What Are Your TSP Options With Phased Retirement?
By June Kirby
June Kirby has well over a decade of experience serving as a Federal Employee Retirement Trainer and expert. June Kirby has extensive knowledge in both TSP and other Federal Retirement benefits. Ms. Kirby tirelessly travels the Country making herself available to Federal & Postal Employees, Federal Agencies, Unions and Organizations and partners with PSREducators.com (PSRE), and as one of the top providers of PSRE’s services, June Kirby continues to generously make herself available to hundreds of deserving Federal and Postal Employees each and every year by offering consultation on federal retirement benefits and TSP maximization strategies.
In allowing Federal Employees Retirement System (FERS) employees to participate in the phased retirement program, there are certain requirements that must be met, as well as various options that can be chosen by the individual. It is important to have a good understanding of these guidelines, as they could have an effect on the amount that you receive, as well as whether or not moving forward will or will not even be beneficial for you and your specific situation.
What is Phased Retirement and How Does It Work?
The phased retirement program is essentially an agreement between you and your agency. When this option is elected, you will be considered as partially retired, and you will begin receiving half of your TSP annuity retirement income. At the same time, you will also be considered as employed part-time and will work at a 50% capacity and receive one-half of your pay. When you are ready to move into full retirement, you will at that time receive the remainder of your TSP retirement income.
As an example, as a FERS employee, if you had a current annual salary of $60,000 and you opted to go into the phased retirement program, you will work part-time and receive a salary of $30,000 per year.
At the same time, if your current TSP annuity would have paid you $24,000 per year at full retirement, you would instead receive $12,000 per year at 50% of that annuity. Therefore, during your phased retirement time, you would be receiving $30,000 in salary, and another $12,000 from your TSP annuity.
While working during your phased retirement, it is required that at least 20 percent of your time be spent on mentoring activities. These can include working with current employees on transferring knowledge, as well as assisting them in further developing their careers.
Taking the Next Step – How to Participate in the Program
If you opt to participate in the phased retirement program, the next step is to discuss the option with your manager. You should also obtain an estimate of your TSP annuity in order to determine the amount of your income during the time of your participation, well as the amount of your income during your full retirement once your participation in the program has ended. In addition, completion of a phased retirement election form and approval by your agency will also be required.
Contact June Kirby:
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