Federal Retirees Will Learn Their 2015 COLA Soon

K-Kwan Kwanchai/Shutterstock.com

Federal retirees will know their 2015 cost-of-living adjustment soon, and it’s expected to be somewhere between 1.6 percent and 1.8 percent.

The Bureau of Labor Statistics announced that it will publish September’s Consumer Price Index figure on Oct. 22. That number is the final data point needed to calculate the 2015 COLA for federal and military retirees, as well as Social Security beneficiaries and those receiving veterans’ benefits.

Plugging the latest available data into the COLA formula results in a 1.6 percent increase, down from the 1.8 percent August estimate, based on July statistics. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) fell 0.2 percent in August, according to statistics the BLS released recently. The CPI-W, which the annual COLA for retirees is based on, dropped 0.1 percent in July, after increasing in May and June.

The CPI-W measures price changes in food, housing, gas and other goods and services. Annual COLAs are based on the percentage increase (if any) in the average CPI-W for the third quarter of the current year over the average for the third quarter of the last year in which a COLA became effective.

Even with the slight decreases in July and August, federal and military retirees, as well as Social Security beneficiaries and those receiving veterans’ benefits, are on track to receive a larger COLA than the 1.5 percent bump they got in 2014. Retirees received a 1.7 percent increase for 2013, and a 3.6 percent boost for 2012. The 2012 COLA increase was the first since October 2008 (which took effect in 2009).

Federal employees, who do not receive COLAs, are on track to receive a 1 percent pay raise next year, the same as in 2014.

According to the formula, if the full COLA increase is 3 percent or higher, as it was for 2012, then retirees under the Federal Employees Retirement System receive 1 percent less than the full increase. So FERS retirees received a 2.6 percent bump for 2012. If the COLA falls between 2 percent and 3 percent, then FERS retirees would receive 2 percent. If the increase is less than 2 percent, as it was in 2014, FERS retirees receive the same as retirees under the Civil Service Retirement System; this year, it was a 1.5 percent boost.

(Image via K-Kwan Kwanchai/Shutterstock.com)

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