If you’re approaching retirement but feel uncertain about making a sudden transition, phased retirement might be a suitable alternative. Eligible federal employees can take advantage of this structured plan to ease into retirement. According to the OPM, phased retirement is “a human resources tool that allows full-time employees to work part-time schedules while beginning to draw retirement benefits.”
A Smoother Transition
Federal employees have been able to apply for phased retirement since November 2014. While participation numbers remain modest, those who opt for this gradual approach find it a valuable way to transition into retirement. Additionally, it provides an opportunity to mentor younger employees.
How Phased Retirement Works
During phased retirement, you work half of your previous full-time hours, earning half of your full-time salary and approximately half of your annuity. Phased retirees, excluding USPS workers, are required to spend 20% of their working hours mentoring. Participants can choose to return to a full-time schedule or move into full retirement at any time, subject to approval.
Pay and Benefits
After entering phased retirement, you will work 50% of your full-time schedule and receive half your full-time salary, subject to standard withholding. Despite the reduced pay and hours, your health and life insurance premiums will remain the same as those for full-time employees. Additionally, you can continue contributing to your TSP and retain access to TSP withdrawal options, including loans, financial hardship withdrawals, and in-service withdrawals.
Eligibility Criteria
To qualify for phased retirement, the following conditions must be met:
- You must have been employed full-time for the three years immediately preceding phased retirement.
- CSRS employees need at least 30 years of service at age 55 or older, or at least 20 years of service at age 60 or older.
- FERS employees must have at least 30 years of service at their minimum retirement age, or at least 20 years of service at age 60 or older.
- Employees subject to mandatory retirement (such as law enforcement officers, firefighters, and air traffic controllers) are not eligible.
For more information on phased retirement and to see if it aligns with your financial goals, consider consulting with an FRC® trained advisor.
