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Something that I get asked about a lot is how do you use annual leave or sick leave when getting ready to retire. The answer to this question is simple but important for you to know. If you’re retiring and want to take time off, should you use annual leave or sick leave?

Most federal employees earn 13 days of annual leave each year if they have less than three years of service. They can earn 20 days if they have at least three years but less than 15 years of service, and they get 26 days if they have 15 or more years of service. If you’re a civil service employee, you can only be paid up to a maximum of four hundred forty hours of annual leave. If you are in a higher management position, you will be allowed to acquire a higher maximum of 560 hours. You would lose any earned annual leave over that maximum. The same is true for FERS employees.

Regardless of the length of service, employees earn 4 hours of sick leave each pay period. They don’t have to use it, and it will keep on accumulating, and they can reserve as much sick leave as they want. It’s not capped at a certain amount like the annual leave. Sick leave used to be “use it or lose it,” and you weren’t able to use that as any kind of compensation towards your retirement. Now sick leave will count towards retirement, but only the full 30 day lots will transfer over and count towards retirement. If you have 11 months and ten days of sick leave, those ten days will not count towards retirement. So, you need to use them because if you don’t use them, you will lose them and not get credited for them in any way.

When approaching retirement, you want to consider whether or not you should be using annual leave or sick leave to help maximize dollars in the household. You get paid for annual leave as a lump sum (minus taxes) in your last paycheck, or it will be deposited into your checking account up to 2-3 weeks after you retire. For sick leave it will only count towards years of service. This adds value to your pension check because adding towards your years of service will increase the amount of money you receive monthly for the rest of your life.

Due to the COVID-19 crisis, the APWU worked to negotiate different amounts of leave that you could carry over into 2021. For a maximum of five hundred twenty hours earned annual leave that you could carry over into 2021.

Determining whether you should choose sick leave vs. annual depends on your time horizon to retire and how much of each is accrued. When meeting with clients, I can calculate the annual leave and sick leave and let you know what to use and how to use it based on your individual numbers. If you are still unsure what the best choice is for you, call my office at (724)915-0005, and schedule a personalized financial review.


Galen Bargerstock



Registered Representative, offering securities through Encompass Investments, a division of Verity Investments, Inc. [Member FINRA, SIPC]. Government & Civil Employee Services, LLC (GCES) is not affiliated with Verity Investments, Inc.  Government & Civil Employee Services, LLC is not affiliated with or sponsored by any federal or state governmental agency.