Retirement: Choosing your actual retirement date - Be careful

  • 25th Apr 2025
  • 3 min read

Full disclosure - I don't have firsthand knowledge of this topic, and you'd be wise to check on this information if it will apply to you.

Ray G. brought this situation to my attention. I thought it was important enough to share.

I retired on Sep 30th, 2024. My pension started Oct 1st, 2024. It took a month before I started receiving my pension, and I received a retroactive payment for Oct. I'm going to set up a FICTIONAL example to illustrate the problem Ray brought to my attention. For this example:

  1. I'm on the old pension plan.

  2. My pension started at $2,000 a month.

  3. I chose the 100% split pension option, which means my pension will be $2,000 per month for about 6 years, then drop to roughly $1,500 a month for the rest of my life. My wife will continue to receive $1,500 per month the rest of her life.

Note that people on the new pension plan, or in a hybrid situation, may operate under different rules.

One aspect of the pension situation we don't consider is what happens if the employee dies before they retire? If I had died before my retirement, I believe my wife would have received 50% of my pension, or $1,000 per month. She would have also received my company-based life insurance, so maybe the reduced pension wouldn't hurt her too badly - I don't know.

But let's assume I make it to retirement. If I decide to retire early in a month, like Oct 4th for example, here's the problem Ray revealed:

  1. My retirement and pension don't start until Nov 1st.

  2. My Corning-based life insurance ended on Oct 4th. This is important to understand. Health-care coverage would continue for Oct, but not life insurance.

  3. If I die between Oct 5th and Oct 31st, my spouse will only get 50% of my pension, and no life insurance.

So you could say you're in a more vulnerable situation when you retire early in a month, if you plan to split your pension for your spouse.

I'm sure there are readers who are saying to themselves, "that doesn't make any sense!" I did the same thing when Ray first started sending me notes about this. Ray was pretty persistent on this point, sent messages, and made phone calls. Initially the Corning retirement folks weren't sure, but did confirm to Ray that this situation does exist. According to Ray, they're updating some documentation about retirement to make this more clear.

I previously wrote about how I made my retirement date decision. I spent more time than I thought I would thinking about it. I didn't consider this situation at all. I'm glad I retired at the end of a month.