Trump’s COLA plan has future federal retirees sweating

Senior Correspondent Mike Causey is on vacation. This “best of” column originally was published on May 30, 2017.

Lots of federal workers, both active and retired, are really sweating the Trump administration’s plan to eliminate cost-of-living adjustments for current and future retirees under the FERS retirement plan. And they are worried for good reason.

Dropping COLAs in the future would save the government lots of money. And it would quickly eat into future benefits for all FERS retirees. Big time.

Financial planner Arthur Stein says that while all federal retirees will have lifetime income in the future, the zero COLA plan would dramatically eat into the money they have to spend in retirement. Big time.

The change is not a sure thing. Congress would have to approve it and over very strong objections from federal and postal unions, management groups and the National Active and Retired Federal Employees Association. Their combined clout on Capitol Hill would be a major factor. Not to mention claw back from federal workers and retirees who represent a lot of votes in key states like Virginia, North Carolina, South Carolina, Wisconsin, Pennsylvania, Texas, Florida and other states where current and former feds live, work and vote. It could also have an impact on local House races in New Jersey, Maryland, Indiana, Illinois and federal hub cities from Ogden, Utah to Huntsville and Anniston, Alabama. Plus lots of fed voters in Oklahoma, including Oklahoma City and Norman, as well as many semi-rural areas where VA hospitals, federal prisons and Army, Navy and Air Force Bases are big, if not the biggest, employers. Retirees who are not bound by the Hatch “no politics” Act could also play a major make-or-break role in the 2018 mid-term elections.

The chart below, worked up by Stein, shows what would happen in the future if the FERS COLA is eliminated. It shows the annual reduction in annuity payments if inflation is either 2 percent, 3 percent or 4 percent. Over as little as 10 years, a 72-year old retiree would “lose” — as in not receive — up to 18 percent in COLA payments if inflation was 3 percent, and lose up to 26 percent if inflation during the period averaged 4 percent.

Nearly Useless Factoid

By Michael O’Connell

A portrait of President Ronald Reagan made from 10,000 Jelly Belly beans hangs in the Reagan Presidential Library in Simi Valley, California.

Source: Jelly Belly

Read more of Mike Causey’s Federal Report.

Related Stories


Your Turn with Mike Causey


Learn about everything from pay, benefits and retirement, to buyouts, COLAs and pay freezes. Call the show live Wednesdays from 10-11 a.m. at 202-465-3080 with your questions. Dial 605-562-0264 to listen live from any phone. Follow Mike on Twitter and send him an email with your questions and comments. Subscribe on Apple Podcasts or Podcast One.

Sign up for breaking news alerts


Oct 25, 2021 Close Change YTD*
L Income 23.3259 0.0178 3.52%
L 2025 12.1258 0.016 6.40%
L 2030 43.0454 0.0751 7.92%
L 2035 12.9555 0.0247 8.58%
L 2040 49.1328 0.1015 9.26%
L 2045 13.4853 0.0298 9.83%
L 2050 29.5995 0.0695 10.41%
L 2055 14.6440 0.0405 12.65%
L 2060 14.6439 0.0405 12.65%
L 2065 14.6437 0.0405 12.65%
G Fund 16.6895 0.0021 0.99%
F Fund 20.8017 0.0142 -1.40%
C Fund 68.7435 0.3248 15.90%
S Fund 87.9833 0.6274 11.66%
I Fund 39.3278 -0.0717 8.56%
Closing price updated at approx 6pm ET each business day. More at
* YTD data is updated on the last day of the month.