Here is a combination of good and bad news for federal retirees.
The good news: The COLA for 2007 is continuing to go up. According to the National Active and Retired Federal Employees Association, the 2007 COLA is now on track to hit 3.4% next year. The actual amount of the increase is likely to be higher than 3.4%.
The final figure for next year’s increase for retirees will not be available until October. The COLA amount is calculated using the consumer price index for Urban Wage Earners and Clerical Workers which is compiled by the Bureau of Labor Statistics. The year-to-year increase is based on the federal government’s fiscal year which ends in September. The COLA is derived by comparing the index from September of the previous year.
The bad news: Your expenses are also going up. With increases in the cost of gas, food and a probable increase in the cost of health insurance, chances are the final increase will not go up as much as a higher rate of inflation will take away from your monthly check.