Should I Use My Sick Leave Before Retirement? Or Let it Increase my Pension?

ladies and gentlemen federal employees welcome back today we're talking about your sick leave and what happens to it if you have unused sick leave at retirement is it worth actually not using it to have it at retirement or should you just be using it before you retired that's the question we're answering today and we're going deep to make sure you have all the answers you need to be successful if you're new here welcome my name is Dallin Hawes I'm a financial planner who serves photo employees every single day to help you get the most out of your benefits and retire confidence that's my goal so let's dive in so as you might or might not know if you have unused leave at retirement you get some sort of benefit now the type of benefit depends on the type of leave for example if you have unused annual leave then they're going to cut you a check they're going to say hey for whatever time let's say you have two weeks worth of annual leave they're going to cut you a check as if you had worked those two weeks that's how annual leave works now today we're focusing on sick leave sickly so if you want more information about whether or not to use annually whatever it is go I've got other videos on annually this is focused on sickly today um but basically for us to make that decision on whether you should be keeping your sick leave right and actually letting it add into your retirement or just using it before we have to understand exactly how it works okay what do they do if you have unused sick leave out retirement it's very common to have a lot of sick leave come retirement so how does that work and this is in a nutshell how it works basically any unused sick leave at retirement let's say you have six months worth of sick leave then they're gonna add that six months into your years of service to calculate your pension so unused sick leave will go into increasing your pension basically that monthly check you get every single month once you retire from the federal government is going to be bigger because you had unused sick leave however the devil is in the details for example unused sick leave cannot make you eligible to retire it can only it can only increase your pension after you're already eligible okay for example as you know as federal employees you have to meet certain years and age requirements to retire and get a pension okay for example for traditional Firs employees you have to be at least 57 with 30 years of service okay that's one or if you're age 60 or above all you need is is 20 years or if you're age 62 or above all you need is five years of service and you're eligible to retire as a federal employee and get a pension okay now of course the rules are different for special provisions and that sort of thing okay but in general those are the rules for traditional first so like I said there are years of service requirements to be eligible to retire so your sick leave cannot be added in and they won't bump you up to be eligible to retire so for example let's say someone is 62 years old and they've got four and a half years of service okay 4.5 years of service if that's the case and they have 6 month worth of sick leave it will not bump them up to be eligible to retire because they first have to be eligible and once they are then their sick leave can come into play to bump them up and to increase their pension at that point so I wanted to make that clarification super super clear so you understand that sickly only can come into play once you're already eligible to retire with your full normal years of service okay but once once you are once you are then for example let's say you have 20 years of service you're age 60. so you're eligible to retire but if you then have six month worth of sick leave at retirement then that six months can be added in and your pension will be as if you had 20 years and six months worth of time that's how it works now let's do an example to show you how much this actually comes out to okay so if you want to know let's say you have two thousand hours or one thousand hours or 500 hours of sick leave in your coaching retirement how do you know how much time that's actually worth okay well if you just Google sick leave conversion chart one of the first hits is going to be the right chart okay basically it's a chart that shows you it has a chart with tons of numbers on it and you find your number that's closest to how many how many unused hours of sick leave you have and it'll tell you how many months and days that's worth in pension years okay in pension months right for example to have a full Year's worth you need about two thousand and eighty hours ish okay 2080 hours of unused sick leave to have a full year added back into your your pension for for the pension calculation okay if you have more than that then you'll get more if you have less you'll get less okay check out that chart if you want to figure out exactly what that means but let's show you an example of what your pension might do to see if this is worth it for you or not okay so again let's do in a quick example let's say you have 20 years of service you're age 60 so you're eligible to retire okay and if we just do a quick quick example of what your pension might be let's assume someone someone's high three is about 100 Grand okay so it means they're making about a hundred grand in the last three years of their career okay so they have 20 years we're going to multiply that by 100 Grand multiplied by one percent now if you're if you're not familiar with that formula that's the formula to calculate your pension as a traditional Furs employee if you want more information on that I've got other videos check those out okay but long story short so in this 20 years of service they got paid about a hundred grand the last three years of their career they're retired at 60 with 20 years of service then they would have a pension about twenty thousand dollars a year twenty thousand dollars a year 20 grand multiplied by 100 Grand multiplied by one percent comes out to 20 grand a year okay now let's say this person has a Year's worth of sick leave so about 2080 hours of unused sick leave at retirement and that get gets added in how much will that increase their pension right that's the big bucks right that's a full year of unused sickly what will that do and the answer is well let's just do the math right instead of 20 years let's assume they have now 21 right that added in to their pension calculation so 21 multiplied by a hundred grand multiplied by one percent you get 21 000. so over a year basis on an annual level their pension would be a thousand dollars more every single year so on a monthly basis we're talking about 83 83 on a monthly basis so for some people that's a lot for some people not so much okay so the purpose of this video is not to tell you whether to use your sickly while you're working or really save it and crimp it and and take it to the end I wanted to show you what it's going to do for you so you can make that decision for yourself because some people they're like look I like what am I doing I'm not going to take my sick leave while I'm working I don't really get sick I'm gonna take you to the end anyway I just want to know what it's going to do for me great do the rough math for you again Google sick leave conversion chart you can find how much time it's gonna be added to your pension great it's only going to benefit you but some people that's not the case some people do get sick fairly often maybe you got some surgeries coming up that you're trying to decide when to schedule and and maybe schedule before it depends how you want to structure it right it depends how you want to structure it because again sick leave added into your pinch can be helpful maybe it'll be the difference between you being comfortable and uncomfortable and retireable but maybe not for some people the increase that it has it is going to be very small and again the example I use with the numbers they had a full Year's worth of sick leave but they only saw an increase by 83 dollars every single month in their pension and that was gross and it might be a little less than that okay so I hope that helps I hope I hope it gives you some context over what these sort of decisions how it impacts your retirement now if you have any questions yourself about this or any other topic when it comes to your first benefits and retiring confidence there's a link below to submit those questions and you might be featured on a future episode so I hope that's helpful have an incredible rest your day I'll see you guys next time

Channel: Haws Federal Advisors

Views: 25,080

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Id: Ivbdef8COaA

Length: 8min 32sec (512 seconds)

Published: Fri Apr 21 2023