Decision guide · Reviewed September 5, 2026
Federal Retirement Leave Calculator: Use, Save, or Retire?
Unused sick leave and annual leave do different jobs at federal retirement. Sick leave can increase the service used to compute an immediate Federal Employees Retirement System (FERS) annuity, but it is not paid in cash or used to qualify for retirement. Annual leave is generally paid as a lump sum. Compare medical need, service-credit thresholds, cash timing, and possible retirement dates before deciding.
The short answer
Do not treat sick leave and annual leave as interchangeable. Preserve sick leave you may need for an eligible medical purpose; at retirement, qualifying unused sick leave can add annuity-computation service. Annual leave creates near-term cash instead. A different date may improve one result while worsening another, so compare the whole decision rather than maximizing one balance.
What happens to each type of leave at retirement?
| Decision input | Retirement treatment | Practical meaning |
|---|---|---|
| Unused sick leave | No cash payout | Can add service used to compute an immediate FERS annuity; it cannot create retirement eligibility. |
| Unused annual leave | Lump-sum payment | Paid by the separating agency for the projected leave period; it does not add pension service. |
| A different retirement date | Changes several inputs | May change earned leave, service length, pay assumptions, eligibility, and the timing of the annual-leave payment. |
What does unused sick leave pay at retirement?
The U.S. Office of Personnel Management (OPM) says unused sick leave is used in computing an employee’s or survivor’s immediate annuity; it is not a lump-sum payment. For a FERS annuity based on separation on or after January 1, 2014, OPM credits 100% of the qualifying balance. Sick leave cannot establish entitlement to retire or increase the high-3 average salary.
OPM’s conversion uses a 2,087-hour work year. Hours are converted into service months and days, then combined with other service for the annuity computation; odd days left after the final service conversion are dropped. That does not make partial hours “free to use.” Sick leave may only be used for an authorized purpose under applicable rules, and keeping a medical reserve may matter more than a pension threshold.
How is unused annual leave paid, and when can the money arrive?
OPM says an eligible employee who separates from federal service receives a lump-sum payment for unused annual leave. The payment generally equals the pay the employee would have received during the projected leave period, including applicable pay changes and holidays. The familiar 240-hour carryover ceiling is not a universal retirement-payout cap.
The separating agency—not OPM’s retirement adjudication office—processes the payment. OPM warns that leave audits can make payment take several months and recommends keeping the final leave and earnings statement and requesting the SF-1150 leave record.
Annual-leave cash is wage compensation and can have payroll withholding. Internal Revenue Service Publication 15 describes vacation pay and separately identified supplemental wages; withholding is not the same as your final tax liability. Confirm the expected payment year and treatment with your agency payroll office or tax professional.
Does a partial sick-leave month change the decision?
A balance near a conversion threshold can change the service credited in a simplified comparison, but the final OPM calculation combines sick-leave service with actual creditable service before dropping residual days. A standalone “174 hours equals one month” shortcut is useful for rough planning, not a final adjudication.
The right question is not “How many hours can I burn?” It is whether you have an authorized need for leave, enough medical reserve, and a retirement date that still works after eligibility, pay-period, annual-leave, and pension effects are considered.
What does a worked use, save, or wait comparison look like?
Illustrative example—not a recommendation
Assume an employee is already eligible for an immediate FERS annuity, has 1,044 sick-leave hours, 240 annual-leave hours, a $104,350 annual basic-pay assumption, and no medically necessary leave currently planned.
- Save sick leave: 1,044 hours is approximately six months on the OPM conversion scale, but OPM combines it with actual service before its final month/day treatment.
- Keep annual leave: $104,350 ÷ 2,087 is a simplified $50 hourly rate, making 240 hours roughly $12,000 before withholding. Actual agency calculations can include projected pay changes and holidays.
- Move the date: waiting could add earned service and leave, but it also means working longer and may shift the payment or tax year. A one-variable comparison cannot decide whether that tradeoff is worthwhile.
Who is this for, and what can this page not determine?
This is for
FERS employees comparing a projected immediate retirement, unused leave balances, and nearby retirement dates.
This is not for
Deciding whether a specific absence qualifies for sick leave, replacing agency payroll estimates, or providing medical, tax, legal, or benefits advice.
It cannot determine
Your final OPM service credit, retirement eligibility, exact annual-leave payment, withholding, best retirement date, or whether using leave is authorized. Your agency and OPM control the official records and determinations.
How do I run the leave-value what-if with my balances?
After you create a scenario, the existing Leave Optimization Center compares sick-leave credit, annual-leave cash, and nearby dates without replacing the official agency or OPM calculation. Use the federal retirement checklist to verify records and use-or-lose timing before relying on any scenario.
Build my leave-value scenarioWhich primary sources support this guide?
- OPM: unused sick leave in retirement
- OPM: lump-sum payments for annual leave
- OPM: FERS annuity computation
- IRS Publication 15: wage withholding
Last reviewed September 5, 2026. Verify current rules with your agency and the linked primary sources before acting.