Beginning in November, U.S. government employees at or near retirement age will be eligible for "phased retirement." That will enable them to continue to work and be paid for working part-time at their jobs while getting part of their retirement pay. They'll also continue to earn retirement credits toward full retirement down the road, and they'll keep their health insurance.
Sounds like a great deal to me.
Federal workers enter the Ted Weiss federal building in Manhattan. © BRENDAN MCDERMID/Reuters/Corbis
While the option to do this was approved by Congress in 2012, it took the the federal Office of Personnel Management, or OPM, until last Friday to release final guidelines. The rules published in the Federal Registry say federal workers can "enter into a 50 percent working schedule and receive approximately 50 percent of what his or her annuity would have been -- not including credit for sick leave -- had the individual retired completely from federal service, without electing a survivor annuity."
To be eligible, federal workers must be at least 55 and have 30 years of service or be age 60 and have 20 years of service.
The bottom line is that phased retirees will earn more than they would have had they retired fully, according to Ken Zawodny, OPM's associate director of retirement services. Zawodny told FedScoop, which reports on federal issues of concern to federal employees, that phased retirement provides more income than switching to part-time work or fully retiring. Zawodny also told FedScoop that an employee who takes phased retirement becomes entitled to a greater retirement annuity than he would have received by retiring early, but less than he would have gotten if he had continued to work full time.
Preventing a brain drain
Part of the plan is to create a smooth transition by requiring boomers to share their knowledge and experience with younger workers. In order to choose phased retirement, partially retiring federal employees must agree to spend 20 percent of their reduced working hours mentoring the employees who are expected to replace them when they fully retire.
"Phased retirement offers an innovative alternative to traditional retirement for the 21st century workforce," said OPM Director Katherine Archuleta in a statement. "Phased retirement provides a new tool that allows managers to better provide unique mentoring opportunities for employees while increasing access to the decades of institutional knowledge and experience that retirees can provide."
The good news is that this plan isn't expected to cost taxpayers any additional money. In fact, in a 2012 report, the Congressional Budget Office estimated that the phased-retirement program would reduce spending by $427 million between 2013 and 2022 and increase revenues by $24 million.
If you were offered this deal would you take it?