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Old 03-17-2015, 01:31 PM
 
Location: Idaho
4,619 posts, read 4,456,526 times
Reputation: 9033

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As most of you know, I'm getting close to retirement. Somewhere between a year and a half from now to two years from now. We have a matrix style of personnel management here at work. The project manager, who you interact with on a daily basis and 'manages' you in what you do day in and day out.

Then there is the line management. The people who make sure you fill out your timecard correctly and take care of other boring administrative things related to your employment. I only see or talk to my line manager a couple times a year.

Yesterday, I went up to tell my line manager that I'm done with office politics and don't care what pay increase they give me this year . . . to just not insult me, (he wanted to set up a meeting where I explain to him what I do - he already knows and it hasn't changed). We talked about my timing for retiring and he suggested that instead of not waiting for the turn of a new calender year so that 'big' check I'd get for unused vacation and a percentage of unused sick time would theoretically be taxed at a lower rate, that instead why don't I just take the vacation early, then come back for one week to close out my employment. (We max out at eight-weeks of vacation and lose anything over that.)

Hmmmm. Hadn't thought about doing that. That could mean that I'll retire in July next year, (after the Fourth of July holiday, of course, to get that 'free' day of pay); instead of January of February of 2017. I have a meeting with a no-fee financial planner at the end of next month and will definitely talk with him about this. I like the timing better, as concerning a cross-country move, but it means I have to get hot about getting my current house ready to sell.
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Old 03-17-2015, 02:53 PM
 
48,516 posts, read 83,880,155 times
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Your could be different; I retired effective jan1. That meant that any lump payout from vacation; sick time and others the check was paid in January the next year; first year retired. Either less other income year or easier managed as to income for tax purposes. They are required to take 20% withholding on lump sum payouts.
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Old 03-17-2015, 03:04 PM
 
2,429 posts, read 3,221,383 times
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1) You say you max out at 8 weeks vaca, and lose any accrued time over that. IS that what you would be using EIGHT weeks? (IF you have more than eight weeks accrued, you could use as much as you can and still leave eight weeks to be paid for)

2) Also, when you you really want to stop GOING TO WORK, going to the office, looking at people's faces, dealing with -- just having to be there?

3) The two options, technically have you on the books as an employee...until two different dates, right?
For example at my job, the second there's a new calendar year...you earn your vacation for that entire year. So in that case if you were to take eight weeks of vacation from November 2nd to Jan 2nd....since you're employed on Jan 1 and 2...you can let that time carry you over into a new year...have an effective retirement date of Jan 3rd....AND STILL get paid out the door for your new year's worth of 5 weeks vacation.

4) Does it work to your advantage to NOT retire until a certain date or milestone...like 30 years of service, or an employment anniversary date...that may earn you some benefit, higher pension, payment for earned days, etc?

5) How much OTHER accrued time could you be paid for?...And if you took the vacation before you retired (instead of a bigger check on the way out.....) what would you DO with that time....one last big trip, stay home and start downsizing, prepare for a move? or just take the time so it feels like you've already retired?

I guess it comes down to, which would you rather have the money or the time...and is there a way to get a little bit of both, if that's what you'd like.

6) Also, IF you retire in a new year, versus late in a current year, and get a big final check....you won't have to worry about that big check pushing your taxes higher, because you'll be retired and likely NOT earning as much -- so that big check, could be less lf a "tax" factor.
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Old 03-17-2015, 03:15 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,522 posts, read 39,903,732 times
Reputation: 23623
btdt... USE the vacation while at work:

1) You don't NEED to vacation when you are retired,
2) You are 'on the books longer' (earning vacation while you are on vacation)
3) You don't know what tomorrow might bring (you might need sick leave / medical leave BEFORE you retire)
4) once you are GONE... poof... you are GONE. there is some benefit to hanging around (medical ins for one).
5) consider the anniversary dates mentioned (in my case, when profit sharing was disbursed)

I have several friends who just 'disappeared-from work / were on vacation' 6-8 weeks prior to when they planned to retire. They never even bothered to come clean their desk or announce their retirement. They just LEFT the workplace and stayed home (traveled) while collecting their vacation. This saves a lot of time and money for the company (disruptive retirement dinner / party / cake / going away events / wasted watercooler talking....)

This was the right decision for me. No one except my boss knew I was leaving. (and they didn't know anytime too soon). I only had 32 yrs service, so was no big deal to leave. (Many people have 40+ yrs and work was 'their life'). Not so here... work is only a TOOL to enjoy life. (Though work was great and coworkers were even greater!)
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Old 03-17-2015, 04:03 PM
 
Location: Idaho
4,619 posts, read 4,456,526 times
Reputation: 9033
320 maximum accrual, computed continuously. For example, use a day now and it takes a couple weeks for it to 'recover' that 8 hours. I'm usually between 310 and 320 hours, so I take a couple Fridays off a month to keep from losing time.

Max sick time is 960 hours. When we leave, we get paid at our current per-hour wage for unused vacation and will only get 12% of current per-hour wage for unused sick time.

Anniversary date is Valentine's Day. No extra benefit by sticking around for any specific anniversary date, except for a 'gift' at each 5-year increment, (which I'm not sticking around for because they're crummy gifts and at our age, we've accumulated everything we want already).

