A 2% Cost of Living Adjustment for Federal Retirees in 2018

by | Oct 18, 2017

Last Updated June 11, 2024


In 2018, federal retirees will receive the largest Cost of Living Adjustment since 2012—2%. This increase applies to all retirees receiving Social Security benefits, not just federal retirees.

“[This] announcement was eagerly awaited by millions of Americans who rely on the increase to keep up with the rising prices for food, housing, gas, and medical care,” Richard Thissen, president of National Active and Retired Federal Employees Association said.

Advocating for a New Cost of Living Calculation

NARFE has wanted a change in the way the Cost-of-Living Adjustment is calculated to better reflect how senior citizens spend money. Currently, the COLA is based on the percentage increase in the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the current year over the average CPI-W for the third quarter of the last year in which the COLA became effective.

This year, the average CPI-W for July, August, and September was 239.668. The average for the 2016 third quarter was 235.057.

If the percentage increase is less than 2%, retirees under FERS receive the full COLA. If the change is between 2% and 3%, FERS receive a 2% COLA. Finally, if the increase is 3% or higher, FERS retirees receive 1% point less than the full increase.

Proposed Cost for the Elderly

NARFE wants to see the formula switched to the Consumer Price Index for the Elderly (CPI-E). Thissen said, “Our nation’s seniors spend more than twice as much on medical care than the population measured by the current formula to calculate COLA’s, the CPI-W. Congress must act to implement a new formula that adequately measures costs incurred by seniors.”

He also noted that the federal retirees’ portion of healthcare premiums will rise by 6.1% next year. “On top of this, Medicare premiums increase disproportionately for most federal annuitants during the last two years, and long-term care premiums sharply increased by 83%, on average. A new COLA formula that doesn’t force Americans to take one step forward, then 2 steps back is long overdue.”

Future Living Adjustments and Assistance

The new cost-of-living adjustment will take effect with the December 2017 benefits.

In 2023, we are projected to see the highest COLA in 40 years. This can make a huge different in the lives of disabled federal employees who struggle to keep up with inflation. If you are a disabled federal employee, Harris Federal Law Firm can help you apply for Federal Disability Retirement, which provides financial security for years to come. Schedule a FREE consultation today to learn more.

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