We developed GovRet to help calculate the FERS annuity, and of all the OPM rules the one that stood out is how sick leave is applied in retirement. I've accumulated over 900 hours in about 12 years of service so I should retire with at least 1500 hours. There are 251 working days in a year, and 8 hours per day shows we work 2087 hours a year. Great, so I can use those and retire about 9 months prior to my target date? Nope, not how it works!
Left over sick leave can't be applied to pad your total years of service prior to retirement, so if you're targeting your MRA at 57 or trying to maximize benefits at 62 you'll have to work until you meet that age for an immediate retirement. Okay, so it's like annual leave, and I'll get a fat lump sum payment of 9 months salary when I leave, which I can put towards my retirement celebration cruise to Aruba? Nope!
Sick leave can only be used to increase your total years of service after retirement. So if I retire with 30 years of service in 2039 the 1500 hours of sick leave will increase my total service years to 30.67. OPM gives you ~5.7 hours for each sick leave day, so a month extension on your total years of service is 174 hours, and a full year would be 2087.
- With a high 3 salary of $100,000 and no sick leave (High 3 x 1.1% x Total Years of Service) = $33,000 annuity per year
- With 1500 left over sick leave hours (High 3 x 1.1% x Total Years of Service) = $33,737.00 annuity per year
So by saving my sick leave and coming into work with migraines and squeezing doctor appointments into evening flex time for 30 years, I'm going to get an extra whopping $737 more a year. Not worth it! Life is much more enjoyable taking sick leave now and getting paid your hourly rate for those hours. With a $100,000 salary my hourly rate is roughly $50 so I get paid $400 for each sick leave day now for a total of about $75,000 in salary and the ability to take care of my health and I still retire on the same date.
Don't hoard your sick leave, thinking as my co-workers and I did that it will greatly enhance your retirement. Use it to take care of yourself now (if it's a valid need), because the financial benefit in retirement is minimal compared to the immediate value you get from using it during your career. Prioritize your health and well-being, and enjoy your well-earned benefits while you can!