best day in year to pull the plug?

[albireo13]

Thinking of 2019 to retire from the large, and ponderous MegaCorp!
I will be 63/64 by then.

What day in the year do folks find best to retire?

My considerations:
1. give notice in May - profit sharing payout in April (don't want to miss that)
2. end of the year (Dec31) - accrue max vacation days which I would get compensated for and last gasp at 401K.
3. give notice in May: gives the whole summer to enjoy and relax
4. give notice just before Thanksgiving - use vacation days and just don't come back!
5. December is usually a stress time of year - the predictable annual EOY crisis over project schedules and faux-milestones ... whipping by management, working on weekends, ... "break out the cots!", mini-managers bubbling out of the woodwork brandishing spreadsheets and airs of self-importance.
Maybe I want to miss this. : )


Any other considerations I am missing? Hmm ... I get the feeling I am missing something.

 

[Honeyfill]

Just curious , how will you handle health insurance between May and the time you turn 65? Sounds like your 18 month cobra will work but its kind of expensive.

 

[growing_older]

My choice: take profit sharing in April and give notice in May. I'd also consider moving all 401k contributions in January to Roth, since it will be a somewhat lower income year. Summer is a nice time to start retirement and de-stress from worklife.

 

[RunningBum]

Getting a profit sharing or other bonus seems like a good priority if it's high enough. $500 bonus? Not worth it.

If you have a pension and it is based on # of years, it could be worth it to wait until your anniversary date, but probably not if it's based on # of months. 20 or 30 years can be a magic number to be sure to hit.

Maxing out a 401K match or even your own contribution can be good. I did something like a 50% deferral my last partial year to get this.

If you have stock options, vesting more of those is a consideration.

Vacation? For mine I got 5 or 6 hours per 2 weeks so it didn't matter when.

I would monetize all of these things and see if they are really worthwhile. A few hundred dollars extra (above the regular paycheck) is probably not worth an extra month, but a tens of thousands can be. It's all part of the trade off of padding your nestegg to make sure you don't have to return to work or make unwanted cutbacks if things go bad versus pulling the plug when it's time.

Time of year can be a good point for some too. If you love summer, or your partner is a teacher with summers off, getting out in May can be a great choice.

 

[scrabbler1]

I, too, had several competing times of year hen I was going to retire back in 2008. I wanted to make sure I took my annual bonus in early April. But working part-time actually simplified my choices because I had become ineligible for several fringe benefits such as 401k matching (I had stopped contributing months earlier) and the ESOP matching (I'd have gotten very little anyway), both of which occurred at the end of the year. Therefore, there was no real downside to leaving near the end of the year, so I left at the end of October.

 

[bingybear]

have your last day on the 1st of the month so you get that month's insurance covered. Also cobra may be less expensive than alternatives depending upon your specific situation.

 

[RobbieB]

I left on my birthday. Happy birthday to me!

Blew the year end bonus and the 401K profit sharing too!

 

[albireo13]

The annual bonus should run $5K-$10K depending on the year.

My annuity pension is frozen so, the monthly payout is the same if I quit today or quit 5 years from now.

 

[albireo13]

I turn 65 in January so I figure I can tolerate COBRA for 18months. A consideration though, thanks for pointing that out.

 

[scrabbler1]

have your last day on the 1st of the month so you get that month's insurance covered. Also cobra may be less expensive than alternatives depending upon your specific situation.

I didn't know about this when I pulled the plug. But I happened to do this so I got an extra month of coverage which was a pleasant surprise.

 

[ocean view]

April Fools Day was my last day. Everyone thought my ER announcement was a joke...the joke was on them!

But in all seriousness, I also did not give notice until my annual bonus was posted in my bank account. It posted shortly after lunch and I gave my notice before leaving that night. I did use my vacation time rather than getting paid out so as to stretch the number of months on the company's health plan. Remember, working one day in a month gets you coverage until the last day of that month. I also timed it during a lull in the calendar so no one would be left in a lurch during a busy time (I worked in Finance so projects were cyclical).

