What to do with accumulated sick leave?

[Ron Ronnerson]

I’m a public-school teacher in California in my 21st year. I'm married (wife is a stay-at-home parent) and we have one kid, age 10.

My employer offers 12 days of sick time per year which can also be used for reasons besides being sick. Unused days roll over to the following school year. I typically use about half the allotment so, after a couple of decades, have around 125 days of time available at this point.

I’m a tenured teacher with high seniority and excellent evaluations in a district facing a teacher shortage so the chances of a lay-off are low. However, my thought has been that having this accumulated time available would help provide an extra layer of security if I were to get sick/disabled.

I am turning 50 years old soon and, for the next 6 years, will be working full time (which is 185 days per year). After 6 years, I plan to glide toward retirement with a part-time schedule. I think that taking more time off than I have done in the past would perhaps be most beneficial while I’m working full time between ages 50 and 55. My job, while rewarding, is also tiring. I teach 5th grade and also commute for about 100 minutes per day.

The pension system I’m under (CalSTRS) allows for teachers to earn a full year’s worth of service credit toward retirement if they work at least 50% FTE (full-time equivalent) once the teacher is over age 55 and has at least 10 years of service credit. My employer offers this workload reduction program. My plan is to work part-time from 55 to 61 and then fully retire with about 33 years of service credit.

In current dollars, my pension at a retirement age of 61 would be 2.4% (age factor) x 33 (years of service credit that I should have by then) x $150k (highest one-year salary in current dollars) = $119k (annual member-only benefit). I plan to select my wife as a 100% beneficiary in case I predecease her so the pension benefit would be around $110k/year for making that selection.

The pension benefit has purchase-power protection (supplemental payments go out if the purchasing power decreases below a certain threshold, currently set at 85% of the initial benefit) along with 2% annual increases based on the initial benefit so these provisions act as a COLA-light, if you will.

Each sick day that I don’t use gets added as service credit toward my pension benefit. An unused day turns into an additional $1.50 per month (or $18/year) until both my wife and I pass away. The median life expectancy of a retired male teacher in California is 88 and I'm in good health right now. Assuming either my wife or I live for another 30 years after I retire, a day of sick time would pay out about $540.

A teacher at the top of the salary scale currently earns right around $800 per day in my district. So it would seem the rate of pay-out of sick time through the pension is not as good as taking the time off. Our income streams (my pension and wife’s social security) should be $140k/year in current dollars. Our expenses are currently below that number and we also have $2m in assets. So a slightly higher pension benefit would seem to do me less good than taking off more time in the present. However, taking time off when I don't really need to doesn’t sit great with me. At the same time, I’m an optimizer and don’t want to leave money on the table and this time is a form of money.

Thanks for taking the time to read this and for any suggestions about what you might do if you were in my shoes.

[retired@50]

My job, while rewarding, is also tiring. I teach 5th grade and also commute for about 100 minutes per day.

The 100 minute commute would be enough to make me call in sick.

I'd take the time off now, while you're certain to enjoy it. Who knows what things will look like in several years.

Regards,

[Ron Ronnerson]

My job, while rewarding, is also tiring. I teach 5th grade and also commute for about 100 minutes per day.

The 100 minute commute would be enough to make me call in sick.

I'd take the time off now, while you're certain to enjoy it. Who knows what things will look like in several years.

Regards,

Yes, it is long. When we purchased our home in 2010, the commute was about 30 minutes each way but has slowly increased over time. I'm unable to move for a variety of reasons. A teacher's hours help, though, as I leave for work around 7 am and am back home by 4 pm.

[retired@50]

My job, while rewarding, is also tiring. I teach 5th grade and also commute for about 100 minutes per day.

The 100 minute commute would be enough to make me call in sick.

I'd take the time off now, while you're certain to enjoy it. Who knows what things will look like in several years.

Regards,

Yes, it is long. When we purchased our home in 2010, the commute was about 30 minutes each way but has slowly increased over time. I'm unable to move for a variety of reasons. A teacher's hours help, though, as I leave for work around 7 am and am back home by 4 pm.

