Retire in December or January?

[Kelor]

As far as health insurance is concerned, is there a better month to retire when it comes to year end planning?

Any other considerations as to why I should wait until Jan 3 instead of December?

Thanks!

 

[SheitlQueen]

I retired at the end of December because I was going to switch to an ACA policy in January and didn't want extra income counted for the new year.

 

[Aerides]

A lot will depend on your MC:

Do you get an HSA match/contribution from your MC each year (i did, in january)
Does your MC insurance cover thru the end of the month, or end on the last day of employment?
Are you going to cobra or go ACA?
etc.

 

[GrayHare]

January provides one final IRA contrib year, but unless you make Big Bucks you'll need to work past the 3rd of January to max out that year's contrib.

 

[Kelor]

Thanks for the IRA reminder. I likely will get a bonus, so won’t qualify for ACA. I’m guessing Cobra is my best option as it also let’s me keep my current plan - I would like to not rock the boat too much in year one. Am I thinking correctly?

 

[candrew]

Thanks for the IRA reminder. I likely will get a bonus, so won’t qualify for ACA. I’m guessing Cobra is my best option as it also let’s me keep my current plan - I would like to not rock the boat too much in year one. Am I thinking correctly?

Depending on your MAGI for next year, COBRA may or may not be your best option.

DW & I, with ACA subsidies qualified our 1st year of retirement for a CSR Silver plan @ $275/month. COBRA would've cost us over $800/month. Max OOP and deductibles were a bit higher with ACA but the premium cost difference more than made up for it. YMMV

 

[pb4uski]

As far as health insurance is concerned, is there a better month to retire when it comes to year end planning?

Any other considerations as to why I should wait until Jan 3 instead of December?

Thanks!

Thanks for the IRA reminder. I likely will get a bonus, so won’t qualify for ACA. I’m guessing Cobra is my best option as it also let’s me keep my current plan - I would like to not rock the boat too much in year one. Am I thinking correctly?

Check with your employer, but with many employers if you are an employee on the first of they month you qualify for employer subsidized health insurance for the whole month.

If you get a bonus or unused vacation or sick pay, you may be able to set your 401k withholdings to 100% so that income will not be taxable for ACA purposes (obviously depending on the amount being lower than the maximum allowed contribution for 2020).

 

[Souschef]

I retired in January, after the 7.5% profit sharing was put into my 401K.

 

[CardsFan]

As far as health insurance is concerned, is there a better month to retire when it comes to year end planning?

Any other considerations as to why I should wait until Jan 3 instead of December?

Thanks!

While my last day of actual work was in mid-December, I was able to move my retirement date to early February by using accumulated vacation. While they would have paid for the vacation days, the extra benefits were:

- 2 more months on the low cost company HI plan
- Company annual HSA contribution on the first work day of the year
- Personal HSA contribution for 2 months
- 401k contribution with match.

While the total value above is probably only $5k, the only cost to me was going in to work one day in February to turn in my computer and get a free lunch with co-workers.

 

[pb4uski]

^^^ I did the same thing... last day of work was the last day before the 2011 Christmas holidays but was on vacation until Feb 2012... answered the phone if it rang but that was about it.

Another benefit, I refinanced to get a lower mortgage interest rate in Jan 2012 and since I was on vacation and still on payroll the firm verified my employment the day before closing... lender never inquired about continued employment and I never told them.

Actually, in retrospect, I never submitted a resignation letter either.... but I did send out a nice good-bye email to colleagues the day before my last day.

 

[Senator]

By working until January 3, you get a holiday and another month's worth of vacation. In my case, I got 1.66 days of vacation by working one day.

Possibly you get paid for Jan 1, 2, 3, and a couple of days of vacation by working only one or two days. Plus any company match for healthcare and a policy that extends until 1/31.

 

[Bamaman]

Many companies' vacation days start over on January 1st. In my case, that'd be 5 more weeks--and staying on company healthcare that much longer.

 

[HI Bill]

I'm planning on giving notice after January 2nd, to ensure I'm employed on December 31, and therefore, receive the 401(k) matching contribution. But I'll probably stay on another month or so, just to fill in time before a one-month New Zealand trip!

 

[SecondCor521]

I retired in February but went on a sabbatical before that, so my last work day was some time in November.

While on sabbatical, I still accrued vacation days, kept my stock options, got to use the employee gym, and kept my employer health insurance.

I was also able to retire directly from my sabbatical, so I could (a) test drive FIRE for a few months, and (b) avoid any awkward-for-me going-away stuff.

I was due back in the office on a Monday. The Thursday two-plus weeks previous to that, I exercised all of my stock options. The day after I submitted my two week notice and sent a goodbye email to my colleagues.