Retirement date: Overview, definition, and example
What is retirement date?
Retirement date refers to the specific day when an employee officially stops working, either because they’ve reached retirement age or chosen to retire early. It’s the last day they’re actively employed and the point at which they transition into retirement status—often triggering pension benefits, retirement payouts, or changes to healthcare and insurance coverage.
In simple terms, it’s the employee’s last day on the job before entering retirement.
Why is retirement date important?
The retirement date is important because it affects several key things, including:
- When pension or retirement benefits begin
- Final paycheck and accrued leave payouts
- Healthcare or insurance transitions
- When replacement hiring or succession planning kicks in
- Legal obligations tied to employment status
For businesses, it helps with planning workloads, staffing, and benefits budgeting. For employees, it marks the beginning of a new financial and lifestyle chapter, so getting the date right ensures benefits start on time and there’s no gap in income or coverage.
Understanding retirement date through an example
Let’s say your office manager announces they’ll retire at the end of the year. You agree their retirement date will be December 31. On that day:
- Their employment ends
- They stop earning salary or leave
- Their retirement benefits (like a pension or 401(k) distributions) can begin
- You begin onboarding their replacement
That single date becomes the key reference point for final payroll, benefits administration, and HR documentation.
An example of a retirement date clause
Here’s how a retirement date clause might appear in an employment or benefits agreement:
“The Employee’s Retirement Date shall be the last business day of the month in which the Employee attains age sixty-five (65), unless otherwise agreed in writing by the Employer and Employee. All benefits and entitlements shall be determined based on this Retirement Date.”
Conclusion
Retirement date is a simple but significant milestone—for both the employee and the business. It’s not just a calendar date—it’s the dividing line between working life and retirement, with important legal and financial implications.
If you're planning to retire or managing a retiring team member, make sure the retirement date is clearly defined, documented, and understood by all parties to ensure a smooth and well-organized transition.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.