Federal and military retirees and people who get Social Security are in line for a 3.5 percent cost of living adjustment next year. The COLA will be even higher if inflation goes up between now and September 30.

About one in every six Americans – millions of former feds, ex-military and people on Social Security – will get the January, 2009 COLA. It’s automatic. Congress and the White House don’t have to do anything to implement it. And, because Social Security is the dangerous third rail of American politics, Congress and the White House know better than to touch it.

The majority of federal retirees are under the old Civil Service Retirement System. They will get the full COLA regardless of their age. Retirees who are under the FERS retirement system get one percentage point less than the full COLA and they don’t qualify for it until they are age 62 or older.

COLAs – a One Way Street

Several readers have asked what happens to their COLA if inflation goes down. There was a period several years ago when it did. And answer is: Nothing! Retirees get an inflation-adjustment when living costs rise. But when they drop (as they did during the Great Depression of the 1930s, and again during the 1950s) retirees would continue to get their current level of payments.

For more, click here.

Baseball Night For Feds

Saturday May 24th is federal-employee-appreciation night at the new (and fabulous) Washington Nationals ballpark. Card-carrying feds will get $5 off per ticket. Except of course for the $5 seats (yes they have them, and yes they are good)!

Our plucky and pennant bound team will take on the Milwaukee Brewers. Game time is 7:15 p.m. The $5 off deal is made possible by the Nationals and the Partnership for Public Service. Tickets (after the discount) are $33, $24 and $15. You can get them by clicking here.

Retirement Tax Havens

Robert Hollings wants to know “what are the states that don’t tax federal annuities?” The answer, according to the National Active and Retired Federal Employees, is (in handy alphabetical order) Alabama, Hawaii, Illinois, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, New York and Pennsylvania. They exempt pension income from federal, state or local governments from state taxes.

But as Ron B., of Dallas, points out “your state has to raise revenue somehow. That can be a state tax, sales tax, whatever. The bottom line is you can live in Texas which has no state tax, but it has every other kind of tax known to man. There is no escape.”

Nearly Useless Factoid

On this date in 1866, Congress authorized minting of the first 5-cent piece, also known as the “Shield nickel.” Because of hoarding of gold and silver during the Civil War, the new nickel “nickel” circulated far and wide, eventually replacing the silver “half dime.” And yes, it’s still hard to find a good five cent cigar.

To reach me: mcausey@federalnewsradio.com

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