FERS & CSRS Cost of Living Adjustment (COLA) for 2020.

Posted by Frank Augustosky on 10/16/19

FERS & CSRS Cost of Living Adjustment (COLA) for 2020.

The Social Security Administration has recently announced its decision for a COLA increase of 1.6% in 2020.  This will apply to current FERS and CSRS beneficiaries.  The increase goes into effect in January 2020.

This is less than the COLA for 2019 of 2.8% or 2.0% from 2018 for FERS and CSRS beneficiaries.  The 1.6% increase is better than the increases from 2016 of 0.0% and 2017 0.3%.

Beginning in 1975, Social Security started automatic annual cost-of-living allowances. The change was enacted by legislation that ties COLAs to the annual increase in the Consumer Price Index (CPI-W). This is meant to mitigate any harm to annuitants as a result of inflation, which would negatively impact the buying power of the annuity.

Congress continues to work on a pay increase for current federal employees, with current discussions ranging between 3.1% as passed by the House and 2.6% proposed in the Senate.  While these changes are not automatically adopted by the United States Postal Service (USPS), the amount given to other federal employees is generally used as the benchmark for changes that may be adopted by the USPS.

Brian McLaughlin, Founding Partner, Imperium Global Advisors