 

[Surewhitey]

The first time back in 2011, we drove off on Labor Day. Didn't plan it, but it made it easy to remember...

Our friends had "Whoa Mexico" playing in the garage as we were loading the car to go to our first "retirement" destination. Very memorable morning.

Been back in the w*rking world for 2 years now and contemplating "retirement 2.0"...a little more planning is going into this one...OMY if I have my way (or less)...

 

[Sanstar]

Last day was July 5. Waited until after end-of-year bonus and just before budget prep work began. Listened to my Last Day Playlist, and packed for celebratory trip when I got home. Left the next morning in my new truck (present to myself) to meet up with family at a spa/resort for long weekend.

Independence Day has an extra special meaning for me each year.

Unexpectedly, HR called a year later to let me know my pro-rated, end-of-retirement year, bonus check was in the mail! Apparently, if you leave to work somewhere else you aren't eligible, but if you retire, you are.

 

[Gumby]

The young wife and I have always planned to retire at the same time. She is a teacher, so that means waiting until the school year finishes at the end of June (most likely 2019, but could be 2018 if the market goes on a tear in the next 9 months).

 

[SecondCor521]

One thing I did which was a bit unusual was take a 12 week unpaid leave of absence and then gave my 2-week FIRE notice at the 10 week mark and never went back.

In my case, I had options that were vesting that I wanted to make sure to exercise, so I timed my 12 week period so my options vested right before the 10 week mark.

A couple of consequences of doing things this way:

* I continued to get company health insurance, access to the company gym, and vacation time accrual.
* I could do a mini test run of being FIRE and if things didn't look good for any reason I could go back to my job.
* I could avoid any awkward goodbyes or going away parties.

Another thing I did just because of my personality type is go to HR and make sure I was understanding all of the policies and stuff correctly. It would be unfortunate for a misunderstanding about, say, pension eligibility, to result in the loss of significant amounts of money. At first I tried to be cagey about why I was asking all of my detailed questions, but eventually I decided to trust the HR person and simply ask her to help me maximize all my benefits as I was leaving. She did so and as far as I know kept my confidences about the fact that I might not come back.

I'd echo what RunningBum said upthread. There are lots of benefits to try to optimize; some will be very important to pay attention to and the rest, not so much. Focus on the big ones and don't worry about the little ones since it's impossible to maximize every last one.

 

[ABQ2015]

I'd definitely want to avoid the December EOY madness. May would be my first choice for the OP followed by taking vacation days starting Thanksgiving, especially if you get paid for the holidays and continue to accrue annual leave during that time.

In my case I'm retiring at the end of this month to avoid my federal agency's EOY taskings, to enjoy the cooler fall weather, and to finally have the time to fully experience the holidays (e.g., baking, shopping, Christmas cards, holiday events). I dislike the hot southwest summer so was okay with working during that time.

Most of my married coworkers choose to retire at the end of the calendar year to maximize their vacation leave and to cash it out in the next tax year at a lower tax rate. I'm single and in the 25% tax bracket based on pension alone so there are few tax benefits to delaying the cash out. By retiring 9/30, I’m hitting the SS cap at the same time so will save 6.2% on my annual leave cash out.

 

[Blue Collar Guy]

What day in the year do folks find best to retire?

Any other considerations I am missing? Hmm ... I get the feeling I am missing something.

As usual I have a story. I worked with a guy who did an overtime tour on new years eve 2002, he wanted to maximize his retirement pay to the max. He retired on January 1st 2003. He went on a 2 week trip to some exotic Caribbean Island with his wife. He had to come to the precinct to collect his last few paychecks. The first check around January 23rd(?), we all ask him how is retirement, wow man you got a beautiful tan, etc. He was loving it. 2 weeks later around mid February he comes for his last paycheck and we ask again any retirement advice. He said yeah "Dont even think about retiring in the winter(he used very strong expletives to demonstrate his anger). You cant even go out on the front steps and smoke a damn cigar, I fell 3 times on the ice walking to the stores to keep busy." He was a great story teller, we were all howling. PS When it was time for me to say bye-bye, I left in May, i had 6 solid months to go for my decompression walks before winter set in.