I'd start scheduling some long weekends in wine country, or whatever it is that gives you happiness in your time off.

Regards,

[123]

We only have so many days in our lives, we don't know how many are left, and all the money in the world won't get you any more. I would work the numbers for retiring ASAP and maybe another set for retiring midway toward your present goal and put on your thinking cap about what's important to you. Continued good health of you and your spouse is always something to be grateful for but subject to change at any time.

We've got family friends who retired early (by conventional standards), they have never complained about it. A couple of them were California teachers under CalSTRS, they're sitting very pretty.

[Ron Ronnerson]

We only have so many days in our lives, we don't know how many are left, and all the money in the world won't get you any more. I would work the numbers for retiring ASAP and maybe another set for retiring midway toward your present goal and put on your thinking cap about what's important to you. Continued good health of you and your spouse is always something to be grateful for but subject to change at any time.

We've got family friends who retired early (by conventional standards), they have never complained about it. A couple of them were California teachers under CalSTRS, they're sitting very pretty.

I've run the numbers and a retirement age of 59-61 makes the most sense to me. I'm thinking that I may just work at 50-60% FTE for the last 2-3 years before retiring fully. The earliest possible retirement is at 55 but my pension would be reduced dramatically (to $50k/year). Anyway, I do still enjoy my job. The commute isn't fun but I think working part-time would be fantastic. In the meantime, I'm trying to figure out how to proceed with the sick time I've accumulated as it keeps going up every year and the pay-out through the pension for sick time isn't so great.

[Oldaroo3]

My job, while rewarding, is also tiring. I teach 5th grade and also commute for about 100 minutes per day.

The 100 minute commute would be enough to make me call in sick.

I'd take the time off now, while you're certain to enjoy it. Who knows what things will look like in several years.

Regards,

Yes, it is long. When we purchased our home in 2010, the commute was about 30 minutes each way but has slowly increased over time. I'm unable to move for a variety of reasons. A teacher's hours help, though, as I leave for work around 7 am and am back home by 4 pm.

I'd start scheduling some long weekends in wine country, or whatever it is that gives you happiness in your time off.

Regards,

Long weekends are great. Consider a day off mid-week as well. It's amazing how a Wednesday "sick day" can get you though some of those long five-day weeks.
Take some time off now and then. It will help you get through the remainder of your career.
Good luck!

[biker2035]

I had 7 weeks that could only be used for sick time, not paid out if you left the company. Crashed on my bike and used it all. Fortunate that I had it.

[CoAndy]

How about using your time off to extend 3-day holiday weekends to 4 days? This would mean you would have taken today off, for example.

[SmileyFace]

Why do they call it sick time if you can use it for other purposes?

[Kenkat]

Do you have the option to be paid out for your sick time at the time you retire? This is a common option although I don’t know if it is allowed in your situation. Basically the idea is that your sick time payout funds the first year or whatever of your retirement.

[jayars35]

If my pension was going to be $100,000+, I would be inclined to take the sick time off now, or at least some of it. I retired from teaching in 2015 with 28 years of service and my pension is ~$25,000/year with no colas. I saved as much sick time as I could to boost my pension as much as possible.

[Hot Sauce]

It sounds like you are trying to re-brand your sick time as all-purpose PTO.

[Hot Sauce]

Consider yourself lucky that you have any ability to rollover or cashout unused vacation, sick, or PTO.

My employer, in their infinite greasiness, decided to lump it all into PTO for the sole purpose of preventing any cashout or rollover. Here is their “logic”: vacation would be an earned benefit, but since PTO isn’t just vacation, it’s an undetermined mix of vacation and sick, and sick is considered a form of insurance and not an earned benefit, then all PTO is ineligible for cashout.


They hired an attorney specifically to force this manure onto us employees. Maybe they should take some sick time to heal their brains.

[SmileyFace]

Consider yourself lucky that you have any ability to rollover or cashout unused vacation, sick, or PTO.

