![]() ![]() 31, 2022, and who will be eligible for a COLA, the first COLA will be granted on Dec. The initial COLA for FERS retirees who are not eligible to receive a COLA during their first year (or more) on the annuity rolls is the full COLA without proration.įor those who are planning to retire on Dec. Your first COLA may be prorated based on how many months you were on the annuity rolls before the COLA was granted. ![]() The new rate would have been payable on Jan. ![]() The COLA is applied to your gross monthly annuity.Ī CSRS retiree eligible for the full 2021 COLA of 5.9% with a gross annuity of $5,000 a month would have received a new benefit of $5,295. Those under the Federal Employees Retirement System can’t get COLAs until age 62, with some exceptions. Retirees covered under the Civil Service Retirement System can receive a COLA at any age. The recent spike in inflation is a reminder of the significance of this benefit. Although it can be argued that the COLA formula does not truly reflect the impact of inflation, especially for older retirees, it is certainly better than a level payment for life, which is what most private sector pensions provide. The COLAs that are granted for federal and military retirees, along with Social Security recipients, are provided so that over the life of your retirement, you can afford to buy groceries, put gas in your car, pay your rent or mortgage and cover other expenses of daily living. We probably won’t know whether Congress backs that figure until much later in the year. This year, President Biden has proposed a civilian federal pay increase of 4.6%, the highest in 20 years. Last year, the January pay adjustment for most federal employees was a 2.2% increase to basic pay and a 0.5% boost to locality pay, both of which took effect on Jan. 31, 2021, and less than if you retire on Dec. So your high-three would be higher than if you had retired on Dec. 2 would be in place for five months and 29 days out of the last three years. If you were to retire on June 30, 2022, the pay adjustment that took effect for most feds on Jan. Pay changes can be step increases, promotions or the January pay adjustment. Your high-three can have three, four, five or more pay changes that are each prorated based on how many days they were in effect before the next pay increase. Every day you continue to work, after all, your high-three increases. (The other is your length of service.) But keep in mind that if you choose your retirement date based on pay adjustments, you might never retire. The annual federal employee pay increases factor into your high-three average salary, one of the two primary factors for computing your retirement benefit. It’s a tricky question to answer, but the place to start is by understanding how these two increases work. I have been getting a lot of questions lately about choosing when to retire in order to maximize the impact of both the annual cost-of-living adjustment to retirement benefits and the yearly federal employee pay increase. ![]()
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