Do you really lose money selling some of your leave before retirement?

2017-01-04T00:57:36-05:00

I keep reading that you lose money selling your leave. I plan on the future on doing both, taking as little leave as I need and selling the rest. I don't understand how you make more taking the leave.

If I sell the day's I get that money PLUS, not OR my base pay divided by 30 multiplied by the amount of days sold.

Response by LTC John Shaw made Jan 4 at 2017 1:01 AM

2017-01-04T01:01:02-05:00

When you sell your leave you do not receive the non taxed benefits like BAH, BAS; therefore, you get less. Selling leave means only getting base pay.

Response by 1SG(P) Private RallyPoint Member made Jan 4 at 2017 1:01 AM

2017-01-04T01:01:58-05:00

What I've been told from finance over and over is that the only way you can make more money taking transition/terminal vs. selling the leave back, is if you are in the barracks and not already receiving BAH.
If you weren't receiving BAH and had 30 days of leave, you would make more money taking the terminal leave because you would make the BAH while on leave.
This is only what I've been told. I would assume it accounting for your BAH being higher than 75% of your base pay. I'm also assuming that this was bad advice passed down the chain, and only intended for first termers.
IDK. I would have like the extra paycheck when I separated for selling leave if that's how it works.

Response by LTC Private RallyPoint Member made Jan 4 at 2017 3:14 AM

2017-01-04T03:14:54-05:00

Yes. You lose BAH and BAS that you would have earned during that time. Also, if you take 30 days leave you get 2.5 more days leave right?

Response by LTC Kevin B. made Jan 4 at 2017 8:00 AM

2017-01-04T08:00:56-05:00

You actually make more money by selling the leave. The answer is a little nuanced, and you need to look at total cash flows. The confusion comes into play when trying to isolate one month's pay, or when trying to decide between the scenarios of taking it as regular leave, selling the leave, or taking it as terminal leave.

For the purpose of an illustration, let's make some simplifying assumptions here by focusing on your final year in uniform. During that final year, you would serve 12 months and you would earn 30 days of leave. Let's assume you already earn BAH and BAS, but we'll ignore any other things like hazardous duty pay, family separation pay, etc. Let's also ignore any other stockpiled leave.

If you burn up all of your earned leave as regular leave before retirement, you'll receive a total of 12 months of salary, 12 months of BAH and 12 months of BAS. This scenario is the status quo and presents no change to your regular cash flows.

If you serve the entire year and sell the 30 days of earned leave, you'll get 13 months of salary (the 12 you serve + the 1 you sell), 12 months of BAH and 12 months of BAS. So, you actually gain money by selling the leave (one extra month of salary).

If you choose to take the 30 days as terminal leave at the end of that final year, the mix changes. You'll receive a total of 12 months of salary, 12 months of BAH and 12 months of BAS. So, by taking the terminal leave you do get into your "retirement lifestyle" one month earlier, but at the cost of the extra salary.

So, is getting into your "retirement lifestyle" a month early worth giving up the extra month of salary? If so, go on terminal leave. If not, stay on the team and sell the leave.

If you're stepping into another job immediately upon retirement, the scenario changes yet again. You'll get more total cash flow (from both the military and your new employer) if you take terminal leave or you sell the leave. That was what happened in my case. I stepped into the new job while on terminal leave and I essentially had a double salary for 75 days. I would have had a similar scenario if I had sold my leave, but the timing was an issue for me. The general rubric (timing issues aside) is that if you make more in your retirement job, take terminal leave and get started earning the higher salary. If you make less in your retirement job, keep working at the higher salary, and then sell the leave.

Response by SFC Dennis A. made Jan 4 at 2017 8:42 AM

2017-01-04T08:42:36-05:00

When I retired I took 90 days leave if I had sold it I would not have been paid my quarters allowance or my BAS.

Response by Cpl Justin Goolsby made Jan 4 at 2017 9:32 AM

2017-01-04T09:32:17-05:00

Because when you sell your leave, that pay gets added to your check which means you get taxed on it. Also, I'm pretty sure you don't get your BAH included in that amount if you sell it.

Response by SSgt Dan Montague made Jan 4 at 2017 9:41 AM

2017-01-04T09:41:52-05:00

I didn't sell any back. With house hunting/job hunting PTAD and my acquired leave, i had 120 days off at the end. I didnt notice if i lost money or not, i was focused on relaxing and finding a job. It is a hell of a lot of work retiring. Take the time off. you will not regret it.

Response by COL Vincent Stoneking made Jan 4 at 2017 10:44 AM

2017-01-04T10:44:11-05:00

At retirement, you lose no money selling back your leave, rather you gain $$.
What you lose is free time and flexibility.

The standard argument is that you lose your BAH/BAS/etc that you would have gotten had you taken leave. Trueish enough, if continuing on with active service after the sale. You get more money from the LEAVE if you take it. Plotting it out for retirement shows the error, however:

Assume you are Retiring Sept30/Oct 1 (ignoring any special leave authorities, and the realities of how much work you will actually be expected to do if not on "leave").

Take 60 days of leave: Earn Base + Allowances for Aug and Sept. You are free to do what you will those two months.

Sell 60 days of leave: Earn Base + Allowances for Aug and Sept. ALSO get additional Base for 2 months. You will be "working" right up until the end.

You clearly end up with 2 months of additional base pay more than if you had sold it. You did not maximize your LEAVE $$, but you did maximize your overall $$.

I'm not saying either is the "better" option. I am facing the same issue at the end of this FY, when I come off mobilization orders. Except I will likely have 90 days (little trivia, if mobilized in support of contingency operations, can both accrue and sell back in excess of 60). to play with.

Response by 1stSgt Private RallyPoint Member made Jan 4 at 2017 3:31 PM

2017-01-04T15:31:55-05:00

Many good points by all above, boils down to your own scenario and what works best for you.

Response by MSG Brad Sand made Jan 4 at 2017 3:42 PM

2017-01-04T15:42:31-05:00

You do not 'lose' money. You pocket some money but it is less than what you would have put in your pocket if you had taken you leave while serving.

Response by CAPT Kevin B. made Jan 4 at 2017 5:23 PM

2017-01-04T17:23:44-05:00

You can figuratively. If you take terminal leave, you get the BAH, medical, etc. that goes with it. If you're gaining some other value like working on the outside, building that deck you always wanted, etc., it can be the best thing. On the other hand, starting a new job after your last date and taking the slug, invest it in yourself; that can be the best for you. So the real answer is it depends. Remember it's all taxable.

Response by Sgt Private RallyPoint Member made Jan 4 at 2017 9:46 PM

2017-01-04T21:46:48-05:00

1SG(P) Private RallyPoint Member When I was discharged, I sold back 30 days of leave. When I retired from my civilian career, I had two months of vacation on the books. In both cases, I had to sell the vacation, because I did not have the opportunity to take it. If you take vacation days, you get paid for being off and doing what you want to do. This can be especially handy when you have things to do to accommodate retirement.

Response by LTC Paul Labrador made Jan 5 at 2017 2:39 PM

2017-01-05T14:39:43-05:00

the only way you get "extra money" by selling back leave is if you work right up to your clearing days. Then selling back leave essentially "extends" your paycheck for however many days you sell back. For me, it was more important to finish early (I took almost 80 days of terminal leave) and start looking for a new job and house than making a little bit of extra cash.

Response by LTC Jason Mackay made Jan 5 at 2017 4:36 PM

2017-01-05T16:36:06-05:00

You sell back leave at a discounted rate. If you take it, you continue to draw base pay and allowances, primarily BAH and BAS. Don't forget to factor in your earned leave while on leave when you do your DA31. I just did it.

Response by SFC William Swartz Jr made Jan 6 at 2017 9:14 AM

2017-01-06T09:14:17-05:00

As has been said before in the responses, you get only your base pay when you sell, you don't receive any of the allowances you are entitled to if you take the days and get paid for being on "vacation". In my case I had 80 some days so I took 50 some days leave plus my permissive TDY days, and sold the remainder to get a nice lump sum after retiring. But in essence you do lose money when selling days.

Response by TSgt Tommy Amparano made Jan 6 at 2017 10:55 AM

2017-01-06T10:55:44-05:00

You get taxed up the wazoo. Take you leave if you can. Life is too short.

Response by SGT Thomas Heimel made Apr 17 at 2017 8:21 AM

2017-04-17T08:21:06-04:00

If you were being Medically Retired or retiring before your RCP you make more by taking all of the leave days you have accrued because it keeps you on active duty to receive BAH and BAS. If you are going to your RCP Point as your retired date you end up coming out better working to the end and selling the leave for the extra money. However, it is usually heavily taxed but you'll likely get it back when you file.

Response by SSgt Dan Rivett made Sep 25 at 2017 9:37 AM

2017-09-25T09:37:57-04:00

here is the thing if you take terminal leave before you ETS or retire the leave only goes to your ETS or retirement date. If you sell back your leave, you work up till your ETS or retirement date and cash in on all the leave you have minus the non taxed benefits like BAH, BAS. Now if you ETS, retire and take terminal leave you continue to get paid twice a month till the end of your enlistment date. When you sell your leave you cash it out on the day before or the last day of your enlistment.

Response by SP5 Larry Morris made Sep 25 at 2017 8:58 PM

2017-09-25T20:58:06-04:00

and who are you selling it to good luck BS