My employer, in their infinite greasiness, decided to lump it all into PTO for the sole purpose of preventing any cashout or rollover. Here is their “logic”: vacation would be an earned benefit, but since PTO isn’t just vacation, it’s an undetermined mix of vacation and sick, and sick is considered a form of insurance and not an earned benefit, then all PTO is ineligible for cashout.


They hired an attorney specifically to force this manure onto us employees. Maybe they should take some sick time to heal their brains.

It may not just be about not wanting to pay you.
Many companies are now doing this so they don't have to carry the liability on the books. PTO that is eligible for payout for publically traded companies has to be deducted against EBITDA while PTO that is not - does not. Many companies have gotten rid of any accrued time and just say it is "unlimited" - when that is the case- on average - employees use even less time off (and the company has no liability being carried on the books).

[Hot Sauce]

Consider yourself lucky that you have any ability to rollover or cashout unused vacation, sick, or PTO.

My employer, in their infinite greasiness, decided to lump it all into PTO for the sole purpose of preventing any cashout or rollover. Here is their “logic”: vacation would be an earned benefit, but since PTO isn’t just vacation, it’s an undetermined mix of vacation and sick, and sick is considered a form of insurance and not an earned benefit, then all PTO is ineligible for cashout.


They hired an attorney specifically to force this manure onto us employees. Maybe they should take some sick time to heal their brains.

It may not just be about not wanting to pay you.
Many companies are now doing this so they don't have to carry the liability on the books. PTO that is eligible for payout for publically traded companies has to be deducted against EBITDA while PTO that is not - does not. Many companies have gotten rid of any accrued time and just say it is "unlimited" - when that is the case- on average - employees use even less time off (and the company has no liability being carried on the books).

My company of 10 people does it to avoid paying us. They also make it hard to use the PTO and enforce a strict use it or lose it rule. It’s an illusory benefit.

[Ron Ronnerson]

Thanks for the feedback, everyone. I think taking some long weekends and sprinkling in some days off mid-week from time to time might be a good plan. I don’t intend to go too crazy with it but don’t want to keep accumulating more time which, in the end, would be paid out through the pension at an unfavorable rate. I will still hold on to a good chunk of the accumulated time in case of an emergency.

[Ron Ronnerson]

It sounds like you are trying to re-brand your sick time as all-purpose PTO.

On the official form there is something called “special use of sick leave” and allows the employee to take time off for personal needs. I can use up to 9 days per year that way (I have been averaging about half this amount over the past 20 years). Then there is sick time which carries over from year to year. If I am not feeling great (have a headache or something like that), I have tended to go into work while some other employees might call in sick. It’s not as if a doctor’s note is required or someone assesses whether an individual is well enough to go into work.

Anyway, it’s a little wordy to explain all that but I wasn’t trying to intentionally change the terminology or break any rules.

[Ron Ronnerson]

If my pension was going to be $100,000+, I would be inclined to take the sick time off now, or at least some of it. I retired from teaching in 2015 with 28 years of service and my pension is ~$25,000/year with no colas. I saved as much sick time as I could to boost my pension as much as possible.

Makes sense. In my situation, the pension can be boosted significantly based on the age of retirement but additional service credit that I might be able to get by applying unused sick time doesn’t impact the pension benefit very much at all.

[Ron Ronnerson]

Do you have the option to be paid out for your sick time at the time you retire? This is a common option although I don’t know if it is allowed in your situation. Basically the idea is that your sick time payout funds the first year or whatever of your retirement.

No. If it were possible to do this, I’d try to accumulate as many days as I could. Instead, it’s paid out through the pension and the rate of the pay-out is not that good.

[teen persuasion]

There's always the chance the rules change.

My DH is a retired teacher - but he taught in alternative schools, never in a district, so no pension. The agency he worked for the longest had a policy that PTO did not roll over, it was cashed out at the end of every year, but sick time did roll over. He hated taking sick time off, because it was more work to prep something for a sub, and then catch up afterwards, etc. So he had quite a lot of sick time accrued. When he decided to quit there, he did his due diligence and confirmed that there was no limit on sick time cashed out (though at 50%). Even after the 50% haircut, and contributing 50% of the payout to his 403b, the take home was more than enough to cover our expenses for the rest of the year.

