Should you burn that extra sick leave before retirement? I'm JT and this is All About FERS. Today, let's get into calculating your FERS pension and looking at that extra sick leave, and deciding if you should use that before retirement or not. First, let's look at the requirements for an immediate pension. That's your minimum retirement age, MRA, and 30, or age 60 with 20 years of service, or age 62 with just
five years of service. And the formula for calculating your pension is your high three we are highest three years of consecutive pay times a multiplier in this case we use 1% times your years of service. So how does sick leave factor into this? Your sick leave hours can be converted into months and days using OPM sick lead conversion chart. Now these months and days can be added to your years of service in that
formula to increase your potential pension. But one thing to know here is that your sick leave can't be used to qualify for a pension. So it can't be used to reach that MRA in 30. For example, if you had 29 years and six months of service, but you had six months of sick leave, that six months of sick lead can't be used to increase your years of service to qualify for that MRA and 30. It can only be used to just increase your benefit.
The other thing to note here is that OPM only deals in 30 day months, and in full month's extra days aren't used in adding to your pension. So for example, let's say you have 31 years and three months of creditable service and you have three months and 20 days of sick leave to put towards your pension calculation. That 20 days at the end isn't a full 30 days. It doesn't equal a full month so it can't be used to increase your pension amount. So one strategy we see all the time is to burn
those extra 20 days. And burn the extra days that don't contribute to your pension. And in some cases, this can be a great idea. Your sick leave is more valuable to you as a sick leave before retirement than in pension contribution. If you're actually sick, or if you have a surgery scheduled or something it's better to do that before retirement and use that extra sick leave. But it's important to know how burning that sick leave will affect your pension calculation, so that there's no
surprises in retirement. For your pension calculation, only 5.8 hours of sick leave are needed to consider a full day. That 5.8 hour day comes from OPM taking the number of work hours per year, just 2087 and dividing it by 360. For retirement purposes every month has 30 days., so the 5.8 hour work day comes from OPM taking the number of work hours per year is 2087 and dividing it by 360. For retirement purposes every month has 30 days. So, 30 days times 12 is 360.
So a mistake that we see many federal employees make is they want to burn the remaining sick leave and the previous example 20 days worth of sick leave. Well 20 days worth of sick leave in your pension calculation is 20 days only at 5.8 hours. So if you wanted to actually take 20 days of sick leave, that would
be eight hours of sick leave per day. So if you go back to that sick leave conversion chart with OPM, taking 20 days of sick leave would actually decrease your sick leave hours by 27 days of sick leave creditable hours towards your your pension calculation. So now if we go back to that sick leave conversion chart once we've used the 20 days, eight hours, it's actually 27 days that are deducted from that pension
calculation. So, remember before we had three months and 20 days of sick leave to be added to our creditable service, now we only have two months and 27 days of creditable service or of sick leave to be added to the creditable service. Now if we go back to that sick lead conversion chart, remember we had three months and 20 days of sick leave to be added to our creditable service. Well because we took those 20 days it actually decreased our sick leave for creditable service by
27 days. Now if we go back to the OPM conversion chart, remember that we had three months and 20 days of creditable service. If we burned the full 27 days, it'll actually cost us 27 days in real sick leave days, which reduce our our sick leave for creditable service by 27 days. So now if we go back to the sick leave conversion chart, now we only have two months and 27 days of sick leave to be added to our creditable service. And remember that OPM only uses 30 days months to be added to
creditable service. So those 27 days now don't count towards the creditable service. And we just have two months left over now to be added to the pension amount. So again, it's important to understand how this work so that there's no surprises. So if you So I know this can get a little complicated and we got into some want to burn those remaining sick days to maximize your
numbers here. It really needs to be considered on a case by case pension, and it's important not to burn the full, in this case, basis. If you'd like help looking at your unique situation 20 days leftover. It's important to leave some on the table and how this applies to you. Click the link below to go to our website to schedule a consultation with one of our because of that conversion, the 5.8 to eight hour conversion. federal employee benefits specialists. Until next time, happy planning