A ‘diet COLA’ for FERS retirees has compounding effects on retirement savings
A reduced cost-of-living adjustment, or “diet COLA,” for FERS retirees can create a much larger difference in retirement savings over time.
When Congress created the Federal Employee Retirement System in the ‘80s, one of the most notable changes was that future retirees would get smaller cost of living adjustments than participants in the old Civil Service Retirement System. CSRS and Social Security beneficiaries get COLAs that match inflation; FERS retirees get a smaller adjustment. That hasn’t been a big deal over the past decade of low inflation, but obviously circumstances have changed.