Expert's View

Cost-of-living adjustments for federal retirees have been up and down since they became automatic in 1962. In recent years, they have ranged between zero in 2010, 2011 and 2016 to a high of 3.6 percent (CSRS) and 2.6 percent (FERS) in 2012.

The 2017 COLA for eligible federal retirees and Social Security recipients is 0.3 percent. That ain’t much but it’s better than a poke in the eye with a sharp stick.


If you are a Social Security beneficiary you’ll automatically receive the full amount of any COLA in your January payment. If you are a federal retiree, the amount depends on the retirement system you are in.

CSRS retirees get a full COLA regardless of their age.

Most FERS retirees only receive any COLA after they reach age 62, but there are exceptions to that rule. Those who are immediately entitled to COLAs are law enforcement officers, firefighters and air traffic controllers, military reserve technicians who lost their military status due to medical reasons, disability retirees, and survivors.

Further, even FERS retirees who do receive COLAs often receive a smaller one than their CSRS counterparts. That’s because of the rules that govern FERS COLAs. When it’s 3 percent or higher, FERS retirees receive the COLA minus 1 percent. If it’s between 2 and 3 percent, FERS retirees only receive 2 percent. If it’s less than 2 percent, CSRS and FERS retirees receive the same amount, which they did in 2013 and 2015 (1.7 percent) and 2014 (1.5 percent).

However, this time the FERS and CSRS COLAs are the same amount.

For both retirement systems, COLAs that are paid are prorated based on the number of months you were on the annuity roll. For example, if you retired at the end of November 2016 (or up to December 3, if you were covered by CSRS), you’ll have been on the annuity roll in December 2016 and eligible for your first full COLA in January 2018.

If you retired at the end of December (or up to January 3, if you were covered by CSRS), you’ll be on the annuity roll in January and eligible for 11/12 of the COLA in January 2018. For each month’s delay in retiring, the following year’s COLA is reduced by an additional 1/12th.


Next week we’ll look in more detail at how that reduction works.

Of course, with COLAs as small as they have been in recent years, it’s hard to tell the difference.