2024 COLA for FERS ; image - older gentleman shopping for groceries

After an 8.7% COLA for 2023, read the latest on inflation and interest rates – indicating a much lower adjustment next year.

Over 70 million Americans receive either Social Security benefits or Supplemental Security Income (SSI) payments from the Social Security Administration. This includes older folks claiming retirement benefits, people of all ages that receive disability benefits, and even some family members are eligible to receive a beneficiary’s social security. For federal retirees collecting a FERS or CSRS pension, they receive Cost-of-Living Adjustments (COLAs) as well.


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CSRS, like Social Security, receives an adjustment that equals the rise of inflation at the end  of a given fiscal year (September 30th) as indicated by the Consumers Price Index for Urban Wage Earners and Clerical Workers (CPI-W). FERS, on the other hand, only receives the same COLA as CSRS and Social Security if the COLA is less than 1.0%. If the CPI-W shows inflation grew between 2.0% and 3.0%, then FERS receives a flat 2.0%. If the COLA for Social Security and CSRS is 3% or higher, then FERS annuitants get the same COLA, but minus 1.0%, That is why FERS retirees saw a 7.7% COLA for 2023 while CSRS and Social Security recipients got 8.7%.

During the last 12 months, there’s been a 5.8% increase in the CPI-W, but by the time autumn rolls around, some experts are predicting the COLA could be less than 3%, possibly even less than 2%.

Spending Trends

Out of all Americans last year, there was a 2% average increase in spending. Among just older citizens (born in 1964 or earlier), however, the increase in spending rose between 4% and 6% compared to the same timeframe last year. Interestingly, the same group of people were the ones who cut the most spending during the pandemic. This recent uptick could very well be because of the high COLA that went into effect in December 2023, but the extra spending isn’t all coming from Social Security Benefits. According to the Senior Citizen League, older Americans’ who have credit card debt that wasn’t paid off in 90 days or less went from 35% in the 3rd Quarter of Fiscal Year 2023 to 44% in the 1st Quarter of Fiscal Year 2024.

In a nutshell, higher spending exasperates rising inflation, and the Federal Reserve has been trying to combat inflation by raising interest rates. We’ll see how this all plays out, but unless the country’s economic landscape drastically changes before October, a COLA comparable to last year’s 8.7% doesn’t seem likely. Right now, between 2.0% and 5.8% are where the best estimates currently sit.

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Until Next Time,

Benefits Ben, STWS

**Written by Benjamin Derge, Financial Planner, ChFEBC℠ 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 Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.

2024 COLA for FERS ; image - older gentleman shopping for groceries

2024 COLA for FERS, CSRS, and Social Security