Recent headlines have brought some tough news for Feds, as policy changes continue to impact the federal workforce. However, amidst these concerns, there is a piece of good news on the horizon: an update on the potential 2026 pay raise, which seeks to offer a well-deserved boost to compensation that reflects the value and dedication of federal employees.

What’s in Store for Federal Employees in 2026?

Earlier this month, a proposal was introduced by Democratic lawmakers to provide federal employees with a significant pay increase in 2026. If passed, the bill would grant an average 4.3% raise for federal workers across the board. This move is designed to help keep pace with inflation and ensure that federal salaries remain competitive with private-sector compensation, addressing concerns about the wage stagnation faced by many government employees over the years. It also underscores the value placed on the critical work that Feds do every day.

Why This Raise Matters for Federal Employees

For federal workers, the 4.3% proposed raise will make a noticeable difference in your paycheck. While it may not fully make up for the years of stagnant pay increases, it provides an important step toward narrowing the wage gap between the public and private sectors. For those approaching retirement, the pay raise could also impact retirement planning, as higher wages contribute to higher retirement benefits based on the Federal Employees Retirement System (FERS) or Civil Service Retirement System (CSRS) calculations.


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Planning Ahead: How This Impacts Your Financial Future

While the 2026 pay raise may seem like a distant event, now is the perfect time to start thinking about how it fits into your long-term financial plans. Whether you're planning for retirement or just aiming to make the most of your earnings now, the proposed raise could provide an opportunity to reassess your financial strategy.

A larger paycheck could allow for more aggressive retirement savings, enable you to boost contributions to your Thrift Savings Plan (TSP), or allow you to shift your TSP contributions from pre-tax to Roth to help build up your after-tax savings. More income may also offer a chance to revisit your investment portfolio or pay down debts more quickly. Strategic financial planning is about looking ahead, anticipating changes like this, and adjusting your goals and investments accordingly.

If you need some help with that, feel free to reach out to us for a complimentary 1-on-1 financial planning consultation by emailing [email protected]. Our team of fed-focused financial advisors here at Serving Those Who Serve would be happy to help you make the most of the opportunities ahead.

**Written by Katelyn Murray, CFP®, ChFEBC®, FBS®, CFT-1™, ECA. 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 Katelyn Murray 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. **