Choose Your Retirement Date
6+ Months Before Retirement
Finding the best day to retire
Once you’re eligible to retire, you can select any date as your retirement date. Retirement begins the day after your last day on paid status with your participating employer, provided ACERA receives your retirement application before that date.
Since your retirement benefit allowance is calculated based on three factors—age, length of service, and final average salary—there are a few things to consider when selecting your effective retirement date.
Be Cognizant of Your Age Factor Percentage Dates
One of first thing to consider when choosing your retirement date is your age. You receive an incremental age factor adjustment, which slightly increases your benefit for each quarter of a year you age based on your birthdate, up to a maximum age for your tier. See the age factor page for an explanation of how these dates work.
When choosing your retirement date, if you haven’t yet reached the maximum age factor percentage for your tier as described on the age factor page, you’ll want to make sure you’re not choosing a day that’s right before one of the quarter year dates based on your birthday. For example, if your birthday is on January 15, your next quarter age is three months later on April 15, the quarter after that is three months later on July 15, and the next quarter is on October 15; so you wouldn’t want to retire on July 14 because you would miss the age factor percentage increase. Instead, you would want to work on July 15, and retire on July 16 so you get the next highest age factor, which increases your retirement allowance by about 1%.
Think About the Cost of Living Adjustment (COLA) Date of April 1
A second thing to consider is the timing of the plan’s annual cost-of-living adjustment (COLA). The annual COLA is effective on April 1 of each year, and you must retire on or before April 1 to be eligible to receive the annual cost of living increase for the year. If you retire after April 1, you’ll have to wait until next year’s COLA to get an increase.
Timing Your Retirement Date to Get the COLA
Many ACERA members retire each year on or right before April 1 to get the COLA for that year. March is our biggest retirement month because everyone is eyeing that immediate retirement allowance increase!
Typically we tell members that if they want to work right up until April 1, they should have their last day in active pay status be March 31, and their first day of retirement be April 1. If in a particular year (like 2019), March 31 isn’t on a day you normally work (it’s on Sunday in 2019), you’ll want to move your retirement date back a few days so that your last day in active pay status is a normal work day (it’s okay to be on leave on this day–that counts as active pay status), and then your retirement day is the next day. So if you work Monday-Friday, in 2019 you may want your last day of work to be Friday, March 29, and your first day of retirement to be Saturday, March 30.
Solving the Dilemma Between COLA and Age Factor Percentage Increase
If you plan to retire in the spring, sometimes there is a dilemma between the COLA increase and the Age Factor Percentage Increase. For example, if your birthday is on January 15, your next quarter age is three months later on April 15, so you may be deciding between retiring on April 16 to get the Age Factor Percentage increase (about 1%) and missing the COLA for that year, or retiring on or before April 1 to get the COLA for that year, but miss the next Age Factor Percentage increase on April 15.
To solve this dilemma, check our COLA page in early February when we know what the COLA is going to be for that year. If the COLA for that year for new retirees is going to be more than 1.5%, then it would be more advantageous for you to retire one or before April 1 to get the COLA, which will be a large increase than the roughly 1% you would get by achieving the next Age Factor Percentage.
Retire on the Next Day After Your Last Day in Active Pay Status to Avoid Deferred Retirement Status
Your last day of work (in active pay status) should be a day that’s a normal work day for you (it’s okay to be on leave on this day–that counts as active pay status). Your retirement day should be the next day after that. These means that you go straight from active ACERA membership into retired ACERA membership, and you avoid spending even one day in deferred ACERA membership, which would cause you to lose all your sick leave so it would not convert to service credit.
If you put in any work or earned leave hours on a day, you can’t retire that day; you would have to have your first day of retirement be the next day.
Retire on Any Day Besides July 1
For ACERA to calculate the maximum amount of vacation compensation that is includable in your Highest Average Monthly Salary calculation, you must retire on any day except for July 1. See our page on Limits on Vacation Pay in Your Highest Average Monthly Salary for more information.
Will You Have Enough Income to Retire?
Make sure you understand where your retirement income is going to come from after retirement to make sure it’s enough for you to live on. Get a precision estimate of your future ACERA retirement allowance with the retirement calculator in Web Member Services.