement. What’s more, because your salary will probably peak at the end of your career, those additional, final TSP contributions may be particularly large. By contrast, neither a leave payout nor an annuity credit will add to your TSP.

If you carry health insurance through the Federal Employees Health Benefits Program into retirement, your premiums will increase at retirement. But you may delay these premium increases by using paid leave to strategically delay retirement.

By strategically timing paid leave at the end of your career, you may increase your retirement annuity – both by extending your length of service and by raising your high-3 salary.

If you use paid leave to help extend your employment into a new calendar year, you will gain several benefits. These benefits include prolonging your eligibility for coverage in the Health Care FSA into the new year, and potentially increasing your Social Security retirement benefits.

While you’re on annual leave or sick leave, you’ll keep accruing annual leave and sick leave.

If you want to burn through paid leave before retirement, strategically plan whether to use it intermittently or continuously. Check regulations at opm.gov to ensure you adhere to requirements for using sick leave, FMLA leave and annual leave. Provide your supervisor with as much warning as possible for leave requests, and obtain a signed leave form before taking leave, if possible. Beware that your agency may require your presence in the office on your last day(s) before retirement for checkout procedures or other activities.

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