If you are retired, about to retire or have a friend or relative who’s a former fed, do you want the good news or the bad news first?

Let’s go with good, which is: Thanks to the dramatic drop in oil prices the cost of living (as measured by the Labor Department) is going down. That’s negative inflation. Great, right?

Now for the bad, which is: Thanks to the dramatic drop in oil prices the cost of living (as measured by the Labor Department) is going down. That’s negative inflation. Terrible, right?

When federal workers retire, they, like people on Social Security, get annual cost-of-living adjustments each January. That’s assuming that prices go up which they usually do. But not always.

This year (January 2015) for example, the retirees got a COLA worth 1.7 percent. Not much, but better — as a percentage — than the 1 percent raise active-duty federal workers got.

Next year, white-collar feds are in line for a 1.3 percent raise (as proposed by the White House) or 3.8 percent in the long-shot proposal made by 31 congressional Democrats.

For retirees, any COLA depends on the rise, or not, of inflation. It prices go up, so does the amount of the 2016 COLA. But if the inflation rate is steady, or actually drops, there will be no COLA.

The good thing for retirees is that deflation doesn’t mean their benefits are reduced. But it can mean that they do not get a COLA. It’s happened in the past, but not often.

It is much too early to tell if there will be a COLA in 2016 and, if so, how much. But for now, living costs are down (according to the Consumer Price Index or CPI-U) by 0.70 percent as of January.

For a full (and I do mean full) explanation of the COLA countdown process you can visit the National Active and Retired Federal Employees’ website.

NEARLY USELESS FACTOID

By Michael O’Connell

The first diet soda was a sugar-free ginger ale produced in 1952 by Kirsch Bottling in Brooklyn, New York. However, it was produced as a drink for diabetics and not dieters. In 1958, Royal Crown Cola announced its first diet soda drink, Diet Rite.

Source: Wikipedia

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