Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

A Look Ahead


In my last column, I took a look back at changes in the federal retirement world in 2012. This week, let’s take a look ahead at what has already changed for 2013, and what other developments might be on the horizon.


Civil Service Retirement System retirees (including survivor annuitants), eligible Federal Employees Retirement System retirees (including survivor annuitants), Social Security recipients and military retirees received a 1.7 percent cost-of-living adjustment to their benefits on Jan. 1. CSRS retirees whose benefits began between Jan. 1 and Nov. 30, 2012, received a portion of this COLA based on the number of months they were retired before Dec. 1.

Eligible FERS retirees include those who retired under special retirement provisions (such as law enforcement officers and firefighters), regular retirees 62 and older, and disability retirees. FERS retirees who were entitled to the COLA, but whose benefits began between Jan. 1 and Nov. 30, 2012, received a pro-rated COLA based on the number of months they were retired before Dec. 1.

Children’s survivor benefits increased by 1.7 percent as well. Under FERS, these benefits are reduced by Social Security benefits paid to surviving children.

FERS Changes

The New Year also has brought a few changes that mostly affect FERS retirees:

  • The earnings limit for retirees receiving the FERS supplement and for Social Security beneficiaries who are younger than their full retirement age has increased to $15,120.
  • Newly hired federal employees will be covered under the FERS-Revised Annuity Employees system. These employees must make an additional contribution to their retirement benefits of 2.3 percent of basic pay. Employees already in FERS as of Dec. 31, 2012, are not covered by the new provisions. (Incidentally, members of Congress and congressional employees also are now covered under the new system, and in addition they will now accrue retirement benefits at the same rate as regular federal employees.)
  • The annual limit for elective deferrals to the Thrift Savings Plan has gone up to $17,500 for 2013, while the “catch-up” contribution amount remains at $5,500.

Payroll Tax Holiday Over

In the recently completed fiscal cliff deal, Congress and the Obama administration agreed to end the payroll tax holiday. So the FICA tax will increase to 6.2 percent for employees during 2013. The maximum taxable wage subject to this tax has increased to $113,700.

What Might Happen

Some ideas that have been floated in Congress and the White House could affect future federal retirement benefits, and doubtless will be debated again this year.

One revenue-generating proposal known as “chained CPI” would involve implementing a new way of using the Consumer Price Index to determine annual cost-of-living adjustments to federal benefits, including Social Security payments, CSRS and FERS retirement benefits and military retirement benefits. Here’s more information on how the chained CPI would play out.

Other potential changes that have been floated in budget negotiations and by independent deficit-reduction commissions include changing from using the highest three years of salary to compute retirement benefits to a high-five approach; eliminating the FERS supplement; and increasing retirement contributions for current employees.

Remember, none of these proposals have been enacted -- yet.

Correction: The original version of this column indicated that the earnings limit for retirees receiving the FERS supplement and for Social Security beneficiaries who are younger than their full retirement age has increased to $14,120. The correct figure is $15,120. The article has been updated to correct the error.


Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.