As military members approach separation or retirement from active service, there are some choices you have that will directly affect your financial situation. One is whether to sell accumulated leave when you finish service, or use the leave as terminal leave prior to your last duty day. The other is when and why to take advantage of permissive temporary duty days afforded in the service transition programs. I'm taking advantage of this new military and veterans group to share advice on these decisions you are not likely to get from your colleagues in uniform.
My advice here is based not just on 26 years in uniform, but also service during that time as a personnel officer and as a comptroller & financial management officer at both installation and major command level. I recently gave the basic advice here to @JoeB_IG in another thread, Passed CISSP - Now What? I am repeating and expanding it a in this new forum to gain wider awareness.
From the previous post:
"Unless you have your next job lined up and need to leave duty to start work before your actual retirement date, do not take terminal leave. Instead, use your pre-retirement permissive TAD/TDY in four day chunks to get more use of them. Then sell leave instead of using it, if possible.."
Here is the expanded explanation:
JoeB_IG said, "I could have upwards of 90 days of terminal leave. I live/work in a high-cost area, so it is to my economic advantage to enjoy my leave before I retire. If I sell back my leave, I don't get the associated (and very high) BAH. If I was in my home state of Kentucky, I might feel otherwise, but I am getting Silicon Valley BAH... it practically mirrors my base pay income. I can definitely use the PTDY as you suggest."
JoeB_IG parroted a bit of barracks wisdom that is flat out wrong. The advice to use rather than sell leave because of the monthly allowances misses a key point in the equation. This is why I want to explain the details. Yes, sold leave gets base pay, only, and using leave you get full pay plus allowances. However, If you sell leave at separation, you actually put MORE MONEY into your pocket. Here is how it works:
Let's say your separation (or retirement) date is December 31, 2020. You have 90 days of leave in September, 2020. For easy calculation let's say your base pay is $2000 / month and your allowances are $2000 / month.
If you go into 90 days terminal leave, October - December, at the end of 2020 your total received for 2020 will be one year of pay and allowances,
12 x $4000 = $48,000.
If, however, you use 30 days of leave in December and on retirement sell back 60 days (when I was in the max we could sell back was 60 days), your total income for 2020 will be one year of pay and allowances PLUS 60 days of base pay,
12 x $4000 + 2 x $2000 = $52,000.
$52,000 sure looks better to me than $48,000.
Therefore, you make a big bunch more money in your pocket by selling leave instead of using it.
Note, any leave you need to use instead of sell may be taken as either normal leave or terminal leave. If you can, take it as normal leave, even if it is in your last days of duty. Once you sign the terminal leave request you are locked in to that use and cannot change your mind. If you are on normal leave and see a need to report in for duty, you can cancel that leave and go back to the shop. If you will be moving to a new locale before your last official duty day, then taking terminal leave makes sense.
There are other factors to consider. You said you are in a high cost area; it may be worth losing some or all of that 60 days off base pay to get out of the area. Also, if you line up a new job and are allowed to start it while still on active duty (no conflict of interest), then it probably is better to begin the job in leave status, foregoing some of the base pay leave sale.
Detail on careful use of permissive temporary duty (PTDY/PTAD) for separation:
If you have 30 days of PTAD available, do not use them all in one big block. Instead, use the days in blocks of one to four days, with each block of PTDY abutting a duty day at one end.
Crafted carefully you can get 30 weekdays of permissive duty for transition. That is how you avoid using PTAD for weekends and holidays (same rule as leave across weekends). Also, you do not have to use those days for travel or house hunting. You can be doing anything related to preparing for your separation: job hunting, taking courses and exams (CISSP Class?) for new skills, packing and cleaning your home, or just decompressing and slowing down your life. When requesting the PTAD/PTDY days you do not have to explain exactly how you will spend the time.
Making these strategies work to your best advantage requires cooperation of your supervisor or leave-granting authority. Be upfront and tell them what you want to do and why. My boss was great. During my last month of duty I worked either Friday or Monday each week.
I did something similiar when I left the federal government and went to state government. The pay days did not line up (off by a week) and there would be a two week lag after starting the state job. I left in December so here is what I did.
In the federal government the pay raise takes place the first payday in the new year if it does not contain any of he previous year work (i.e. all of the workdays are in the new year). So I had 2 options:
1) Leave in the middle of a pay period causing me to get a short check. The Leave would be paid out in about 4 weeks after I left.
2) This is what I did- Take 3 weeks of leave and start the other job. This ensured I would get at least 2 more pay checks from the federal government. This eliminated both the possibility of a short check, and the pay lag in the state check (which would mean a two-week period with no-pay). It also meant that since I was still on the books and didn't officially leave until the new year, When my leave was paid out, it was paid out at the higher pay rate. This also provided me a fallback plan in case the new job was just too terrible or if I got fired (never know... I have heard some stories) I could return to my old job because I hadn't officially left yet.
I don't know if the military is like this (as far as the pay raises go) but thought I would share to help people maybe think of other options.