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Disability Retirement: 101

By Lucas Wapinsky

So people generally have concerns when applying for Disability Retirement. They can range anywhere from "how long will it take before receiving my benefit" to "what will my benefit amount be." Hopefully after reading this you will have a better understanding of what you are getting into when applying for Disability.

First we will start at the beginning. When debating if disability retirement is right for you there are a few things needed to know. How long it will take and what is the process. As far as how long it will take, that is going to vary a little bit on how cut and dry your case is. For most people I would recommend to expect it taking anywhere from 6 months to a year.

Now if you think that you would be able to wait that long then you are ready to start the process. The process is fairly simple but a little time consuming. In order to apply for your disability retirement you must first start with an application for social security disability. After the application is submitted to the social security office, then you are able to submit your application for disability retirement.

If you plan to continue to work while applying, you should expect your social security disability case to be rejected from the start because your income will be to high. If at anytime during the application process you separate from work, it might be advisable to reapply for social security disability because you may become eligible.

After you applications have been submitted then it is just a waiting game. Like I said before this can take up to a year to complete. For those out of work, there is a chance you can start receiving social security disabilities prior to your retirement benefits, which can help with the wait.

So now that you are waiting you need to know what you are waiting for. The calculations are fairly easy but something to know is your benefits will change during your retirement. First when you begin to receive your disability retirement income you will begin receiving 60% of your high-3 salary. After the first 12 months that will change to 40% of your high-3 salary. Then finally at age 62 your disability retirement income will change to a normal pension calculation of 1% of your high-3 salary for every year worked as well as every year on disability.

This income is also affected by your social security disability income. So if you never are approved for ssdi then above is what you recieve. If approved for ssdi then there is an offset of income based on what you receive from ssdi. The thing to remember is you will always receive the full amount of ssdi if approved and that your medical retirement income is what is being reduced. So for the first year while receiving 60% of your high-3 your benefit is reduced by the full amount of your ssdi. After that when your benefit is at 40% of your high-3 salary it will be reduced by 60% of your ssdi benefit. Then at 62 when disability retirement income will change to a normal pension calculation of 1% of your high-3 salary for every year worked as well as every year on disability, there will no longer be any other reductions.

Please remember to contact me if you ever have questions about this. There is a lot of information, and even more than what I can fit in this short post. If you are considering it, feel free to reach out for a free consultation, and I will let you know if it is something that could work for you based on financial well being and overall chances of approval.

Why You Should Never Burn Your Annual Leave

By John Mantia

FERS Annual Leave Strategy When Nearing Retirement

Annual Leave strategy is one of the most misunderstood aspects of planning for federal retirement, with proper strategization having a big quality of life impact. This blog post should set some things straight.

The unique aspect of Annual Leave, as compared to sick leave, is that is has a cash value. The government will pay you for your Annual Leave by multiplying your base hourly rate by the number of annual leave (NOTE: Annual leave check has a 33% tax withholding, most of which you get back when you file your taxes. ) hours you retire with. Because of this unique feature, you can "Double Dip".

The easiest way to show this is by way of example. Jack and Steve are two postal employees, with base salaries of $59,572, and 348 Annual Leave hours at the end of June. Jack wants to "burn" his Annual leave, while Steve elects to sell his back. Steve retires on 06/30, while Jack, “burns” his leave, delaying his retirement till the end of August. Below is a schedule of cash flows each received through the end of the year.


While on annual leave for 2 months, Jack collects four paychecks and earns a further 32 hours of annual leave which he sells back with his last paycheck when he retires at the end of August. Steve, having retired in June, not only gets the value of his annual leave as a lump sum (equivalent to four pay periods), but also collects a pension check in August, while Jack is still "working". This is the “Double Dip” which results in Steve not only retiring earlier, but also making $1,951 more than Jack. Effectively, Steve not only got paid for the extra two months, just like Jack, but also got to collect an extra pension check.

The interim period also comes into play because while OPM is finalizing his pension check Steve has a large pool of funds to help ease the pinch of not collecting a check for the month of July and for the reduced pension checks in the few months after retirement. In comparison, Jack’s annual leave check will be much smaller stretching his finances during the interim period.

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