Like most federal retirees, you will enjoy the potential of three forms of income in retirement: Your annuity payments, income from money you set aside in your Thrift Savings Plan, and your Social Security benefit. Since your Social Security payments are subject to periodic adjustments (indexed to the inflation rate), you might be interested to know that beneficiaries will receive a cost of living adjustment (COLA) in 2018.
Each fall, the Social Security Administration analyzes inflation, and decides whether to issue a COLA beginning the following January. The amount of this adjustment is also tied to inflation, and can vary from one year to the next, with no COLA ever guaranteed. In fact, sometimes a COLA is not issued for the year.
In 2018, beneficiaries will receive the largest COLA in five years.
How much is this COLA? It has been set at 2 percent, which doesn’t sound like a lot. For the average beneficiary, the adjustment equals an extra 27 dollars per month, with the average benefit rising to $1,404 per month. Of course, that is only an average figure; your benefit amount is calculated based upon your earning history, and can vary significantly from the average.
Any upward adjustment in benefits is helpful. Also, keep in mind that Medicare might also raise their rates. It is possible that the Social Security COLA will serve more to compensate for a Medicare rate hike, for many retirees.
Recent years have taught us that COLAs are certainly not guaranteed to occur each year, and can sometimes be disappointingly small. Since your own cost of living can change throughout retirement, regardless of what the inflation rate reports, it is important to take saving for retirement into your own hands. Bolster your Thrift Savings Plan, taking advantage of maximum contribution limits, and work closely with a financial advisor to plan for your retirement.
Call us any time. We can help you understand your retirement benefits as a federal employee, and plan for a stable retirement.