Retirement & Financial Planning Report

With the January 2019 COLA for retirees likely exceeding the pay raise for active employees, some employees eligible for retirement apparently are thinking of retiring soon, hoping to benefit from the former rather than the latter.

The CSRS COLA will be 2.8 percent and the FERS COLA will be 2 percent, for those eligible for COLAs (generally not until age 62 except for disability retirees, retired law enforcement officers, firefighters or air traffic controllers; COLAs also are paid on FERS survivor benefits regardless of age).

However, COLAs are reduced by a twelfth for each month that a person was not on the retirement roll. Thus, even by retiring soon, someone who is now still working would get only a small portion of the upcoming COLA.

Under FERS, a person is on the retirement roll in the month after the month of retirement, regardless of what date in a month he or she retired. Under CSRS, a person is on the retirement roll during the month of retirement if he or she retires within the first three days of the month; otherwise, that person is on the roll the next month. That means that to get the full amount in January, someone who retired under CSRS would need to have retired no later than December 3, 2017. Someone who retired under FERS, and who is otherwise eligible for a COLA would need to have retired no later than November 31, 2017.

Social Security benefits, however, are increased by the full COLA regardless of how long the person has been drawing those benefits.