what is the fers cola for 2025

Jouse Heery

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02-12-2024

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The Federal Employees Retirement System (FERS) Cost of Living Adjustment (COLA) for 2025 is currently projected to be 3.2%. This means that in 2025, FERS retirees and those receiving disability retirement benefits will see a 3.2% increase in their monthly annuity payments. However, it's crucial to understand that this is a projection based on current economic indicators, and the final number may vary slightly.

Understanding the FERS COLA

The FERS COLA is an annual adjustment designed to protect retirees' purchasing power against inflation. It's calculated based on the change in the Consumer Price Index for Wage Earners and Clerical Workers (CPI-W) between the third quarter of the preceding year and the third quarter of the current year. The Office of Personnel Management (OPM) announces the official COLA in late October or early November each year.

How the 2025 COLA was calculated (projection)

The projected 3.2% COLA for 2025 is based on the projected increase in the CPI-W between the third quarter of 2024 and the third quarter of 2025. While the exact figures fluctuate until the official announcement, economic forecasts provide a reasonable estimate. This projection takes into account factors like inflation rates and overall economic growth.

Important Considerations Regarding the FERS COLA for 2025

• This is a projection: Remember, the 3.2% figure is a projection and is subject to change. The official COLA will be announced by the OPM later in the year.
• No COLA guarantee: While the FERS system aims to provide a COLA each year, there's no guarantee. In years with very low or no inflation, there may be no COLA increase.
• Check your official statement: Once the official COLA is announced, you'll receive an updated benefit statement reflecting the adjusted payment.
• Tax implications: Remember that any increase to your annuity payment may affect your tax liability. Consult a tax professional if you have questions.
• Impact on future payments: The COLA increase applies to your base annuity payment. Any additional benefits you receive, such as those from Social Security, will be adjusted separately.

What to Do Now

While you wait for the official announcement from the OPM, there's not much to do beyond staying informed. Continue to check the OPM website for updates. You can also sign up for email alerts to be notified when the official COLA is announced.

Frequently Asked Questions (FAQs)

Q: When will the official 2025 FERS COLA be announced?

A: The OPM typically announces the official COLA in late October or early November.

Q: Is the 3.2% COLA guaranteed?

A: No, this is a projection based on current economic indicators. The actual COLA may be higher or lower.

Q: Where can I find the most up-to-date information?

A: The official source for FERS COLA information is the Office of Personnel Management (OPM) website.

Q: Will my Social Security benefits also increase by 3.2%?

A: Social Security benefits have their own separate COLA adjustment, calculated independently from the FERS COLA. They will likely be different.

Q: What happens if I'm already receiving reduced annuity payments?

A: The COLA applies to your reduced annuity, so you will see a percentage increase based on your reduced monthly benefit.

By staying informed and regularly checking the OPM website, you can ensure you are aware of the official FERS COLA for 2025 once it is released. Remember that even though this is a projection, it provides a reasonable estimate for planning purposes.