Retire Smart: The Best and Worst Months to Leave Your Job

Why Timing Your Retirement Month REALLY Matters. When planning for retirement, most people focus on savings and investments, but the exact month you retire can have a significant impact on your finances and benefits. From taxes to healthcare, company perks to pensions, the timing of your exit can make a big difference. Here’s a general overview of why this matters and what to consider.

Final Payouts
Many employers provide a final payout upon retirement, such as severance, unused vacation pay, or other bonuses. While this can be a financial boost, the timing affects how much of it you keep. Tax Bracket Considerations: Retiring at the start of the year may lower your annual income and, in turn, your tax bill. Retiring later in the year could push you into a higher tax bracket.

Company Benefits
Some benefits accumulate over time, while others reset on a yearly or fiscal schedule. Examples include: Paid time off (PTO) payouts for unused vacation days. Annual perks like professional development stipends or wellness allowances.

Other Considerations
Healthcare planning is essential for retirees. Two factors to think about:
Coverage Transition: Will you need to bridge the gap until Medicare eligibility
Medical Expenses: Timing retirement near the end of the year might help if you’ve already met your deductible for healthcare costs.

401(k)
For defined contribution plans like 401(k)s, timing matters in several ways:
Employer Matches: Ensure you receive the last employer match for the year.
Vesting Schedules: Make sure you’re fully vested in any employer contributions before leaving.

Pension Plans
If you’re eligible for a pension, the years you’ve worked may affect your payout. Some plans give credit for an additional year if you work even one day into the new year, while others require more time. Understanding your plan’s rules can help you choose the right retirement date.

Restricted Stock
For employees with stock-based compensation, the timing of vesting can significantly affect your financial outlook. Knowing your company’s rules about vesting and payout eligibility is crucial, especially if these shares represent a large portion of your compensation.

Your retirement month isn’t just a random choice—it can influence taxes, benefits, and long-term finances. By aligning your retirement with company policies, financial goals, and personal health needs, you can start your next chapter on the best possible footing.

Be sure to consult with a financial advisor or HR representative to fully understand how timing affects your situation!

Chapters
00:00 Introduction
00:29 Taxes
01:10 Company Benefits
01:59 Healthcare
02:30 Defined Contribution Plan
03:20 Pensions
04:28 Restricted Stock

FREE Retirement Ready Checklist:

Important Links:

Follow Me on Instagram:

Geoff's Facebook Page

Federal Reserve Board Survey of Consumer Finances:

Social Security Administration Application for Benefits

Current Social Security Cost of Living Adjustment

Social Security Payment Estimator

THE CHANNEL’S MOST POPULAR VIDEOS

Should You Take Social Security at Age 62 and Invest it?

7 GOOD REASONS to File for Social Security Benefits at Age 62

Average Retirement Savings by Age 60. Are You Almost Ready to Retire?!?

The BEST AGE to File for Social Security Retirement Benefits

3 Social Security "Little Known Facts" That Are REALLY Important

Disclaimer: this video is for educational and entertainment purposes only and is not meant to be a substitute for legal, accounting, tax, or professional advice. If you have any specific questions about any legal, accounting, tax or other professional service matter you should consult the appropriate professional services provider.

[brianmurphy-jh]

Whenever I leave a company, I move it immediately to an IRA while using the new companies 401k. The thing I like about not keeping it in the 401k once you leave a company is in CONTROL. I like controlling what I can invest in, unlike the 401k where it’s ultimately picked for you.

[michaelkearney]

I worked for a company that had a pension. When I was getting ready to leave, I discovered that by taking a week’s vacation to extend my tenure with the company I locked in another six month block of employment. That helped with my eventual pension.

[ZhannaDavidova]

I converted my 401k to a Roth IRA to avoid higher taxes in the future. I'd rather pay taxes now than be stuck paying taxes on my retirement income when I'm 59 and living off my savings.

[ph]

Aw, man! You didn't mention the absolte worst month you retire - the one you pass away in! Arghhh. 😂

[bhall]

Company I'm retiring from has use it or lose it on vacation policy days don't carry over to next year, by retiring December 31st I get paid 16 days that are left.

