If you want to participate in phased retirement and are eligible to do so, you’ll need to find out if your boss has any interest in having you continue to work half-time rather than retiring fully. While you may be interested in participating, your boss might not.

However, if you and your boss agree that phased retirement works for both of you, you’ll have to fill out the phased retirement election form (available at http://www.opm.gov/retirement-services/publications-forms/benefits-administration-letters/2014/14-112.pdf) and have it approved by your agency. If it approves, the application will be sent to OPM for processing.

How does phased retirement work? I’ll give it to you straight from OPM:

An employee electing phased retirement continues to work as an employee of the Federal Government but under a part-time schedule. At the same time, the employee receives [an] annuity benefit equal to a fraction of the annuity that would have been paid had the employee fully retired. Currently, this means employees will be receiving half of their pay and approximately half of their annuity because currently the only working percentage allowable by regulation is 50%.

Before you make up your mind about whether to apply for phased retirement, you need to know what your retirement annuity will be and what the impact of working part time will have on that annuity when you retire for good. You’ll have to ask your personnel office to run estimates showing the differences between your 1) continuing to work full time, 2) retiring on an immediate annuity, and 3) electing to work as a phased retiree.

One thing to note is that the phased retirement calculation will not include credit for unused sick leave as time served, as does a regular annuity. That’s because as a phased retiree, you remain an employee and eligible to use your sick leave under normal rules. Similarly, there is no survivor annuity election connected with the phased annuity, because you are still an active employee. Survivor benefits, should you die while a phased retiree, would be provided under the rules applying to active employees.

However, in general, if you need to make a deposit to capture credit for certain service time you will need to make that deposit before entering phased retirement. The only exception to this would be the very rare case of someone who enters phased retirement, is allowed to go back to full-time work, and later retires fully.

Next week I’ll fill you in on what effect phased retirement would have on your FEHB and FEGLI benefits, leave accrual, the special retirement supplement (FERS employees only), and disability retirement.