As a relatively new retirement option, federal agencies began using phased retirement in 2014. The program enables eligible employees to work a part-time schedule while collecting a partial annuity under the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS).
The Basics: Phased Retirement
You can remain employed half-time and retired half-time as long as you spend 20% of your work time mentoring other employees. A phased retirement can last as long as the time period agreed upon by you and your agency. Participation is entirely voluntary and requires the consent of your employing agency upon your request. Add to this, as a phased employee you have the option to return to work full time.
Under a phased retirement, you’re paid for your part-time service while receiving additional credit toward your full retirement. At the same time, you can begin receiving annuity payments, pro-rated for the portion of the workweek hours you spend in retirement. Once you fully retire, the revised annuity will be pro-rated for the additional time you worked during phased retirement.
“After decades of service at your federal agency, full retirement can be a bit of a culture shock.”
Who Is Eligible For A Phased Retirement?
To apply for phased retirement, you must be employed on a full-time basis for the three years prior to your application and you must meet eligibility requirements for an immediate annuity. For CSRS employees, you must have 30 years of service at age 55, or 20 years of service at age 60, to be eligible for an immediate annuity.
For FERS employees, you must have 30 years of service at your minimum retirement age (55 to 57 depending on year of birth), or 20 years of service at age 60. However, federal employees who are subject to mandatory retirement – like law enforcement officers, fire fighter and air traffic controllers – are not eligible for phased retirement.
Advantages To Consider
After decades of service at your federal agency, full retirement can be a bit of a culture shock. For those who would do better to ease into retirement, phased retirement offers a number of advantages:
- Your FERS or CSRS annuity continues to increase as you work less than full time.
- Your FEHB premiums are paid on a pre-tax basis and your FEGLI coverage is based on your full-time salary.
- You can continue contributing to your TSP.
- You can continue to use annual/sick leave and accrue leave on a pro-rated basis.
Once you understand the basic facts about phased retirement, you can decide whether or not it’s a good choice for you.
