Will I Receive a COLA When Retiring on January 3, 2013?

By on June 19, 2012 in News, Pay & Benefits, Retirement with 10 Comments

FedSmith recently received a question from a prospective retiree about the 2013 retiree cost-of-living adjustment (COLA) payment.  The individual is planning to retire on 1/3/2013 and inquired if he would have to be off the employment rolls by 12/31/12 to receive the COLA.

The employee would not receive the adjustment in either situation.  He would have had to retire no later than 11/30/2011 to receive the full COLA, and would have to retire by no later than 10/31/2012 to receive even a prorated COLA.

The above paragraph assumes that the employee is under the CSRS retirement system.  Though the reader did not specifically state which retirement system the future retiree was covered by in the email question, I can assume it is CSRS as he plans to retire on 1/3/2013.  (See The Best Day to Retire From Now Until 2020) If the employee were under the FERS system, in addition to having to be off the rolls by the above dates, the employee would also have to be age 62 to earn a COLA (unless they were a special category employee).  (See The FERS Special Retirement Supplement (and Special Category Employees

The federal retiree cost-of-living adjustment is based on the increase in the Consumer Price Index for Urban Wage Earners (CPI-W) from the third quarter of one year to the third quarter of the next year (i.e., from September 30 of one year to September 30 of the next).  The increase in the CPI-W was recently estimated to be 1.5%. The retiree COLA is effective on December 1st.  The December annuity payment is paid on the first business day of January.

Individuals who retire in any given year will have their first COLA prorated by the number of full months from their annuity commencement date to December 1st.  For example, if I retired on June 30, 2012 my annuity would commence on July 1, 2012 and I would receive 5/12 of the adjustment (for July through November).

The CSRS COLA is based on the full increase in the CPI-W.  The FERS COLA might trail the CPI-W by as much as 1%, though this year it appears that the two adjustments could be identical.  The FERS COLA will be:

  • Equal to the increase in the CPI-W if the CPI-W goes up less than 2%
  • 2% if the CPI-W goes up between 2% and 3%
  • 1% less than the increase in the CPI-W if the CPI-W goes up more than 3%

An employee who is “transFERS” (that is, who voluntarily transferred from CSRS to FERS at some point) will receive a CSRS COLA on the CSRS portion of his annuity and a FERS COLA on the FERS portion of his annuity (if he meets the applicable age requirement).

Also see How to Calculate Your 2012 COLA Payment for more information.

John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. The book is written in an easy to understand question and answer format and covers all areas of federal benefits from the perspective of an employee at various stages of their career. Order your copy at shoplrp.com.

© 2016 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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  1. $15300432 says:

    Just another entitlement mentality fed employee. Is their no limit to their greed??

    • Guest says:

      When is asking a question about benefits or entitlements greed?  These are the expects here and people get to ask them questions for real and honest answers.  Unlike the made up quack-a-doodle squeeks you put out over night.

      • Bill T. says:

        It’s simple, beating employees down (in private or government) is considered good management. Employees pushing back is considered unloyal and greedy.

        onedonegotitwrong doesn’t get it and isn’t going to. Both he (she?) and lazycs have been presented with numerous examples of how they’re wrong. They (and others) persist in their never land lives, ignoring all evidence that contradicts their prejudices.

  2. CSRS Retiree says:

    My spouse retired from FERS in Dec 2007 when he was 57. He became disabled and received Social Security disability in Sept 2011. He was age 62 on 1/24/12 and died on 5/7/12. Will the survivor annuity receive COLA this year?

  3. OldRet says:

    Wow…thought this was common knowledge. Guess people pondering retirement don’t research the way I did. I started 4 or 5 years out figuring what my retirement income would be and adjusting. I had a big spreadsheet with all of the figures taking into account I wouldn’t be paying state tax in PA, no more 7% into retirement, no medicare etc. and less Federal taxes among other variables. It was quite a spreadsheet with all the variables. Since I was RIF’d 3 years before retirement and receving over the step 10 rate, I was getting only a little more than half of the pay raises and I knew I’d eventually get the full COLA in retirement.

  4. HR Manager (Retired) says:

    Wow, what a question to be asking so close to retirement.  Another indication that too many employees set retirement dates without knowing the full story about their retirement benefits.  Retirement, like most things in life, takes planning and retirement dates should not be set until the individual has done her/his due diligence.  Individualsl who find themselves asking basic questions about retirement after setting a retirement date need to rethink their decision and go back to the retirement research drawing board as to due otherwise will not lead to a happy retirement. 

  5. Enjoy Retirement says:

    Hope you enjoy your retirement years and don’t even look back at work life