Federal phased retirement: half salary, half annuity, a full glide path
Most feds picture retirement as a cliff: one day you’re full-time, the next you’re fully out. Phased retirement offers a third door — a glide path. If you’re already eligible to retire, you can drop to a half-time schedule, draw half your annuity alongside half your salary, and ease into retirement while mentoring your successor. Your total paycheck often lands well above what either full work or full retirement alone would pay, and when you finally retire for good, a recalculated “composite” annuity rewards the extra service. It’s a genuinely useful option — with one big catch. Here’s how it works, who qualifies, and a calculator for your numbers.
1. A glide path, not a cliff
The standard federal retirement is binary: full-time one day, fully retired the next. For some, that abrupt stop is exactly right. For others — people who still enjoy the work, want to keep a paycheck flowing, or aren’t quite ready to walk away — it’s jarring. Phased retirement was created in 2014 to give those employees a middle option: a structured way to partially retire.
The idea is simple. You keep working part-time and draw part of your pension at the same time, gradually shifting from employee to retiree over months or years rather than overnight. Built into it is a mentoring role, because Congress designed phased retirement partly to keep decades of institutional knowledge from walking out the door all at once.
2. How it works: 50/50
Under OPM’s rules, phased retirement is structured as a 50% arrangement. You work half of your previous schedule, you’re paid 50% of your federal salary, and you receive about 50% of the annuity you’d be entitled to if you fully retired at that moment:
So if your full annuity would be $60,000 a year, you’d collect $30,000 from the pension plus half your salary from continued work. Importantly, you don’t separate from service — you’re classified as an active part-time employee, not a retiree, for most purposes, and your salary portion still rises with any applicable pay raises.
3. Who’s eligible
Phased retirement is open only to employees who could already retire on an immediate, unreduced annuity — and who have worked full-time for the three years immediately before entering. The age-and-service combinations:
| System | Eligibility for phased retirement |
|---|---|
| CSRS | 30 years of service at age 55, or 20 years at age 60 |
| FERS | 30 years at your MRA (55–57 by birth year), or 20 years at age 60 |
One notable exclusion: employees in positions subject to mandatory retirement — law enforcement officers, firefighters, and air traffic controllers — are not eligible. If you’re unsure where you stand, confirm your numbers against the FERS pension calculation and your service history first.
4. The 20% mentoring rule
Phased retirement comes with a duty attached: with the exception of Postal Service employees, you must spend at least 20% of your working hours on mentoring activities. The point is knowledge transfer — passing your experience to the colleagues stepping into senior roles as you step back.
Your agency decides what counts as mentoring and how it’s tracked, and you can mentor one or more employees and rotate among them over time. Agencies may waive the requirement only in an emergency or other unusual circumstance, and such waivers are meant to be rare. In practice, the mentoring obligation is a feature, not a burden, for many phased retirees — it’s the part of the job that often feels most meaningful at the end of a career.
5. Your phased income
Enter your full-time salary and the full annual annuity you’d receive if you retired now. The calculator shows your total income while phased — half salary plus half annuity — against working full-time and full retirement.
Your numbers
SalaryAnnuity
Bars scaled to your full-time salary. Phased income = 50% salary + 50% of your current full annuity. The composite annuity at full retirement is typically a bit higher than the figure shown here. Estimate only, not advice.
6. The composite annuity payoff
The phased period isn’t dead time for your pension — you keep earning. When you finally retire for good, OPM doesn’t just switch your half-annuity to a full one. It calculates a composite annuity that combines the phased portion with a fresh, fully-retired computation covering the phased period, crediting that time as part-time service and using your full-time salary basis.
The result is generally larger than if you’d simply retired at the start, because you added service and potentially grew your high-3 during the phased years. That composite figure also becomes the basis for related benefits like the survivor annuity. In other words, phased retirement lets you draw income early and end up with a bigger final pension than a clean stop would have produced.
7. What continues, what pauses
Because you remain an active employee, most benefits keep running. Your FEHB and FEGLI continue, and you keep contributing to the TSP on your part-time salary — building the account further even as you start drawing your pension. Service credit, including sick leave, continues to accrue toward your eventual composite annuity.
One benefit does not pay during phased retirement: the FERS annuity supplement, the bridge payment that approximates Social Security for those who retire before 62. If you’re eligible, it begins only after you fully retire and your composite annuity starts — so don’t count on it as part of your phased-period income.
8. The catch: agency approval
Here’s the limitation that surprises people: phased retirement is not an entitlement. It’s entirely voluntary and requires the mutual consent of you and your agency. Meeting every eligibility rule doesn’t give you a right to it — your agency must agree.
And agencies vary enormously. Each sets its own policies on who can approve requests, which positions are excluded, what standards apply, whether the arrangement carries a time limit, and how mentoring is satisfied. Some agencies embrace phased retirement; others rarely or never use it. So the practical first move isn’t running the numbers — it’s asking your HR office whether your agency offers it at all, and under what terms. Build the answer into your broader retirement application timeline.
9. Frequently asked questions
What is federal phased retirement?
Phased retirement lets an eligible CSRS or FERS employee shift to a part-time schedule while drawing part of their pension, instead of going straight from full-time work to full retirement. Under OPM’s rules it’s structured as a 50% work schedule: you work half time, receive 50% of your federal salary, and collect about 50% of the annuity you’d be entitled to at that point. You remain an active part-time employee rather than a retiree, you keep earning service credit and benefits, and you ease into retirement gradually. It’s designed partly to transfer institutional knowledge, which is why mentoring is built in.
Who is eligible for phased retirement?
You must already be eligible for immediate, unreduced retirement, and you must have worked full-time for the three years immediately before entering phased retirement. Under CSRS that means 30 years of service at age 55, or 20 years at age 60. Under FERS it means 30 years at your minimum retirement age (55 to 57 depending on birth year), or 20 years at age 60. Employees subject to mandatory retirement — such as law enforcement officers, firefighters, and air traffic controllers — are not eligible. Crucially, phased retirement is not an entitlement: you must apply and your agency must approve it.
How is the phased retirement annuity calculated?
While you’re in phased status, your annuity equals the full CSRS or FERS annuity you’d be entitled to at that point, multiplied by the phased percentage of 50%. So if your full annuity would be $60,000, you’d receive $30,000 a year while also earning half your salary. When you later fully retire, OPM recalculates everything into a “composite annuity” that credits the part-time phased period as additional service and reflects your full-time salary basis. That final amount is generally higher than if you had simply fully retired at the start, because you kept working and accruing service during the phased period.
Is the FERS annuity supplement paid during phased retirement?
No. The FERS annuity supplement — the bridge payment that approximates Social Security for FERS retirees who retire before 62 — is not payable while you’re in phased retirement status. If you’re otherwise eligible for it, it can begin after you fully retire and start receiving your composite annuity. Meanwhile, during phased retirement your FEHB and FEGLI coverage continue, and you keep contributing to the TSP based on your part-time salary, so you remain an active employee for benefit purposes even as you draw part of your pension.
Can my agency deny phased retirement?
Yes. Phased retirement is entirely voluntary and requires the mutual consent of both you and your agency — it is not a right you can claim. Each agency sets its own policies on who may approve requests, which positions are excluded, what standards apply, whether an approved arrangement carries a time limit, and how the mentoring requirement is met. Some agencies use phased retirement actively; others rarely or never offer it. Because participation depends on agency approval and internal policy, the practical first step is to ask your HR office whether your agency permits it and under what conditions.