A few months later he heard thru the grapevine they had a new policy - sick time payouts are now capped at $2500.

[Hacksawdave]

You are lucky that sick time has some form of compensation at the end. If it were counted as PTO, I would say bank as much as you can as CA deems paid time off as a defined benefit that must be paid out upon departure. Most companies in CA have changed from using the ‘sick time’ format to straight PTO and make the carry-over old sick time impossible to use. It is an invaluable resource as I needed all three months' worth that I built up back in the 20-teens when I went through a ‘medical journey’.

[eddot98]

I had 7 weeks that could only be used for sick time, not paid out if you left the company. Crashed on my bike and used it all. Fortunate that I had it.

Way back before people could work from home, I was in a car accident on my way to work and broke my right leg badly. I was out of work for 14 weeks, or 70 work days. I was only 5 years out of college and into my career. I ran through all my sick leave, vacation days, and personal time and had to go on sick leave at half pay for a few weeks. I was single at the time, so it wasn’t a huge hardship. When I retired 30+ years later, I had the maximum allowed sick leave accrued, 200 days. It was much more valuable in terms of extra service credit and its value was used to lower health insurance costs in retirement, but even if it weren’t used that way, it was valuable as form of disability insurance.
Stuff happens, be aware.

[PeninsulaPerson]

... and also commute for about 100 minutes per day.

That's about 45 minutes each way.

It takes that long to get to downtown Boston from the suburbs on the MBTA from almost every direction - and longer to switch trains and get to the medical centers.

It can be a 30+ minute drive from one suburban town to one 4 towns over.

One neighbor often walks about 45 minutes to a volunteer gig one town over.

Not saying you're complaining - just that that is a pretty average commute.

[bombcar]

Your wife being SAH has insulated you somewhat from kid related sick days. Start taking some of those.

Also you’re going to be absolutely amazed how rapidly YOU will start having random doctor appointments as you pass 50. Don’t scrimp and just take the easiest appointment and the sick day.

[Ron Ronnerson]

I had 7 weeks that could only be used for sick time, not paid out if you left the company. Crashed on my bike and used it all. Fortunate that I had it.

Way back before people could work from home, I was in a car accident on my way to work and broke my right leg badly. I was out of work for 14 weeks, or 70 work days. I was only 5 years out of college and into my career. I ran through all my sick leave, vacation days, and personal time and had to go on sick leave at half pay for a few weeks. I was single at the time, so it wasn’t a huge hardship. When I retired 30+ years later, I had the maximum allowed sick leave accrued, 200 days. It was much more valuable in terms of extra service credit and its value was used to lower health insurance costs in retirement, but even if it weren’t used that way, it was valuable as form of disability insurance.
Stuff happens, be aware.

That’s a good point and one of the reasons I have accumulated the time. The difference is that it is not very valuable to me if converted to extra service credit at retirement. Thanks for this reminder, though, as you are absolutely right that stuff happens.

[Ron Ronnerson]

... and also commute for about 100 minutes per day.

That's about 45 minutes each way.

It takes that long to get to downtown Boston from the suburbs on the MBTA from almost every direction - and longer to switch trains and get to the medical centers.

It can be a 30+ minute drive from one suburban town to one 4 towns over.

One neighbor often walks about 45 minutes to a volunteer gig one town over.

Not saying you're complaining - just that that is a pretty average commute.

While I don’t love the commute, I didn’t mean to sound like I’m complaining so much as laying out the details. My schedule is officially around 6.5 hours per day and that includes lunch within that time. Since I teach elementary school, I aim to not be late and usually arrive to work 30-40 minutes early (never know when there will be an accident causing a delay). I leave around 7 am and usually return home around 4 pm. I do this 38 weeks a year and am off for 14 weeks a year. I would ideally love to work less than I currently do but would not fully retire even if I didn’t need the money.

