Don’t Hold Your Breath

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By on February 27, 2019 in Retirement with 0 Comments

Man standing with his chin bent down, eyes tightly closed, and holding both of his arms up with his fingers crossed appearing to anxiously anticipate or hope for something to happen

Several years ago, when it seemed that everybody and their dog was trying to cut our federal retirement benefits, I wrote an article that ended with this advice – “Don’t Panic! It turned out that was good advice, as our benefits escaped the meat axe.

I think that today, as proposals are being floated to enhance our benefits and our Social Security, we need to follow some different advice – “Don’t Hold Your Breath!” 

We need to remember what we learned in Civics class about how a bill becomes a law. There are lots of steps between legislation being introduced and being enacted. According to the Huffington Post, in any given session of Congress, only 4% of bills that were introduced actually become law.

Of what enhancements do I write?

The Equal COLA Act 

The Equal COLA Act which would increase the FERS retirement COLA to that received by CSRS retirees. If this were in effect now, instead of the 2% COLA FERS retirees age 62 and older received, the COLA would have been 2.8%. The bill would make no change in the age of eligibility for the COLA.

The Social Security 2100 Act

The Social Security 2100 Act which would:

  • Change the way the Social Security COLA is computed to use the CPI-E (consumer price index for the elderly) rather than the CPI-W (consumer price index for urban wage-earners and clerical workers). This would result in slightly higher Social Security COLAs.
  • Increase the Social Security retirement benefit by increasing the first “bend point” in the computation to 93% from 90%. It is estimated that this would increase the average Social Security retirement benefit by 2%.
  • Raise the income thresholds that apply to the taxation of Social Security benefits for federal income tax purposes.
  • Collect the Social Security payroll tax from incomes greater than $400,000. This would leave a “donut hole” of income (that between the current $132,900 tax cap and $400,000) that was not subject to the payroll tax.
  • Increase the Social Security payroll tax by 0.1% per year from now through 2043.

There’s a long way for these proposals to go before any benefits reach FERS retirees and Social Security recipients. And, in a divided government, chances of passage and presidential approval are even slimmer.

It’s nice to see our elected representatives suggesting better, rather than worse, benefits but, like I suggested at the beginning of this article – Don’t Hold Your Breath!

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

© 2019 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

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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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