Note: This video was filmed in Jan 2024 and more recent COLA is available below.
2025 FERS COLA Projection
FERS COLAs are based on inflation (CPI-W) in 2024 and we won’t know the exact 2025 COLA until Mid-October 2024.
However, as the year progresses we can run projections based on what inflation has been thus far.
As of 8/15/24 the projected 2025 FERS COLA is 2.41%.
So if prices stay the same for the next 4-ish months then there will be a 2.41% 2025 FERS COLA.
But we’ll wait and see what happens
If you want to know how we are calculating the 2025 COLA, go here.
How are COLAs Calculated?
Unlike pay raises while you are working, FERS Pension COLAs (or cost of living adjustments), do not require an act of congress to happen.
FERS Pension COLAs happen automatically and the amount of the COLA depends on inflation.
The higher inflation the higher the COLA.
The Government uses the CPI-W index to measure inflation.
More specifically, they compare the average CPI-W in the 3rd quarter of the current year to the average CPI-W in the 3rd quarter of the previous year to see how prices have changed and the COLA is set accordingly.
‘Diet’ COLA
But we have to mention that if inflation (the increase in CPI-W) is more than 2% then FERS COLAs won’t match inflation exactly.
If inflation is anywhere between 0%-2% then the FERS COLA will match inflation exactly.
However, if inflation is between 2-3%, FERS pensions will only grow 2%.
And if inflation is more than 3% then FERS will lag inflation by 1%. For example, if inflation was 5% then your FERS COLA would be 4%.
So for many reasons it is best for FERS if inflation stays under 2%.
CSRS pensions and Social Security get the ‘full’ COLA even if it is over 2%.
Who Gets FERS COLAs?
Not all FERS retirees get COLAs. Traditional FERS don’t get their first COLA until the beginning of the year after they turn 62.
If you retire after age 62 then you’ll start getting COLAs right away.
Exception: Federal employees under the special provision rules don’t have to wait until 62 to start getting COLAs in retirement.
What if you Retired Mid-year? Do you Still Get the FERS COLA?
If you are over 62 and retire mid-year, your first COLA will be prorated based on the percentage of the year that you were retired.
So if you were retired for half of the year then you’d get half of the COLA that was accrued during that year.
2024 FERS COLA
The 2024 COLA for FERS Pensions is 2.2%. The 2024 COLA for CSRS pensions and Social Security is 3.2%.
2023 FERS COLA
The 2023 COLA for FERS Pensions was 7.7%. The 2023 COLA for CSRS pensions and Social Security is 8.7%.