[Sylvan_dB]

Social Security knows about 47 earning years for me. I only needed to work a few months in 2024 to replace a low year of the top 30. Time off left unused is not paid out. Health insurance continues until end of the month. Annual bonus is paid last check in March. Taking a few days off in the first quarter then leaving for good in early April worked for me. Since then 1/3 of the team I left behind was let go. Glad to out of the drama.

[schadlarry]

If you're salaried the worst month to quit is February...shortest amount of working days.

[crosslink]

I worked for a company that had a pension plan where the pension was accrued by fiscal quarters. I had to work until the 15th day of the last month to get credit for that quarter. The plan also had a cost of living adjustment that kicked in on November 1 after you had been retired for a full year. As a result I retired in late September to get the full quarter credit and that was before November 1 so I would be eligible for the COLA the following November. I should mention late September-October is great vacationing time in the southwestern USA; all the crowds are gone and the weather is great. 😎

[jbonifidelity]

My day is in January. I realized this month while signing up for healthcare that 1. The company makes an HSA contribution in the first week of February and 2. I have 8 weeks of vacation saved up. If I had planned for terminal vacation (I had but my projects are extended) then the company would pay for two more months of medical insurance and 401k contributions.
I’m leaving money on the table.

[globalretirementus]

This is a really helpful video! I’ve been thinking about retirement for a while now, and the timing is such an important factor. I’m curious, how do factors like taxes and the cost of living affect the decision on when to retire? Do those things change depending on the month or season? Would love to get more insight into that! Thanks for sharing this!

[frhyuhy]

I delayed my retirement, do to covid. My company had me working from home, and during covid, international travel was out, so I was stuck at home anyway. I left the day thay they said I had to return to the office. I did wait until my full retirement age to collect social security. My wife's benefits are based on mine.

[stingray]

I retired last January at 61 and they wanted me to stay a little longer to train someone. I got an extra month pay besides my regular pay, oh and a clock lol.

[jjwintrs]

In the large university system I retired from, they counseled to retire at the new fiscal year, July 1. Somehow, taking a one day break in service on the last working day in June, then retiring on July 1st, allowed for a passive COLA to kick in. Had there been any other date chosen, that COLA would not apply until the following July (!)

[youngtimer]

Disappointed that only financial concerns are addressed here. I retired June 1 because it’s the start of summer, better weather and the grandkids are off school.

[nco_gets_it]

luck had nothing to do with my pension plan. Planning on my part did. I even have my retirement date planned now even though it is 18 months from now.

[steventogami]

Great video and things to consider. For me, it was at 100% full normal retirement age, i.e., when I turned 66 + 4 months.

[lisaselby-brood]

None of this applies to me. Self-employed, no pension, no Benny's. I would like to see you do a video on the best time to pull Social Security. Not the years, we've listened to that ad nauseam. I mean the year you decide to pull, should you do it in January? Should you do it 3 months before your birthday, should you do it at the end of the year? does any of that make any difference, , ???

[rickclark]

We also have favorable catch up provisions for 457 and 401k particularly in November and December. So those are big months to retire

[dforrest]

My pension was adjusted up about $4, 500/year just before I retired due to changes in the retirement plan. I also had a window of about three months before the subsidized health care from the pension would have cost me $1, 700/year more. So I retired in that narrow window, somewhat due to planning and somewhat due to luck.

[tedjohnson]

My "Perfect Day for 2024" was the end of the Month, following the Month I turned 62. My Pension Multiplier because I stayed last that month came up a bit, giving me an additional $30 Monthly for life. The Vacation Leave Accrual put an additional $400 in my Final Check. The Sick Leave Accrual will boost my Pension Payout tiny bit. I'm waiting for the Sick Leave to Service Credit Adjustment to go through... It takes Four to Six Months, but $45 Monthly for life for NOT USING 700 Hours of Accumulated Sick Leave is worth it.