2019 COLA Increase: How Large Will It Be?

Aug 16, 2018

increase

While the 2019 Cost of Living Adjustment amount won’t be available until mid-October, it is as good of as any to look at the possible COLA increase amount. Based on the current inflation trend, it’s very likely there will be a COLA increase in January 2019.

CPI-W

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 3.2% over the last 12 months to an index level of 246.155. However, this does NOT mean COLA recipients will receive a 3.2% increase next January. This index is the one used to calculate the COLA, but the amount isn’t based on a 12-month comparison.

The CPI-W figure for July 2018 was 2.71% higher than the average CPI-W figure for the 3rd quarter of 2017, which is used to determine the 2019 COLA.

Here’s how it works:

  • CPI-W readings are taken from the 3rd quarter (July to September) of the current year
  • Data is compared to the average CPI-W reading form the 3rd quarter of the previous year (2017)
  • The average from the current year (2018) is compared to the figure from the 3rd quarter of 2017
  • If the average goes up in 2018, then the difference, rounded to the nearest 0.1%, is what beneficiaries receive as the 2019 increase
  • If the figure is lower, due to deflation, no adjustment is made

What determines the COLA?

According to the Bureau of Labor Statistics (BLS), these are the 8 most significant spending areas that have the highest impact on whether beneficiaries of the next COLA will receive an increase:

  • Food and Beverage—cereal, milk, chicken, wine, full-service meals, snacks
  • Housing—rent of primary residence, owner’s equivalent rent, fuel oil, bedroom furniture
  • Apparel—men’s shirts and sweaters, women’s dresses, jewelry
  • Transportation—new vehicles, airline fares, gasoline, motor vehicle insurance
  • Medical Care—prescription drugs, medical supplies, physician’s services, hospital services
  • Recreation—TV’s, toys, pets and pet products, sports equipment, admissions
  • Education and Communication—college tuition, postage, telephone services, computer software and accessories
  • Other Goods and Services—tobacco and smoking products, haircuts and personal services

*This is not an exhaustive list, merely examples.

This calculation doesn’t always work out well for retirees. Medical care is often one of the most important spending costs for COLA recipients; CPI-W doesn’t always consider the higher medical care and housing costs for seniors compared to younger people in the urban and clerical worker category.

COLA beneficiaries received a 2% COLA in 2018, the highest in 6 years.

Message us & find out if you qualify today!

  • This field is for validation purposes and should be left unchanged.

Recent Articles

6 Key Reasons Why Your Disability Retirement Application Was Denied

Have you recently applied for Federal Disability Retirement, only to receive a denial? The Office of Personnel Management (OPM) is denying more initial applications than ever. However, it's important to understand that a denial does not mean the end of the road for...

Federal Employee Resources

Our ever growing library of federal employee resources give you the knowledge you need to make smart choices about your future.

FAQs

Frequently Asked Questions

Get the answers you need on-demand, from a team of federal employee benefits professionals.

View FAQ
Webinars

Federal Benefit Webinars

Twice per month we host webinars to help federal employees better understand their benefits and answer their questions LIVE.

See Webinar Schedule
Guides

Benefit Guides

From guides to detailed charts, these educational resources will help clarify confusing federal employee benefits topics.

See our resources