Best COLA Since 1982 On The Way

Retired federal and military personnel, and people who get Social Security benefits will get a 5.8 percent cost of living adjustment that will first show up in their January checks or payments. The COLA is solid and, contrary to the rumor mill, will not be eliminated, reduced or delayed because of economic conditions. It’s the law, and it’s on the way.

This will be the biggest inflation-catch up retirees have received since 1982.

White collar federal workers, who get pay raises, not COLAs, are in line for a 3.9 percent increase in January. That will vary from city to city based on locality pay determinations.

Most retired feds (who are under the old Civil Service Retirement System) will get the full 5.8 percent COLA. Individuals retired under the newer FERS system will get a 4.8 percent increase. Increases for FERS retirees, who are under a diet-COLA plan, start when they are age 62. The full raises for CSRS retirees aren’t subject to any age requirement.


The 5.8 percent raise is the biggest COLA retirees have received in years. In 2007 the COLA was 3.3 percent and this year (January 2008) it was 2.3 percent. Under their diet-COLA formula, FERS retirees got 2.3 percent in 2007 and 2.0 percent this year.

According to the latest available figures (from October 2006) the average CSRS retirees annuity, at that time, was $2,452. The average FERS annuity in 2006 was $896 per month. Neither figure includes the COLAs that went into effect in 2007 and 2008.

Unlike Social Security benefits, which are generally much lower and limited to a maximum amount, CSRS annuities are based on the individual’s length of service and highest 3-year average. Some long time CSRS retirees get benefits equivalent to 80 percent of that salary average.

In a statement yesterday, Margaret L. Baptiste, president of the National Active and Retired Employees said she’s afraid the January raise will be partially overtaken by price increases between now and the end of the year. She’s also concerned that the price tag for future COLAs “could cause added scrutiny to be applied to the federal retirement system during next year’s budgetary process.”

Both Sens. Barak Obama (D-Ill.) and John McCain (R-Ariz.) have pledged a top to bottom review of federal programs and benefits.

COLAs for federal and military retirees and people getting Social Security benefits are guaranteed by law. The actual increase is based on the increase in the Consumer Price Index from the third quarter of this year (July, August, September) over the third quarter of the previous year.

For information on how the CPI works (and good luck understanding it), click here.

Nearly Useless Factoid

Sad but true. The good people at say there’s no truth to the internet rumor that the In-N-Out hamburger chain will be celebrating with 60 year old prices. The company says it’ll be business as usual on October 22nd.

To reach me: