At what age do FERS retirees get cola? Understanding eligibility and exceptions

For most FERS retirees, the annual cost-of-living adjustment (COLA) does not begin until age 62, a significant point of difference from other federal retirement plans. Understanding the specific rules that determine at what age do FERS retirees get cola is crucial for planning your retirement finances and protecting your purchasing power against inflation. This guide delves into the specifics of FERS COLA eligibility.

Quick Summary

Most FERS retirees receive their first COLA at age 62, though special provisions retirees and those on disability or survivor benefits may be eligible immediately upon retirement. The FERS COLA also uses a unique calculation method, which can result in a smaller annual increase compared to the CSRS system.

Key Points

• Standard FERS: Most non-disabled FERS retirees receive their first COLA at age 62, regardless of their retirement age.

• Special Provisions: Law enforcement officers, firefighters, and air traffic controllers are eligible for COLAs immediately upon retirement.

• Disability & Survivor: FERS disability annuitants and survivor annuitants can receive COLAs at any age, with some initial exceptions for disability.

• "Diet COLA": The FERS COLA has a unique formula that caps the increase when inflation is high, potentially providing less than the actual inflation rate.

• FERS Supplement: The FERS Annuity Supplement, which fills the gap until Social Security, does not receive COLA increases.

• No Back COLAs: If you retire before 62, you do not receive retroactive COLAs for the years you waited; the adjustment begins from your 62nd birthday onward.

Standard FERS Retiree COLA Rules

For the majority of retirees under the Federal Employees Retirement System (FERS), the Cost-of-Living Adjustment (COLA) is tied to a specific age requirement. This is one of the most critical aspects of FERS retirement planning, as it can significantly impact a retiree's income during their initial years of retirement. A non-disabled FERS retiree will not receive any COLA on their basic annuity until they reach age 62. This rule applies even if the retiree opts for an early retirement. For instance, if an employee retires at their Minimum Retirement Age (MRA) with a full, unreduced annuity, their pension amount will remain fixed until their 62nd birthday, at which point the annual COLA adjustments will begin. It's important to note that retirees do not receive retroactive or "back COLAs" for the years missed prior to turning 62.

This delay in inflation adjustments can create a period of financial vulnerability for retirees, as the buying power of their fixed pension decreases with inflation. While retirees in this situation may also receive a FERS Annuity Supplement, which bridges the gap until Social Security eligibility, this supplement is also not subject to COLA increases. This means that federal retirees must be mindful of this delay and plan their retirement finances accordingly, potentially relying more heavily on other sources of income, like savings or the Thrift Savings Plan (TSP), to bridge the gap.

Exceptions to the Age-62 Rule

While the age-62 rule applies to most FERS retirees, several exceptions allow specific groups of individuals to receive COLAs immediately upon retirement, regardless of their age. These exceptions are based on the nature of the employment or the type of benefit being received.

Special Provisions Retirees

Certain occupations within the federal government, categorized as "Special Provisions," have different retirement rules due to the demanding or high-stress nature of the work. This includes:

• Law Enforcement Officers (LEOs)
• Firefighters
• Air Traffic Controllers

For these groups, COLAs begin immediately after retirement, provided they meet the eligibility requirements for a full special provisions retirement. This immediate COLA offers a significant benefit, as many in these roles retire much earlier than the standard age, often a decade or more before turning 62.

Disability Retirees

FERS disability annuitants are generally eligible for COLAs regardless of their age. However, there is a specific nuance during the initial phase of retirement. During the first year of a disability annuity, if the benefit is calculated based on 60% of the annuitant's high-3 average salary, no COLA is applied. Subsequent COLAs are typically payable. For those whose disability annuity is based on their earned benefit, or for those who reach age 62 and their annuity is re-determined, the COLA rules change accordingly.

Survivor Annuitants

Spouses, former spouses, and children receiving a FERS survivor annuity are also eligible for annual COLAs, regardless of their age. The COLA is applied to the gross amount of the survivor annuity to help protect the benefit's purchasing power over time.

The FERS "Diet COLA" Calculation

Another key difference between FERS and the Civil Service Retirement System (CSRS) is the COLA calculation method. The FERS COLA is often referred to as a "diet COLA" because it is capped when the inflation rate, as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), exceeds 2%. The calculation works as follows:

1. If CPI-W increase is 2% or less: FERS COLA matches the CPI-W increase.
2. If CPI-W increase is between 2.1% and 3.0%: FERS COLA is capped at 2%.
3. If CPI-W increase is greater than 3.0%: FERS COLA is the CPI-W increase minus 1%.

This tiered system means that during periods of high inflation, FERS annuities may not keep pace with rising costs as effectively as CSRS annuities, which typically receive the full CPI-W increase. The FERS COLA is officially effective on December 1st of each year, with the adjustment appearing in the January payment of the following year.

Comparison of Federal Retirement COLAs

Feature	Standard FERS	Special Provisions FERS	CSRS (Civil Service)
COLA Start Age	Age 62	Immediately upon retirement	Immediately upon retirement
COLA Calculation	Capped ("Diet COLA")	Capped ("Diet COLA")	Full CPI-W increase
Disability COLA	Immediately (with first-year nuance)	Immediately (with first-year nuance)	Immediately
Survivor COLA	Immediately, regardless of age	Immediately, regardless of age	Immediately, regardless of age
Annuity Supplement COLA	None	None	Not applicable

How the FERS COLA is determined annually

1. Measuring Inflation: The U.S. Department of Labor uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to measure inflation.
2. Comparison Period: The average CPI-W from the third quarter (July-September) of the current year is compared to the same period of the previous year.
3. Applying the Formula: Based on the percentage change, the FERS COLA formula (2% cap or CPI-W minus 1%) is applied to calculate the adjustment.
4. Effective Date: The COLA is effective December 1st and is reflected in the January annuity payment.
5. Prorated First Year: If a retiree or survivor annuitant is not in receipt of benefits for a full year, their first COLA is prorated, receiving one-twelfth of the increase for each month they received benefits.

Conclusion: Navigating Your FERS Retirement

Knowing at what age do FERS retirees get cola is a foundational piece of retirement planning for federal employees. The age-62 rule for standard retirees, the exceptions for special provisions, disability, and survivor annuitants, and the unique FERS COLA calculation all play a critical role in determining your retirement income. By understanding these nuances, you can better prepare for your post-federal career life and ensure your financial security is protected against the long-term effects of inflation.

For official information on federal retirement benefits, including COLAs, refer to the Office of Personnel Management (OPM) website.

Frequently Asked Questions

Does my FERS annuity supplement get a COLA?

No, the FERS Annuity Supplement, which is paid to retirees under age 62 to bridge the gap before Social Security, does not receive any Cost-of-Living Adjustments.

What is the difference in COLA between FERS and CSRS retirees?

CSRS retirees receive a full COLA each year regardless of age, while most FERS retirees must wait until age 62. Additionally, the FERS COLA calculation is capped during high inflation, potentially resulting in a smaller percentage increase than CSRS.

Is the FERS COLA prorated during the first year of retirement?

Yes, if a retiree or survivor annuitant is not on the annuity rolls for a full year, their first COLA will be prorated. They will receive one-twelfth of the annual increase for each month they received benefits.

What if I retire under FERS Special Provisions? Do I get COLA before 62?

Yes. Retirees under special provisions, such as law enforcement officers, firefighters, and air traffic controllers, are eligible for COLAs immediately upon retirement, regardless of their age.

Do I get a COLA on my disability retirement under FERS?

Yes, FERS disability retirees are eligible for COLAs regardless of age, with the exception of the first year if their annuity is based on 60% of their high-3 average salary. After that, they receive annual adjustments.

How is the FERS COLA calculated when inflation is high?

When the Consumer Price Index (CPI-W) increase is over 3%, the FERS COLA is the CPI-W increase minus one percentage point. For example, a 5% CPI increase would result in a 4% COLA.

When does the annual FERS COLA take effect?

The annual COLA is effective on December 1st of each year, and the adjustment is reflected in the annuity payment received in January of the following year.