Have You Considered a ‘Phased Retirement?’

Aug 29, 2014

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It has been over two years since Congress passed a law allowing for a “phased retirement” program. The Office of Personnel Management (OPM) has recently released the final rules governing how it works and who is eligible.

What these new rules allow may interest you if you are a federal worker who is currently eligible or soon will be eligible to retire. This program is different from other federal employee retirement benefits programs.

What is Phased Retirement?

Phased retirement is a new program that allows federal employees to continue to work part-time while receiving retirement benefits. Employees can actually earn more income than they would have if they had just worked part-time or retired completely. This is because they are receiving both part-time pay and part of their retirement annuity.

More importantly, employees can continue to gain credit toward their full retirement. So, employees who go through phased retirement can earn a larger retirement annuity when they fully retire than they would have earned if they had fully retired initially.

OPM Director Katherine Archuleta told The Washington Post that phased retirement provides a “new tool” to managers and allows them to better provide unique mentoring opportunities for employees.

Instead of retiring, employees can continue to work according to a schedule that is flexible and suits the lifestyle they are seeking. They can offer younger, less experienced employees the helpful knowledge that they have acquired over several years in the workforce.

As the OPM website states, these experienced workers can now enjoy financial incentives that were lacking under previous law.

Individual agencies have the authority to decide on specific details as it relates to their respective employees. You may want to contact your agency representative to see how many employees may participate in the program and how the mentoring portion of the work could be handled in your particular case.

Who Is Eligible for Phased Retirement?

Employee participation in phased retirement is voluntary. Both the employee and his or her employing agency must consent to the phased retirement.

To be eligible, the employee must meet the following requirements:

  • Under the Civil Service Retirement System (CSRS), you must have at least 30 years of service and be age 55 or older, or have 20 years of service and be at least 60 years old; or
  • Under the Federal Employees Retirement System (FERS), you must have at least 30 years of service or be age 60 or older with 20 years of service.

Keep in mind: Federal disability retirement benefits are different. If you have become disabled – due to an injury that you suffered on the job or outside of work – and you are seeking federal disability retirement benefits, you will be dealing with a different matter and governed by different rules.

As you make decisions about retiring, it can be helpful to speak with an attorney to learn more about your rights and options.

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