It’s been increasingly common in recent years to describe retirement as a process rather than a point, the idea being a gentle slope to the end of a working career rather than an abrupt stop.
“Phased” retirement evokes images of possibly cutting back on the hours at the regular job and then possibly even after retiring continuing to work, either part-time at that job or elsewhere, or through self-employment, before stopping work completely.
That’s in contrast to a common image of retirement involving good byes with colleagues over cake in the break room, before turning in the ID badge to Security, and ending a working career for good.
That is sometimes referred to as “cliff” retirement, with its unfortunate evocation of Wile E. Coyote in a Road Runner cartoon.
The allure of the former type was illustrated in a recent report from the Employee Benefit Research Institute, which in a nationwide survey found that 44 percent of workers expect their retirement to be a “gradual transition or reduction of hours leading to a full-time stop.” That’s almost identical to the 43 percent who expect such a stop; the rest were unsure.
Further, it found that 70 percent of workers “think they will work for pay in retirement” and a similar 68 percent expect such work to be at least a minor source of income in retirement.
But among retirees, it said, only 17 percent actually experienced a phased retirement, only 27 percent had worked for pay in retirement, and only 22 percent said such work was at least a minor source of income.
The survey was a national one that did not examine the experiences of federal employees specifically, but there is no reason to think the outcome would be different.
Unlike many private sector employers, the government actually does have a formal phased retirement program. Employees who are eligible to retire under one of the combinations involving at least 20 years of service can apply to cut back to half-time work, earning a prorated salary plus half of the value of the annuity they have accumulated. Such arrangements typically are to involve mentoring other employees and are to last up to a year, with the full annuity benefits—including the value of the part-time service—paid on full retirement.
That’s what’s on paper anyway. In practice, since that program took effect in 2014 it has been used only rarely—and apparently not at all at some agencies. No one knows, because the government doesn’t collect and report data on it.
The government also doesn’t do much in the way of promotion. The last mention of it from the Office of Personnel Management—which regularly encourages agencies to use various special personnel policies available to them—was technical guidance in 2019 on processing applications.
One key element of that program is that an employee has to make the case to management that the arrangement would be in the agency’s best interest—not just his or her own. Is it little used because employees aren’t interested, because agencies say no, or because employees don’t even ask because they are convinced the agency will say no? Again, there’s no way to say.
So, if your idea of retirement is a phase-down of work, you’ll almost certainly have to arrange that by working part-time elsewhere, or for yourself, after your federal retirement.
In that context, a couple of other findings from that survey are worth noting. Among the retirees, the average age at retirement was 62, which is also the federal employee average (contrary to some politicians who claim it is much earlier as part of their argument that federal retirement is too generous). However, among those still employed, the average expected retirement age was 65.
Nearly half of retirees, 47 percent, said they retired earlier than they had expected while just 6 percent said they did it later. Of that first group, 32 percent, cited a personal health problem or disability while another 13 percent cited need to care for a spouse or other family member. Combined with reasons such as losing their jobs in reorganizations or downsizing, about two-thirds who retired earlier than planned did so “for a reason out of their control.”
While you may hope that your retirement will be a phased process and on your own schedule, it would be wise to be prepared for neither to be the case.