[PeninsulaPerson]

... and also commute for about 100 minutes per day.

That's about 45 minutes each way.

It takes that long to get to downtown Boston from the suburbs on the MBTA from almost every direction - and longer to switch trains and get to the medical centers.

It can be a 30+ minute drive from one suburban town to one 4 towns over.

One neighbor often walks about 45 minutes to a volunteer gig one town over.

Not saying you're complaining - just that that is a pretty average commute.

While I don’t love the commute, I didn’t mean to sound like I’m complaining so much as laying out the details. My schedule is officially around 6.5 hours per day and that includes lunch within that time. Since I teach elementary school, I aim to not be late and usually arrive to work 30-40 minutes early (never know when there will be an accident causing a delay). I leave around 7 am and usually return home around 4 pm. I do this 38 weeks a year and am off for 14 weeks a year. I would ideally love to work less than I currently do but would not fully retire even if I didn’t need the money.

It didn't seem you were complaining ... at all!



Someone else had written ...

The 100 minute commute would be enough to make me call in sick.

... and a 100-minute round trip commute struck me as average for many areas. Probably short for some areas!

[pahkcah]

I'll start out by saying that I'm not advocating for the strategy that follows, just want to provide a little perspective on the effect accumulated sick leave could have on pension benefits. I viewed sick leave as valuable insurance in the case of extended sickness or injury, as for most of my career internal leave donation programs and other sources of leave coverage such as FMLA did not exist.

I worked in the public sector for almost 30 years, and was granted an early retirement at 54. At retirement I was receiving 26 days of vacation leave, federal holidays, and 13 days of sick leave each year. Although the amount of vacation leave earned each year was based on years of service, sick leave was accrued at the same yearly rate throughout my career. I retired with almost 2900 hours of sick leave, which added 16 months (174 hours equals one month) to my service time for pension calculations. I ran the calculations and the additional sick leave time added $4,300 to my pension last year. I supervised an employee who retired with over 4000 hours of sick leave. His sick leave leave balance added an extra two years of service time to his pension calculation.

[Ron Ronnerson]

I'll start out by saying that I'm not advocating for the strategy that follows, just want to provide a little perspective on the effect accumulated sick leave could have on pension benefits. I viewed sick leave as valuable insurance in the case of extended sickness or injury, as for most of my career internal leave donation programs and other sources of leave coverage such as FMLA did not exist.

I worked in the public sector for almost 30 years, and was granted an early retirement at 54. At retirement I was receiving 26 days of vacation leave, federal holidays, and 13 days of sick leave each year. Although the amount of vacation leave earned each year was based on years of service, sick leave was accrued at the same yearly rate throughout my career. I retired with almost 2900 hours of sick leave, which added 16 months (174 hours equals one month) to my service time for pension calculations. I ran the calculations and the additional sick leave time added $4,300 to my pension last year. I supervised an employee who retired with over 4000 hours of sick leave. His sick leave leave balance added an extra two years of service time to his pension calculation.

Thanks for sharing these details. I really appreciate the points your brought up.

I do have an option to apply for up to 30 days of sick leave from other members in case of an emergency. Over the years, I’ve given up a couple of days to other people who have needed the time. Having an additional 125 days available (like I currently do) would get me through most of the school year in case of an injury or illness and that security is very appealing.

My issue is that the pay-out through the pension of all this accumulated time is not very good. My pension would be $110k/year (or about $9200 per month) if I had no sick time available at retirement. A day of sick time applied toward the pension only increases my benefit by $1.50 per month, or $18 per year. Even a lot of days barely move the needle in terms of the percentage the pension would increase.

My pension formula focuses on age and rewards handsomely for that factor. The benefit increases at a steep slope from 55 to 61 for me. After age 61, the slope of the increase begins to plateau.

Additionally, our guaranteed income streams (pension and social security) should exceed our expenses in retirement and the money we currently have invested in IRAs, 457b, and 403b will likely continue to grow.

That’s a bit more context. I have to factor all these things and decide how to proceed.