The ‘Phantom’ COLA and other retirement mysteries

Planning for retirement isn’t, to beat an old term to death, rocket science. But it isn’t always easy and skipping some steps, or panicking at the wrong time can have a price tag. One that can last a lifetime. Take the January 2022 cost of living adjustment for retirees. Those under the FERS program got 4.9% while those retired under the CSRS program got a 5.9% diet COLA. The increase, designed to help keep up with inflation, was due in checks or deposits in early January. But…

Lots of people didn’t get it. Because they didn’t understand the rules. They retired in late December and/or are under age 62. That’s because you can’t remain on the payroll until the last minute and still qualify for a COLA that covers the period when you were working — and on the payroll. The other disqualifier is the fact that folks under the FERS program (currently the vast majority of federal-postal workers) don’t qualify for COLAs UNTIL they are 62 or older.

The good news about the federal retirement programs — FERS or CSRS — is that they have many moving parts. The downside is you need to do some homework — preferably starting from day one on the payroll — to get the most out of your service. Both in starting annuity and maximum annuity. Again, not rocket science, but also not a walk in the park. Not something you can delay (if you want to get the most) by waiting until the gang at the office is planning your final work sendoff.

So what to do? A good start is right here. We talk with lots of experts (including current and former feds) to find the best deal or deals for you. Like benefits expert Tammy Flanagan. When her husband retired in 2015, they moved to Florida and Tammy started her own consulting business to help active and retired federal employees called Retire Federal. He’s a retired LEO (law enforcement officer). She knows the retirement pathway and is a full-time consultant for feds planning to retire. Or those who’ve pulled the plug but still need help. She also writes a column for Government Executive.

Tammy says that many new retirees were surprised they didn’t get the COLA, because they didn’t know the rules. We hope to change that some today on our Your Turn radio show. Tammy is the only guest. And her theme is a good one: When it comes to planning your federal retirement, there is no such thing as a dumb question.

Some may seem strange, off the way, but if you’ve got a question there is probably an answer you didn’t know about. Or one that surprises you. Like when you can retire (and at what age) to qualify for your first COLA inflation-catch up. That’s one of the things we (she, actually) will tackle on today’s show which begins at 10 a.m. EST. She’ll also talking about some of the not-so-dumb questions people often don’t know, or are afraid, to ask. Questions like:

  • Is Medicare the same as Medicaid?
  • Since I will have Medicare when I’m 65, I shouldn’t need long term care insurance, right?
  • Is it true that if my spouse is also a federal employee that I don’t need to provide a survivor annuity for him/her?
  • I have FEGLI, so if I continue that into retirement, will this take the place of a survivor’s annuity?
  • Is December 31st always the best date for all federal employees to retire?
  • I have 30 years of service, can I afford to retire?
  • Since Social Security is going broke, should I apply for benefits at age 62?
  • I know that there are less expensive health plans, but I’ve had the same plan for 30 years and it works for me and my doctors take it, should I consider a different plan.

Nearly Useless Factoid

By David Thornton

In 1900, Argentina levied a tax on unmarried men. However, men who could prove they’d proposed and been rejected were exempt. This inspired some women to start businesses rejecting marriage proposals for a fee.

Source: Wikipedia

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