My birthday is in mid-August, which would make my retirement day on a September 1st. Up until yesterday, my thinking is that I wanted to retire on September 1st next year, just after I turn 65. That will allow me to be on medicare, (and not have to deal with Obamacare stuff). I'll get a few hundred bucks a month from work to pay for a medicare supplement or a medigap policy. If I were to stay local, I could continue with my current medical provider, (Kaiser), and pay what I'm paying now, (not much). But, I'll be moving to a different state and will need a new medical provider.

Since I would retire on September 1st, and receive a substantial check for unused vacation and sick time, I might as well wait a few more months until the new year. We get a whole lot of vacation time in December, so I'd be able to be paid for that. And, that big check would be taxed at a lower rate, probably.

So, originally, I'd either retire at the beginning of September of 2016 or in January of 2017. By burning the vacation first, I'd 'check out' on July first of 2016, and come back the first week of September 2016 to clear out the desk.

If I were to do that, I would quit teaching (part-time evening job) at the end of this year and use the late winter/spring to sell the house. (I'll have a place to stay if the house sells quickly.) Then, for those two months of vacation in the summer, I'd go to my new state/location and purchase my retirement home. That would be good because I'd still be employed and be able to show a pretty good income. I want to delay social security for several years before drawing benefits.

So many options. I hope this no-fee financial adviser is worth his salt. I need some expert advice, and you guys put some stuff out there that I hadn't though of yet. Thanks.
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Old 03-17-2015, 04:04 PM
 
Location: Albuquerque NM
1,655 posts, read 1,521,066 times
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The advantage of taking vacation is you will probably accumulate a little more vacation leave and sick leave during those 8 weeks, maybe get paid for a holiday or two, will be able to fund your 401K a little longer and get any matching funds, and will add a couple of months to your pension time (you mentioned a pension in an earlier post). But you also need to look at how much money you lost in pension payments for those two months (and any additional taxes paid by working part of the year vs. taking a lump sum of vacation at beginning of year). Some managers will not allow employees to take this much vacation off at a time as they cannot spare your absence for that long. Also HR may not allow management to start the hiring process for your replacement until you actually retire so taking an extended vacation delays backfilling your position.
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Old 03-17-2015, 04:14 PM
 
Location: Idaho
4,619 posts, read 4,456,526 times
Reputation: 9033
Quote:
Originally Posted by ABQ2015 View Post
...Some managers will not allow employees to take this much vacation off at a time as they cannot spare your absence for that long. Also HR may not allow management to start the hiring process for your replacement until you actually retire so taking an extended vacation delays backfilling your position.
Not a problem here. My project manager said he wants me to train my replacement for a six-month time period, (satellite instrument operations). It will take awhile to teach someone about the instrument and how to command, control, and monitor it's health. If I leave in July of 2016, my manager said he wants to hire someone at the beginning of next January. (Wow! Less than a year away before I start training my replacement. It's happening sooner than I feel emotionally ready for. - Not a chance they'd cut me loose after my replacement is trained. This place isn't like that. They really do take care of their people.)

Several other people here have already done the extended vacation route prior to retirement. It's really a good place to work . . . I'm just ready to not have to wake up so early in the morning and drive so far every day.
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Old 03-17-2015, 05:00 PM
 
Location: Great State of Texas
86,093 posts, read 72,460,873 times
Reputation: 27565
LOL..I was so ready for retirement that I took a 1 year Leave of Absence and then came back for 2 months and took all accrued vacation, personal days, etc. and took care of paperwork for pension.

At some point you have to say you have enough money. Is that vacation money a make it or break it for you ?
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Old 03-17-2015, 07:04 PM
 
Location: Idaho
4,619 posts, read 4,456,526 times
Reputation: 9033
Quote:
Originally Posted by HappyTexan View Post
At some point you have to say you have enough money. Is that vacation money a make it or break it for you ?
Don't think it is a 'make or break' amount. It could support me for about least six months, longer if I'm careful. It, along with taking some funds from the 403(b) will allow me to delay receiving SS benefits.

Another thing I need to ask the adviser. Is it 'better' to delay SS and live off of 403(b) funds, or take a lesser amount of SS and try to preserve the 403(b) money? The way this uninformed, ignorant observer see it, is that it is a wash. That's why I need some professional help.

The biggest variable is how much equity I'll be able to walk away with after my current house sells. The market is looking better. Houses are selling, (however, not sure about a house in my price-range - mid to upper middle-class). I'm not upside-down because I've been paying a little extra every month on the principle for a bunch of years now.

Thanks for everyone's help. It is helping me to focus on things I haven't thought about or considered.
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Old 03-17-2015, 09:23 PM
 
526 posts, read 741,074 times
Reputation: 803
Quote:
Originally Posted by texdav View Post
Your could be different; I retired effective jan1. That meant that any lump payout from vacation; sick time and others the check was paid in January the next year; first year retired. Either less other income year or easier managed as to income for tax purposes. They are required to take 20% withholding on lump sum payouts.
I did the same; bonus was this $ increased my earnings thus increasing my pension
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