Retirement Changes Raised

On retirement, CBO raised the possibility of changing the benefit formula for future retirees to base their annuities on their highest four or five years of salary, rather than the current highest three. A high-five base would cost the typical new CSRS retiree about $6,500 over the first five years and the typical new FERS retiree about $2,200 over that time, while a high-four base would cost about $3,100 and $1,100, respectively. It also said that retiree COLAs could be based on the “chained” consumer price index rather than the index currently used, which it said many analysts believe overstates increases in the cost of living. The change likely would mean shaving about 0.3 percentage points off annual COLAs, CBO said.