5.7% for Retirees in 2009? It May Still Go Higher

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By on July 17, 2008 in Retirement with 0 Comments

It is possible that federal employees will get a raise of 3.9% in 2009. That is not a bad nationwide average as some federal employee would get more than the 3.9%–perhaps as much as 5% or so in some metropolitan areas.

But, while the 2009 pay raise is in limbo for active federal employees, the cost of living adjustment for federal retirees is rolling along and will be computed automatically. For anyone who has not given it much thought, this figure may be a surprise: 5.7% in 2009. That figure could go up or down before the final figures are computed for the 2009 COLA adjustment is finalized but it is clear than inflation is back and is impacting our purchasing power.

The latest figures show a big jump in the annual COLA figures. At this time last month, the 2009 COLA adjustment was pegged at 4.5%. The result could be that federal retirees would get as much as 6% or even 7% in 2009.

For those readers who think this is good news, keep this in mind: if the COLA adjustment goes up 6% or so in January, you are probably further behind in your purchasing power than you realize. It is likely that your actual expenses, such as your contribution to medical health insurance, will go up even more than the COLA adjustment.

And, for federal employees who are still at work and collecting a regular paycheck, keep in mind that you do not get an automatic COLA adjustment. You may get an average raise of 3.9% next year–or you might get less depending on your geographic location and the final action taken by Congress and the President on the budget.

Moreover, here is another reality check. Senate Majority leader Harry Reid says that Congress wants to adjourn by the end of September, Presumably, our elected representatives want to take care of the most important business of the country; namely, campaigning to keep their Congressional seats. This, says Reid, means that there is likely to be a continuing resolution passed to continue government spending until 2009.

A continuing resolution could contain a provision that provides a 3.9% pay increase. Or, it could be silent on the issue and federal employees would likely get the 2.9% pay increase recommended by President Bush. The higher amount could be made retroactive to January 1, 2009 if this occurs.

In short, nothing is certain about the 2009 pay increase except that inflation is occurring and federal retirees will get the benefit of a higher COLA amount in the coming year. as a result of inflation eating into the purchasing power of each dollar spent.

© 2020 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.


About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters onĀ federal human resources. Follow Ralph on Twitter: @RalphSmith47