It's official: COLAs back in style

Thursday - 10/20/2011, 4:00am EDT

The 3.6 percent cost-of-living adjustment due federal retirees in January could jump-start retirements in many federal agencies — especially if Congress decides to extend the current two-year freeze on federal salaries. The raise will be 3.6 percent for the majority of retirees who are under the old CSRS system and 2.6 percent for FERS retirees who are 62 or older.

The 2012 COLA is the first inflation-catchup that federal-military and Social Security retirees have had since 2009 when they got a 5.8 percent increase. COLAs are based on the rise in living costs from the current third quarter (July, August and September) over the previous third quarter. Inflation is measured via a complex (and controversial) measurement done by the Bureau of Labor Statistics.

Many retirees feel the Consumer Price Index doesn't take into account or give enough weight to things that people need, use and purchase as they get older. By the same token, some critics believe the CPI doesn't take into account purchasing patterns that change (hamburger instead of steak) in economic hard times. One of the things the bipartisan Congressional supercommittee may propose would be a switch from the CPI to another yardstick to measure inflation. The National Active and Retired Federal Employees has warned that change could reduce future COLA increases by as much as half a percentage point each year.

The 2012 COLA goes into effect in December and will be reflected in checks or direct deposits made to retiree accounts in January. Workers under the older CSRS retirement system will get the full COLA regardless of age. Those who are under the FERS retirement program will get 2.6 percent. But their COLAs do not start until they reach age 62.

Frozen feds planning to retire at the end of 2011 to get the 2012 COLA are out of luck. The COLAs are prorated over a 12-month period. In order to get the full COLA next year they would have had to retire in December of last year.

Although it's too late for feds to retire and get the full COLA for 2012, the fact that retirees are getting a raise and active-duty feds aren't, could be the tipping point for many people. For example this comment from a short-timer:

" Do you have any stats (or can you get stats) on how many people are planning on retiring 12/31/2011. One of my colleagues says his office usually has 10 to 15 retirements and this year they are having 40 to 50 retirements. I am guessing that this year Federal Retirements are going to be larger than normal. (double to triple). Oh yeah, forgot to mention ... I'm retiring 12/31/2011. -- Robert B.

NEARLY USELESS FACTOID

By Jack Moore

Can too much spice in your life kill you? Specifically, can eating too much spicy food kill you? It turns out, Life's Little Mysteries reports, a 1980 research study found that three pounds of extremely hot chile peppers in powder form could kill you, in theory. However, it would have to be ingested at one time and the body's reaction to such intense spiciness would likely prevent you from getting that far.


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