Phelan has progressed through the ranks at Old Trafford since joining the coaching staff in 1999, taking Carlos Queiroz's position when he left to manage Portugal.
But the 46-year-old is not thinking of taking the next step quite yet.
"Being a manager is an interesting proposition but I am assistant manager of Manchester United, which is a fabulous thing to be involved in," Phelan said.
"I work with great players every day at a great football club. At the moment, I could not ask for any more."
PressureThe former United player is well aware of the pressure Premier League managers are put under and recognises it would be an immensely testing role.
"I have never been a manager," he added.
"But looking from the outside in, it is not easy. The consequences of your actions are highlighted more than they have ever been.
"You try to work in an environment where you want to develop or succeed but sometimes through luck or mismanagement, it does not work out for you.
"But that is just something that seems to be in the game now. Young managers have to accept that situation."
AmbitionHowever, Phelan believes the ultra-competitive environment he works in at Old Trafford would be the perfect preparation for the world of management.
"When you come into a club like this, with the history it has, you know it will be competitive from day one," he said.
"If you don't produce you don't last very long. It was terrific as a player. I wanted to come and win things, which I was lucky enough to do. Going into coaching I had that same ambition and desire.
"I feel really privileged to hold the position I do but that is all down to the manager's selection. He feels he can trust what I am doing, which is good to know."