Retirement planning is an exciting yet complex process, especially for federal employees under the Federal Employees Retirement System (FERS).
One of the most important decisions you’ll make is choosing the right retirement date, as it can impact your annuity payments, tax liability, and leave payout.
If you’re planning to retire in 2025, selecting the best date can help you maximize your benefits and ensure a smooth transition. This guide covers the top four retirement dates to consider, along with key strategies to optimize your FERS benefits.
Best Retirement Dates
The timing of your retirement matters because it affects when you receive your first annuity payment, how much annual leave payout you get, and your overall tax situation.
Key Retirement Dates & Benefits
| Retirement Date | First Annuity Payment | Advantages |
|---|---|---|
| May 31, 2025 | July 1, 2025 | Early summer transition, full leave credit |
| June 28, 2025 | August 1, 2025 | Mid-year retirement, ideal for tax planning |
| November 29, 2025 | January 1, 2026 | Year-end retirement, favorable tax strategy |
| December 31, 2025 | February 1, 2026 | Clean calendar-year retirement, easy tracking |
Each of these dates provides unique advantages based on tax implications, leave payout, and annuity start dates.
Why Your Retirement Date Matters
Choosing the right FERS retirement date impacts:
- Your first annuity check – Payments begin one month after your retirement date, so timing is crucial for budgeting.
- Your annual leave payout – Retiring at the right time can maximize your unused annual leave payout, giving you a bigger final paycheck.
- Tax planning opportunities – Some dates allow you to spread taxable income over multiple years, reducing tax liability.
- Ease of transition – Picking a date that aligns with the work calendar and payroll cycles helps ensure a smoother transition.
Top 4 FERS Retirement Dates in 2025
1. May 31, 2025 – Early Summer Retirement
- First Annuity Payment: July 1, 2025
- Why Consider This Date?
- Provides a smooth transition into retirement at the beginning of summer.
- You’ll receive full credit for your annual leave payout (calculated at the end of May).
- A good option if you want to enjoy the summer months in retirement.
Best for: Federal employees looking for a clean break before summer while ensuring early access to retirement funds.
2. June 28, 2025 – Mid-Year Retirement
- First Annuity Payment: August 1, 2025
- Why Consider This Date?
- Ideal for tax planning, as it allows you to spread taxable income over two years.
- Provides a balance between early retirement and finishing a solid portion of the work year.
- If you have accrued leave, it ensures a decent payout without waiting until year-end.
Best for: Federal employees who want to maximize tax savings and ensure a smooth transition into retirement before the fall.
3. November 29, 2025 – Year-End Retirement
- First Annuity Payment: January 1, 2026
- Why Consider This Date?
- Ensures full annual leave payout before the new year.
- Helps push taxable income into 2026, which may lower your overall tax burden.
- Provides extra time for financial planning before retirement begins.
Best for: Federal employees planning for tax efficiency and looking to maximize leave payout before the new year.
4. December 31, 2025 – Classic Year-End Retirement
- First Annuity Payment: February 1, 2026
- Why Consider This Date?
- Simple calendar alignment makes it easy to track financial milestones.
- Maximizes tax planning benefits, allowing you to structure income efficiently.
- Ensures seamless transition into the new year without overlapping tax years.
Best for: Those who prefer a clean financial transition while maximizing tax benefits and leave payout.
Maximizing Your FERS Retirement Benefits
To get the most out of your FERS retirement, consider these additional strategies:
1. Plan Your Annual Leave Payout
- Any unused annual leave is paid out as a lump sum at retirement.
- Retiring at the end of a pay period ensures you receive maximum leave compensation.
2. Consider Your FEHB (Health Insurance) Coverage
- You must be enrolled in FEHB for at least 5 years before retirement to continue coverage.
- Retiring on a strategic date helps ensure continuous coverage without gaps.
3. Optimize Your Thrift Savings Plan (TSP) Withdrawals
- The Thrift Savings Plan (TSP) functions like a 401(k) for federal employees.
- Consider whether to withdraw funds, roll them over, or leave them invested.
- Be aware of Required Minimum Distributions (RMDs) if you’re 72+.
4. Understand Your Social Security Benefits
- FERS retirees may also qualify for Social Security in addition to their pension.
- Your FERS annuity may affect your Social Security benefits (Windfall Elimination Provision).
- Plan when to start collecting Social Security based on your income needs.
How to Apply for FERS Retirement
The FERS retirement application process requires careful planning. Follow these steps:
- Check your eligibility – Confirm you meet the age and service requirements.
- Estimate your pension – Use the FERS retirement calculator on the SSA website.
- Submit Form SF 3107 – This is your official retirement application.
- Finalize health and life insurance – Decide on FEHB and FEGLI options.
- Prepare your TSP withdrawal plan – Determine if you need monthly withdrawals or a lump sum.
- Work with HR – Ensure all paperwork is completed at least 6 months before retirement.
Choosing the right retirement date under FERS is one of the most important decisions you’ll make. Whether you retire mid-year or at year-end, selecting the optimal date can help you maximize benefits, avoid financial pitfalls, and ensure a smooth transition.
By planning ahead and considering leave payouts, annuity timing, and tax implications, you can set yourself up for a successful and stress-free retirement.
