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FERS & CSRS on COLA 2023 adjustment: is there an increase for federal & civil retirement?

(a lot of times, the titles are not great and need lowercase and uppercase adjustments, as well as articles added or taken out … could a programmer create a way in Credkeeper to possibly make TWO lines for the title, and one would be editable by the proofreader?) More than 2.6 million retirees and their dependents were eligible for and received benefits from the civil service pension program in 2018, according to official data. More than two-thirds received honors under the Civil Service Retirement System (CSRS); when payments begin in January 2023, they will see a rise of 8.7%. For the final one-third of Federal Employees Retirement System (FERS) retirees, the anticipated 7.7% cost-of-living adjustment (COLA) increase for 2023 is available. Employees of the federal government hired after January 1, 1987, are the ones covered by the FERS. Their annuity benefits will grow less than initially projected because of how the FERS was structured when Congress formed the pension program in 1986. The COLA retirement plan features include a Basic Benefit Plan, Social Security, and a Thrift Savings Plan. Methodology for Determining the Cost-of-Living Adjustment for the FERS Plan Cost-of-living adjustments for the FERS Basic Benefit Plan are now only matched by the increases for Social Security and CSRS if the growth is less than 2%. When the COLA is between 2-3%, the FERS COLA will be restricted at 2%. If the combined increase for Social Security and the Civil Service Retirement System is more than 3%, as it was again for 2023, the FERS COLA will be decreased by 1%.  Consequently, in 2023, retirees’ monthly income from their FERS pension annuity will only increase by 7.7%. Payment of the enhanced amount will begin in January 2023, coinciding with the CSRS equivalent. Cost-of-living Adjustment Calculation The Social Security Administration compares the Consumer Price Index-W (CPI-W), a broad government measure of inflation, from the third quarter of the fiscal year to the one from the previous year using a method established in federal law. We will use the CPI-W for the fiscal year’s third quarter to make this comparison. Advocacy organization Senior Citizens League (SCL) projected a 2.7% COLA hike for 2023. The data from the prior two CPI-W surveys served as the foundation for their estimate. The 2023 (COLA) was announced on the same day as the September 2022 Consumer Price Index for Urban Wage Earners and Clerical Workers was issued, showing an increase of 8.5%. The skyrocketing inflation that resulted in the historically high cost-of-living adjustment of 8.7% was the cause of the financial hardships that people across the country are currently experiencing. Thankfully, inflation has started to decline, but not nearly enough to alleviate the situation.
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30 + years as a Financial Planner. Securities (Series 1,7, and 65) and Insurance Licensed. Retirement Planning including the actual planning of where your income will come from as well as a discussion of products to get you there. The market has been volatile since Covid broke out and many people are not comfortable with this. If you are retired we will look at your total income and tax situation. If you are still working we have some more time to plan.

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Thomas Sweet

Thomas Sweet has 30 + years as a Financial Planner. Securities (Series 1,7, and 65) and Insurance Licensed. Retirement Planning including the actual planning of where your income will come from as well as a discussion of products to get you there. The market has been volatile since Covid broke out and many people are not comfortable with this. If you are retired we will look at your total income and tax situation. If you are still working we have some more time to plan.

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