It looks like I will have an opportunity to take advantage of a special retirement program. It's an interesting transition program where I'll work 20 hours a month for 6 months, get paid full salary for that time and then retire. I was planning on going at the end of the year anyways, so this came at a very opportune time!
I have an option that I need to decide on now however - start the program June 1 and retire Dec. 1 this year, or start July 1 and retire Jan. 1, 2017.
For reasons I spelled out in my "Hi, I am..." post (longevity isn't likely to be in the cards for us), we're very likely taking a lump sum payout on my pension.
At least for my megacorp, 2016 is a special year. Previous years the lump sum was calculated (government formula) based on the previous year's October rates. Those retiring in 2017 will see lump sums calculated on August of the previous year. For 2016 the lump sum is the greater of October or August 2015. That means that I already know the lump sum for any retirement date this year (assuming the benefits site is doing it right), and I won't know for the Jan. 1 retirement date option what the lump sum will work out to be before I have to decide (this week!). There seems to be no way to make my retirement date Dec. 31 instead - I'm stuck with the two options.
The OMM (one more month) syndrome plays here as well. If I retire on Dec. 1 the lump sum payout will be over $17K (2.4%) less than the Jan 1. number - that is, if the Jan. 1 calculation is favorable.
I believe the lump sum calculation is based on the interest rates - higher rates mean lower payout. Since the fed raised interest rates in December 2015 already (which is after the August and October calculations), and they could bump again before the August adjustment, it seems there is risk waiting the extra month. Still, $17K is 25% of one year's retirement budget for us.
So will the current interest rate increases and the possibility of another rate increase wipe out that $17K anyways? I'm not sure how to calculate that. It isn't hard to think about working the one extra month - after all, it is December and between holidays and people scrambling to spend their vacation days, it's an easy month to w*rk.
I'm leaning toward the earlier timing, as it's a known factor (and I get out a month earlier). I'd just rather not leave money on the table if I can help it.
Any thoughts out there?