The latest estimates for next year’s COLA dropped from last month’s forecast of 3.1% to 2.7%
The Senior Citizens League produces a monthly estimate based off updated inflation data for the upcoming year’s cost-of-living adjustment (COLA) for recipients of social security retirement benefits. This COLA is computed using the Consumers Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is also used to calculate the COLA for FERS and CSRS annuitants. While the CSRS COLA is exactly the same as the COLA for social security, the adjustment received by those who collect a FERS pension is only the same as the other two if the COLA is less than 2%. If it ends up being between 2 and 3%, FERS retirees see a flat 2.0% increase. If it is over 3%, FERS income gets the same COLA as CSRS and social security, but minus 1.0%.
Current projections for the 2024 COLA are now at 2.7%, meaning a 2% COLA for FERS retirees. The actual COLA will be announced in October.
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The COLA that kicked in for 2023 was largest in over 40 years at 8.7% for CSRS and social security. This meant FERS retirees, and those who can earn COLAs on their FERS special retirement supplement saw a 7.7% bump in income.
How is the Annual COLA Determined?
Based off the CPI-W, the year-to-year inflation growth for the months of July, August, and September are taken into account to figure out a given year’s annual COLA. The average of these three numbers ends up being the following year’s adjustment for social security. So, even as we approach July, remember to take these projections with a grain of salt. Although the Senior Citizens League’s estimates get sharper as the year progresses, they remain mere forecasts. For example, last year’s estimates in July of 2022 had the 2023 COLA landing between 10.5% and 11.4%, but as inflation cooled slightly in August and September, the actual COLA ended up being roughly 2% less.
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