Federal Retiree - Social Security Benefits Flatline

Friday - 4/16/2010, 4:00am EDT

Things are not looking up for federal-military-Social Security retirees who are hoping for a cost of living adjustment in January, 2011.

The retirees got a 5.8 percent COLA two years ago thanks to inflation fueled (no pun intended) by then skyrocketing oil prices. But with the recession also came minimal inflation, and for some months, the cost of living actually dropped.

Result:

For the first time since automatic COLAs were introduced, retirees whose benefits are indexed to inflation did not get any increase in January, 2010.

Congress and the White House tossed a bone to some (but not all) retirees by either giving them a $250 stimulus check or a $250 tax credit for the 2009 tax year. For information on that, click here.

Earlier this week the Bureau of Labor Statistics announced that living costs for the month of March rose only 0.1 percent. That means that retirees are still in the hole on the countdown toward the next (2011) COLA.

The inflation-adjustments are based on the rise in the Consumer Price Index from the current third quarter (July, August, September) over the previous year's third quarter. But when there is little or no inflation (or downright deflation when living costs actually drop) there is no increase. Right now that figure, which usually goes up to track inflation, is down 0.9 percent.

The goods news is that when living costs drop, retirees do not have their benefits cut. They may not get a raise, but they do not take a cut.

Many retirees say that their own personal cost of living has gone up. That may well be true, but the COLA countdown is based on the Consumer Price Index and it says overall living costs are down. So unless there is massive inflation over the next several months, the odds of getting any COLA increase next year are slim and none.

For the official explanation, click here.

Teleworking Update

The House Oversight and Government Reform Committee has approved a bill that would encourage/force federal agencies to let more employees work from home. The bill, H.R. 1722, is sponsored by Reps. Frank Wolf (R-Va.) and John Sarbanes (D-Md.). Both have lots of federal workers in their districts. Wolf represents one of the most traffic-choked areas in the U.S., and he's been pushing teleworking using both the legislative carrot and stick on agencies for years.

Confessions of a Millionaire Fed

Coming Monday, the story of how a hard-working fed has banked $1 million toward retirement.

To reach me: mcausey@federalnewsradio.com


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