What Happens to My Sick & Annual Leave in Federal Retirement?


Ever wondered how your accrued sick and annual leave will be treated when you embark on the golden phase of federal retirement? For federal employees, understanding how your leave benefits will be treated can play a pivotal role in retirement planning.

The Basics of Federal Leave

Annual Leave

Federal employees accrue annual leave based on their years of service. This leave can be used for vacations, rest, and personal purposes. It rolls over from one year to the next, but there's a cap on the accumulation.

Sick Leave

Sick leave is meant for personal medical needs, care of a family member, or adoption purposes. Unlike annual leave, there's no cap on how much sick leave one can accumulate.

How Does Sick Leave Affect Federal Retirement? 

Conversion of Sick Leave into Retirement Service Credit  

When you retire, your unused sick leave can be converted into retirement service credit. Think of it as a bonus! For instance, if you've accrued 2087 hours (about a year) of unused sick leave, it can add a full year to your retirement service credit. This can impact your annuity computation, leading to a potentially higher retirement benefit.

The Rule You Must Understand About Unused Sick Leave 

Holding onto your sick leave and not misusing it can be a valuable retirement asset. The more you have, the higher your retirement annuity might be. Remember, every little bit adds up!

However, there’s an important rule to understand about how your sick leave is converted to retirement service credit. It’s only counted in 30-day blocks. For example, if you have 97 days of sick leave at retirement, only 90 of those days will convert to retirement service credit. 

If you have questions about how this works, we urge you to attend one of our live events where you can get clarification on this sometimes-confusing process. 

Look up the date and time of our next live event here…

How To Maximize Your Federal Retirement 

Annual Leave: Use It or Lose It?  

Cashing in Unused Annual Leave  

Federal employees can cash in their unused annual leave when they retire. This can result in a lump sum payment (usually on your last check). So, if you've got a considerable amount of annual leave saved up, expect a nice paycheck when you hang up your boots!

Limitations and Considerations

There are some caveats to keep in mind. There's a limit on how much annual leave you can carry over each year. Any leave beyond this gets forfeited. Plan wisely!

Tips to Optimize Your Leave Before Retirement  

Plan in Advance  

Like all things retirement, it's crucial to plan your leave usage in advance. Knowing the ins and outs of your leave policies can significantly benefit you in the long run.

Understand Your Leave Policies  

Policies can differ depending on your federal agency. Dive deep into your agency's guidelines to ensure you're not missing out on any benefits.

Benefits of Utilizing Your Leave Appropriately 

Improved Retirement Benefits  

Optimizing your leave can lead to enhanced retirement benefits. More unused sick leave can result in a higher annuity, and unused annual leave can be a handsome payout.

Enhanced Work-Life Balance  

Utilizing your leave wisely not only benefits your retirement but also your present. It can lead to a better work-life balance, ensuring you're at your best both at work and home.


Understanding the intricacies of federal retirement and sick leave can seem daunting. But with proper knowledge and planning, you can ensure you maximize the benefits due to you. As you approach retirement, remember to strike a balance between utilizing your leave for present needs and saving it for future benefits.

If you think you’d benefit from a complimentary training on how to maximize your federal retirement, we urge you to attend one of our live training sessions followed by a 30-minute Q&A. We’ll discuss…

  • Forms needed for retirement
  • Social security maximization
  • Estate Planning 101
  • FEHB (Health Insurance)
  • FERS/CSRS Pension
  • TSP Maximization

See Dates & Register For Our Next Live Event 

Common Questions About Annual & Sick Leave

Can I convert all of my unused sick leave into retirement service credit?  

Yes and no. All your accumulated sick leave within a 30-day block can be converted into retirement service credit.

Is there a cap on how much annual leave I can cash out at retirement?  

No, there's no cap on cashing out. However, there's a limit on how much you can carry over each year.

Do all federal agencies have the same leave policies?  

Not necessarily. It's essential to consult your specific agency's policies.

Can I use sick leave for any personal reason? 

Sick leave is primarily meant for personal medical needs, care of a family member, or adoption.

What happens if I exceed my annual leave carry-over limit?  

Any annual leave beyond the carry-over limit will be forfeited.

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