2019 COLA Increase Announced

Largest Increase in 7 Years

Largest Increase in 7 Years

In 2012, the annual COLA increase was 3.6%. It has not come close to that again until the COLA that will be received by Social Security recipients and many federal retirees starting in January 2019. The COLA for 2019 is 2.8% according to the official announcement released by the Social Security Administration on October 11, 2018.

It represents the biggest increase in seven years. The higher benefits will start on January 1st. Annual increases in Social Security and retirement annuities for many federal employees are determined each year based on changes in a component of the consumer price index. This component is called the CPI-W. There was a 2% cost -of-living adjustment in 2018 and an 0.3% adjustment in 2017. These annual increases are meant to keep up with inflation.

Who Receives COLA?

First, for those former federal employees who are under the Federal Employees Retirement System (FERS) or FERS Special benefits employees, you may receive a different amount than other employees. Under FERS or for FERS Special benefits, if the increase in the Consumer Price Index (CPI) is 2 percent or less, the Cost-of-Living Adjustment (COLA) is equal to the CPI increase. If the CPI increase is more than 2 percent but no more than 3 percent, the Cost-of-Living Adjustment is 2 percent. If the CPI increase is more than 3 percent, the adjustment is 1 percent less than the CPI increase. The new amount is rounded down to the next whole dollar.

Second, to get the full COLA, without regard to whether you are in FERS or the CSRS system, you must have been getting paid as a retiree for a full year. If you are planning on retiring late in the year, you will not get the full COLA increase in 2019. If you were not retired for the entire year, the increase is prorated. You will receive one-twelfth of the increase for each month in which you received retirement benefits.

Third, Federal Employees Retirement System (FERS) and FERS Special Cost-of-Living Adjustments are not provided until age 62, except for disability, survivor benefits, and other special provision retirements.

• Retired military veterans, VA rates for compensation and pension for disabled veterans and surviving families will be effective December 1, 2018 and will be reflected on the first check to be paid on December 31, 2018.

• Social Security benefits will be effective beginning with December 2018 benefits, which are payable in January 2018.

• Federal SSI payment levels will begin on December 29, 2017.