When you retire, your base annuity will be computed and will be increased by cost of living adjustments under the separate policies applying to FERS and CSRS.
If you elect a survivor annuity, the amount of the reduction will be calculated and applied. After that’s done, you will have a new base annuity; that annuity similarly will receive COLAs under the pertinent policy.
For example, if you are under FERS and your original base annual annuity were $30,000 and you elected a full (50 percent) survivor annuity for your spouse, that figure would be reduced by 10 percent. So your new base annuity would be $27,000. That’s the annuity amount that would be increased each time you were eligible for an annual cost-of-living adjustment.
If you died before your spouse did, your spouse would be entitled to the percentage of your annuity that you elected. Here’s where a finer point of COLA policies comes into play: That percentage would be applied to the annuity you would have been receiving on the day you died had you not elected a full survivor annuity.
Using the example above, if your original base annual annuity were $30,000, your survivor would receive 50 percent (that is, the percentage you chose) of that annuity increased by all intervening COLAs.
On the other hand, if your spouse died before you did, your annuity would be increased to what it would have been had you never elected a survivor annuity. Here’s a second finer point: It will be increased to an amount including all the intervening COLAs between your retirement and when your spouse died.
COLA Count Crosses 5 Percent Mark
The count toward the January 2022 federal retirement COLA stands at 5.1 percent with three months remaining in the count, following an increase in June of 1.1 percentage points in the inflation index used to set the adjustment.