The 8.7% Cost-of-Living Adjustment (COLA) will also apply to CSRS and CSRS-offset retirees while FERS retirees will see a COLA of 7.7%.
As predicted a few weeks ago, the 2023 COLA has officially been revealed at 8.7% for Social Security recipients. This means the COLA for federal retirees who receive a CSRS or CSRS-offset pension will also see a 8.7% boost. Because those who retired under FERS get 1% less when the annual COLA is 3% or higher, pension checks distributed from the FERS system will experience a COLA of 7.7%. The 8.7% figure is the highest COLA since 1982, when the adjustment was 7.4%, and FERS did not yet exist.
What if I Retired This Year?
It is also important to remember that unless you retired under FERS with special provisions or under disability, there is no COLA if you are not yet age 62. If you turned 62 this year, but have been retired the whole year, you can expect the full COLA and not a prorated one.
Our webinars cover Taxes, COLAs, TSP, FERS, CSRS, FEHB, and more. Check out the full schedule here:
2023 Pay Raise, and More
With the COLA for next year now in the books, this doesn’t have much effect on active federal workers. The pay raise for current employees is strongly expected to be 4.6% on average, but there’s still a slight chance that Congress or the White House could finalize the raise either higher or lower. Representative Gerry Connolly has been pushing for a 5.1% federal pay raise in 2023 since February. The 2023 TSP Contribution Limit is also not official yet, but estimates believe it will increase to $$22,500.
Medicare B Premiums are also set to decrease 3%. As these premiums are deducted from Social Security benefits, those who utilize both could see a net boost of 11.7% to their Social Security checks. On the other hand, FEHB premiums and FEDVIP premiums will undergo an average increase.
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Until Next Time,
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
