2025 COLA Estimate - Image: Gas Prices
  • After an 8.7% COLA in 2023 and a 3.2% adjustment in 2024, the downward trend is expected to continue for Social Security’s 2025 COLA. Current estimates predict 2.4%.

Retired federal employees receiving a CSRS pension receive the same cost-of-living adjustment (COLA) as recipients of Social Security retirement benefits. It is calculated by looking at inflation numbers for the months of July, August, and September as indicated by the CPI-W index. The average of those three numbers results in the COLA. For FERS retirees, the COLA might be slightly less.

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If the adjustment is more than 3%, FERS pensions are adjusted by the CSRS COLA minus 1. So in 2024, when the Social Security COLA was 3.2%, the COLA for FERS was 2.2%. If the adjustment for CSRS is between 2.0% and 3.0%, FERS would receive a flat 2.0%. Anything less than that, then FERS, CSRS, and Social Security all get the same adjustment to their retirement income.

The latest estimates from the Senior Citizens League predict a 2.4% COLA for social security and CSRS in 2025, and this would mean a 2.0% adjustment for FERS. If the adjustment ends up equal to 2.4%, this would be slightly higher than the Federal Reserve’s current target for inflation – which is 2.0%.

The CPI-W index showed prices growing at 3.1% inflation in February, considerably higher than the 1.7% inflation rate seen in January. All of these numbers are a far-cry from the peak seen during the summer of 2022, when inflation was at 9.1%. This contributed to the highest COLA of the past several decades as the adjustment for 2023 was 8.7%.

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.

2025 COLA Estimate - Image: Gas Prices

2025 COLA Estimate for Social Security, FERS, and CSRS