New Phased Retirement Program Details For Federal Workers

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

opmI’m always interested in non-traditional retirement stories, and saw that the US government just released their final regulations on Phased Retirement for federal workers. Phased retirement in general refers to transitioning from full-time to part-time work for a period of time before a traditional full retirement.

Participants will be able to start working half-time while collecting half of the pension they would get if they were to fully retire at that date. Then, when they fully retire, they’ll get the other half of their pension, adjusted for the additional work they did while being part-time. At least that’s my version of their lengthy explanation:

At entry into Phased Retirement, the employee’s annuity will be completed as if fully retired and then divided by two. That annuity would be paid while the individual worked a half time schedule receiving half pay. […] When the Phased Retiree fully retires, there will be a computation of the annuity that would be payable if the employee had been employed full time and then divided by two prior to adjustment for survivor benefits. That amount would then be added to the original Phased Retirement Annuity, and that combined amount would then provide the basis for survivor annuity adjustment and benefits.

Participants will also get to keep their health and dental insurance, access to Thrift Savings Plan, and many other benefits. Fedweek has created a Federal Employee’s Guide to Phased Retirement [pdf], which is a lot easier to read than the actual regulations.

According to this Reuters article, the program should both save money and retain talent:

For the government, the program is expected to be a money saver. The Congressional Budget Office estimated recently that 1,000 employees might take advantage of phased retirement annually, and would continue work for three years. That would cut required contributions to the government’s pension system by $427 million from 2013 to 2022, and boost worker contributions by $24 million.

But phased retirement also will help the government retain talent and expertise at a time when the “brain drain” from an aging workforce is a major concern. About 600,000 people, or 31 percent of the federal civilian workforce, will be eligible for retirement by September 2017, according to the U.S. Government Accountability Office. Phased retirees will be required to spend at least 20 percent of their time mentoring younger employees.

Employess under the legacy Civil Service Retirement System (CSRS) will be eligible for phased retirement at age 55 with 30 years of service, or at 60 with 20 years of service. Federal Employees Retirement System (FERS) employees must be age 60 with 20 years of service, or have 30 years of service and have reached their minimum retirement-eligible age. Agencies can send their Phased Retirement applications to OPM for processing starting November 6, 2014.

I think this is a neat idea and it looks like there will be strong interest. I hope the idea spreads. Even if your employer doesn’t offer an official policy on phased retirement, I know of several folks who have made their own custom arrangements.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

User Generated Content Disclosure: Comments and/or responses are not provided or commissioned by any advertiser. Comments and/or responses have not been reviewed, approved or otherwise endorsed by any advertiser. It is not any advertiser's responsibility to ensure all posts and/or questions are answered.


  1. Sad that it took the government this long to figure out phased retirement — with so many of our early Boomers Vietnam vets, many eligible federal employees hit 30 years/55 age a long while ago.

    My father, one of the earliest of Boomers, had military, USPS, and high-level federal employment with the Treasury department; he had approximately 35 years at his retirement in late 2002. He’d probably have stuck around an extra few more years with this sort of program. Somewhat like shutting the barn door after the horses have already broken loose

    • Correct me if I’m wrong, but I think this is designed to encourage older workaholics to work less, not those ready to call it quits to work longer. 🙂

      • The program sounds like it is trying to present a third option to the former either/or choice of full time work or retirement.

        If you hit eligibility for federal retirement and face no immediate promotion opportunities, you’re otherwise working full-time for about 1/3rd of your salary (given you could be sitting back and fully drawing your pension). If you’re promotion eligible, you’d likely want to stick around longer to have your 3 year GSE salary average bump your overall pension payment up.

        The program clearly is designed to prevent such a stark employment choice for those contemplating retirement & to prevent a brain drain. That being said, there are a lot of federal LEOs who this program would make no sense to

Speak Your Mind