A bitter diet COLA coming up …

The COLA for 2013 will increase by 1.7 percent. This column was written before the increase was announced.

The exact amount of the January 2013 cost-of-living adjustment won’t be known and official until sometime this morning. But if you are a federal or military retiree, or someone who gets Social Security benefits, you will probably find this diet COLA too bitter.

This morning is the scheduled time when the Bureau of Labor Statistics will release the Consumer Price Index, showing the increase, if any, in the rate of inflation for the month of September. Inflation adjustments for federal/military/Social Security retirees — about one in every six Americans — are tied to the CPI. The annual January increase they get is based on the rise in the current third quarter (July, August, September) over the third quarter in the previous year.

Most Americans who get pensions from their former employers — less than half of all retirees — don’t have to worry. They don’t get COLAs. Period.


Retired feds do get inflation-triggered adjustments (except in years like 2010 and 2011) when inflation, as measured by the BLS, was flat accompanied by periods of actual deflation. Bottom line — nobody got COLAs in those years. Retirees did get a 5.8 percent COLA in 2009. In January of this year, federal-military-Social Security retirees got a 3.6 percent raise.

In a column here last month, we said the January 2013 COLA would — based on then current data — be in the ballpark of 1.38 percent. And that even a COLA that small would be bigger than the raises active-duty feds got in 2011and 2012 . Pay has also been frozen at least through next March — and probably for the entire year.

Many retirees took little comfort in the fact that they are at least getting something as opposed to nothing.

“Who does the shopping for the people in the White House and Congress,” said a retiree in Washington state. “They say prices are flat or decreasing! What universe are they living in. Don’t the people who compile the CPI have eyes?”

Another retiree said “a raise in the ‘magnitude’ of 1.38 percent would be a joke. Why bother?”

One reader accused incumbents in both political parties of “kicking the can down the road … Nobody wants to deal with bad news before an election. We are definitely heading for that fiscal cliff.”

Another wrote that “the only way out of this is to cut services, increase retirement ages and increases taxes … I foresee a huge increase in taxes for those of us who saved up for retirement. And a lot of hardship for those who didn’t. At this point, I am just hoping my TSP is still there and Congress doesn’t steal it saying it is ‘Taxpayer Money’ and too generous.”

Several accused the Federal Reserve of “juicing the stock market” which, they said, will produce another recession.

Meantime, health-insurance premiums are increasing slightly for many feds and retirees — those whose pay is frozen and those anticipating a small COLA — alike. The health-insurance hunting season begins next month and runs through early December. It’s always worth comparing plans for benefits and premiums. This year, for obvious reasons, more than ever.

Check our home page today for the latest news on the 2013 COLA.


By Jack Moore

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