Federal Benefits Service

COLA Percentage Determined for 2021: FERS & CSRS Raise

As far as financial events of the federal year, the October announcement for the annual cost-of-living adjustment (COLA) is one of the most important. The annual COLA is essence the annual “raise” for retirees. This will affect the annual Social Security payment for both federal employee retirees and also Social Security recipients. By January, the annual adjustment will be implemented in the first payment of 2021 to retirees. 

Although this is technically considered a raise, it is not a raise in the traditional sense of the word. This is because it is designed to keep pace with the rate of inflation for the increasing cost of goods and services.  Regardless of its stipulations, it still means more money for retirees and can play an important role in their finances and future. 

The payments are determined by comparing the change in the consumer price index (CPI-W) from year to year, based on the average of the third-quarter months of July, August, and September. The annual increase is calculated and then determined by the Bureau of Labor Statistics. 

According to the Social Security Administration, based on the increase of average wages, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $142,800 from $137,700, and will go into effect in January. 

The 2021 COLA will be 1.3% for Federal Employees Retirement System (FERS) retirees. It will also be 1.3% for Civil Service Retirement System (CSRS) and Social Security benefits and annuities.  

In regards to current federal employees, it is unlikely that they will receive the same pay raise amount as the 2021 COLA. The annual cost-of-living-adjustment (COLA) does not equate to the pay raise for the current federal workforce. That amount will be determined later this year. 

Below is a list of COLA raise percentages from 2009 on: 

  • 2021: 1.3% 
  • 2020: 1.6% 
  • 2019: 2.8% 
  • 2018: 2.0% 
  • 2017: 0.3% 
  • 2016: 0% 
  • 2015: 1.7% 
  • 2014: 1.5% 
  • 2013: 1.7% 
  • 2012: 3.6% 
  • 2011: 0% 
  • 2010: 0% 
  • 2009: 5.8% 
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