Retirees brace for peanut-sized COLA

With one month left to go in the cost of living adjustment countdown, federal, military and Social Security retirees are braced for what could be an almost invisible COLA. Something like $10.59 per month for the average retiree under the old Civil Service Retirement System and $4.07 for the average retiree under the FERS retirement program.

The amount of the January inflation catch-up won’t be determined until price data for this month (September) is compiled by the Bureau of Labor Statistics. The final COLA figure will be released Oct. 18. But as of now the COLA, based on the rise in living costs for the third quarter of 2014 (correct, 2014) stands at a mere 0.28 percent. That means, according to government data, that prices as measured by the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) have risen only 0.28 percent in the past two years. Normally the retiree COLA would be based on the rise in inflation from the current third quarter (July, August and September) since the third quarter of the previous year. But because retirees did not get ANY COLA in 2016, the base for computing the January 2017 COLA is the third quarter of the year 2014.

Tons of retirees who depend on the COLA find it hard to believe that prices have risen so little in the past two years that they got a zero COLA in January, 2016 and are looking at a tiny increase, if any, in 2017. That’s especially hard to swallow since health insurance premiums have risen dramatically in the past few years, and since the government announced an AVERAGE 83 percent increase in the federal long term care program. That raise averages out to $111 per month for workers and retirees with LTC insurance. For some there will be an increase of as much as 126 percent.

Many former feds, not to mention people who get retired military pay or Social Security benefits can’t believe the inflation data. Others don’t believe it. They smell a rat!


Typical of the comments we’ve gotten here at FederalNewsRadio is one from John B., who writes:

“The Obama Administration is fudging the numbers in regards to inflation because the economy is much worse then they are admitting, and the COLA that should be paid out would be too much to afford primarily because of the Obama administration’s sky rocketing welfare payments. Retirees are being ripped off in order to keep the votes of welfare recipients.”

Strong stuff.

So is there a plot to make it appear that inflation is flat? Is it political? Or something else?

An official of the National Active and Retired Federal Employees said the problem isn’t with the administration or the folks who measure inflation, but rather with the ruler they are using:

“NARFE does not think that the BLS (Labor Department) which is run by nonpartisan, professional economists and statisticians, is fudging any numbers. We do, however, support using the CPI-E, which is a price index that measures consumer prices experienced by those age 62 and older, rather than the CPI-W, to calculate cost of living adjustments to Social Security benefits and federal retirement annuities. With seniors spending more money on things like health care, the costs of which are rising at a faster rate than other consumer costs, the CPI-E would paint a more accurate picture of the prices faced by seniors than the CPI-W.”

NARFE prides itself on being bipartisan and working with both political parties. By contrast many federal unions (or at least their leadership) lean Democratic. This year most federal and postal unions have made political endorsements. Most are backing former Secretary of State Hillary Clinton. One initially endorsed Sen. Bernie Sanders (I-Vt.), and the Border Patrol Council of the American Federation of Government Employees is backing Donald Trump for the presidency. The AFGE itself has endorsed Clinton, as it did candidate and president Barack Obama in the last two elections.

So what, if anything is going wrong? Is this political or is Uncle Sam simply using the wrong tool (CPI) to measure what true inflation is for older people?

Nearly Useless Factoid

By David Thornton

If you shave all the fur off a zebra, the skin is mostly black.

Source: ScienceBob.Com