In the past, it’s been all or nothing. You can either retire completely from your full-time job or not at all. The only middle ground compromise would have been to retire and find a job working part-time somewhere else. With a recent transportation bill signed into law by President Obama on Friday, July 6, 2012, however, federal employees might have the opportunity to mix the two options.
Situated deep within this 593 page Conference Report (legislation negotiated between the House and Senate), Section 100121 on phased retirement was added, changing the landscape of options for potential retirees. Instead of an all or nothing proposal, retirement could consist of a sort of working retirement. An individual who would like to spend more time enjoying life beyond working years, but still spend time with co-workers in a job they enjoy, might have the opportunity to do both.
The bill was proposed as a way to prevent the knowledge and skills of older workers from abruptly leaving the workforce and moving into retirement. Skilled individuals will now have the opportunity to mentor the younger generation of workers and prepare them for the road ahead while also enjoying their partial retirement.
Partial retirement can consist of working one to four days during the workweek. The retirement pension received during phased retirement will be based on a pro-rated amount of the eligible annuity. An individual, for example, working 40 percent of the time would receive 60 percent of their retirement benefits. The phased retirement option can only be selected once in an employee’s lifetime, though it is possible that a partially retired individual could return to working full-time. Once full retirement is chosen, the additional benefits accrued for the percentage of time worked during phased retirement will be recalculated and the individual will receive a composite annuity.
For individuals vacillating between retiring and continuing to work, this might be an option that could make the retirement itch easier to scratch.
Is a phased retirement something you’d likely consider in the future if it becomes available?