Why more federal employees and retirees are protecting their retirement savings using this overlooked, IRS-approved program
UPDATE: 2023 Federal Retiree COLA Announced (Oct. 13, 2022)
The Senior Citizens League — a nonpartisan seniors group — estimated last week that the 2023 cost-of-living adjustment (COLA) for Social Security retirement benefits could be 8.7%. This would be the largest increase in nearly 40 years.
“A COLA of 8.7% is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today,” the SCL said in a press brief. “There were only three other times since the start of automatic adjustments that it was higher (1979-1981).” A history of COLAs can be found here.
The estimate is based on new Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data through August from the Bureau of Labor Statistics (BLS). There is only one month of consumer price data left to go. The Social Security Administration is expected to announce the 2023 COLA on October 13 after the release of the CPI-W data for September.
SEE ALSO: 2023 COLA Watch
The Social Security Act specifies a formula for determining each COLA. According to the formula, COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
A COLA effective for December of the current year is equal to the percentage increase (if any) in the average CPI-W for the third quarter of the current year over the average for the third quarter of the last year in which a COLA became effective. If there is an increase, it must be rounded to the nearest tenth of one percent. If there is no increase, or if the rounded increase is zero, there is no COLA.
SEE ALSO: How are COLAs Calculated?
How is the difference between the CSRS COLA and FERS COLA determined?
A COLA can affect federal retirees in the Civil Service Retirement System (CSRS) and Federal Employee Retirement System (FERS) differently.
The following table summarizes the FERS COLA in relation to the CSRS COLA:
2023 Medicare Part B Premiums Could Remain About the Same
Medicare Part B premiums may not grow by very much in 2023, according to the SCL. The Medicare Trustees foretasted in their 2022 annual report that the standard Part B premium in 2023 would remain the same as in 2022 at $170.10 per month. The Medicare Part B premium and other costs are usually announced in mid-November.