2024 COLA Watch For Federal Employees
For federal employees, 2024 is a year to watch closely. The Cost-of-Living Adjustment (COLA) that will take place in the new year could have a major impact on their pocketbooks. As Congress works on the budget for 2024, it’s important to stay informed about potential COLA increases and other changes that could affect federal employees.
We will provide an overview of what is currently known about COLA for federal employees in 2024 so that you can stay informed and prepare for any changes that may arise.
What to Know About the CPI-W and COLA
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is a key economic indicator that tracks changes in prices for goods and services purchased by this demographic.
Released monthly by the US Bureau of Labor Statistics, the CPI-W is an important tool used to measure inflation and can potentially have an impact on wages, benefits, and other financial decisions.
The CPI-W has experienced a significant increase of 4.5 percent over the last 12 months, reaching an index level of 296.021. This rise in CPI-W is something that federal employees need to pay attention to as it will impact their daily expenses, purchasing power, and future retirement.
How Is the 2024 COLA Calculated?
The 2024 COLA estimate has been the topic of discussion for many people, especially those who rely on Social Security benefits. The COLA (Cost of Living Adjustment) is an increase in benefits given to retirees under Social Security to help them keep up with inflation.
The latest data shows that the COLA for 2024 will be based on an average CPI-W index of 296.021, which represents a slight increase from the previous year’s index of 291.901. This small difference equates to an adjustment factor of only 1.411%, which has been rounded up to the nearest one-tenth of one percent at 1.4%.
This means that Social Security beneficiaries and other recipients can expect only a modest increase in their benefits come January 2024. However, it is still important for them to stay informed about these developments as they plan their budgets and financial goals for the coming year.
The Social Security Administration (SSA) has announced that the official Cost of Living Adjustment (COLA) for 2024 will be released in mid-October 2023.
What Will the COLA Be for Federal Employees?
The 2023 federal retiree cost-of-living adjustment (COLA) is great news for those under the Civil Service Retirement System (CSRS). The COLA will be 8.7 percent, which is a significant increase from the 2022 COLA of just 1.3 percent. This means that CSRS retirees can expect to see a noticeable boost in their retirement income next year.
For those under the Federal Employees Retirement System (FERS), the news isn’t quite as good but still positive. The 2023 COLA for FERS retirees will be 7.7 percent, which is also a substantial increase from last year’s COLA of just 1.2 percent.
Things to Remember
To understand how COLA affects you as a federal employee, it’s crucial to know how it’s calculated. The Bureau of Labor Statistics determines COLA based on changes in consumer prices for goods and services over a specific period. These prices are then compared to those from a previous period, which creates an inflation rate. This inflation rate is used to calculate how much more money you will receive in your paycheck or retirement benefits.
It’s important to note that not all federal employees receive COLA adjustments. The government only grants this benefit to certain categories of employees whose salaries are subject to annual review based on factors such as economic inflation and market trends. Those who do receive COLA must meet specific eligibility criteria set forth by their employing agency.
Second, the amount of money that an employee receives through a COLA adjustment depends on several factors, including the consumer price index (CPI), which measures changes in the cost of goods and services over time.
Read More > Important TSP Updates for 2023
Lean on the Federal Educators
If you need help keeping up with COLA updates or planning for federal retirement, lean on our professionals at Federal Educators. We are here to help you navigate everything you need to know to set yourself up for success in retirement as a federal employee.
Contact us at (813) 755-7037 for more information or fill out our form online for help with your federal benefits.