 

[gamboolman]

31-Dec-19 is it for me.

Will actually depart Africa on 30-Dec-12 to arrive home on 31-Dec-19.

New Years Eve is planned for the Golden Nugget and will be gambooling....

 

[gamboolman]

31-Dec-19 is it for Ms. gamboolgal and I.

Will actually depart Africa on 30-Dec-12 to arrive home to Gods country, AKA Texas on 31-Dec-19.

New Years Eve is planned for the Golden Nugget and we'll be gambooling....

 

[38Chevy454]

I would go in May, after the bonus payment is received. Also for those first four months of the year, max out your 401k to reach the pre-tax max, then do Roth. Assuming you have some savings to live on from Jan 1 to May. Maximizes the savings and tax benefits. By May weather is getting nice and you can enjoy summer.

 

[SheitlQueen]

My considerations:
1. give notice in May - profit sharing payout in April (don't want to miss that)
2. end of the year (Dec31) - accrue max vacation days which I would get compensated for and last gasp at 401K.
3. give notice in May: gives the whole summer to enjoy and relax
4. give notice just before Thanksgiving - use vacation days and just don't come back!
5. December is usually a stress time of year - the predictable annual EOY crisis over project schedules and faux-milestones ... whipping by management, working on weekends, ... "break out the cots!", mini-managers bubbling out of the woodwork brandishing spreadsheets and airs of self-importance.
Maybe I want to miss this. : )

I would go for December 31, which is what I did. I like things neat and tidy, and it just seemed to fit my life style better than retiring in the middle of the year. I was self employed, so it allowed me to earn money to afford my insurance until January 1, when I went onto Obamacare. If I had quit earlier, insurance would have been expensive and I would have made too much for the year for Obamacare. You also get your profit sharing and max vacation payout and can deal with the 401K.

Basing it on having the summer off to relax and enjoy isn't important, because you are going to have the rest of your life to do that.

As far as December being stressful, knowing that you will be gone at the end of the month should make handling that stress pretty easy.

 

[euro]

I did let some stock options vest at end of Feb and then added an extra month to help out the boss with transition, so I pulled the cord in early April - still in time to enjoy the Spring Season on the back porch

 

[stepford]

It's possible to play all sorts of games with retirement to maximize one's payout, but it can be taken to a silly extent. Just for fun I planned ahead so my vacation and sick leave reached their maximum about a week before the Xmas holidays at the end of December 2015. My last day at work was sometime around December 18th, while my official retirement date was Dec. 31st - by which time vacation and sick leave balances had topped backed up to their maximum. This little game was only worth an extra couple of $K, but engineers like to optimize things and I couldn't resist.

A much more significant factor in the Dec 31st retirement was that I was able to maximize my pension (which froze on that very day), get grandfathered into the retiree medical plan (which was reduced for all retirements after that very day) while my severance and 2015 bonus were paid (and taxed) in the following year.

 

[mpeirce]

I depends on so many personal details.

For me I left in early February. It optimized a few details for me:

I could spread out the exercise of my stock options into another year - these were non qualified stock options (i.e. regular income to me) so some of the added income got pushed into the new year and I could fill up the lower brackets instead of the stock income all being taxed at the Max. For me this was the major consideration.

The company funded my HSA at the start of the year so I got full company funding for the HSA that year while only working 1 month.

The company traditionally had a "end of year shutdown period" which was basically extra vacation time I could get paid for.

The particular date work out nicely for vesting additional stock options and ESPP.

I put a bunch of the January income into the 401(k) plan.

Don't know if the details apply to you...

 

[mpeirce]

Just curious , how will you handle health insurance between May and the time you turn 65?

Wouldn't that be like any other "Early" retirement? I.e. you go out and purchase the health insurance that you need and cancel it when you don't.