FERS COLA Calculator

How this is calculated

A federal annuity is set once, at retirement, and then adjusted every year for the rest of the annuitant’s life. Two separate rules govern those adjustments under FERS, and both of them subtract something. This page applies each in turn to the figure you enter.

The bands: what is granted

5 U.S.C. § 8462(b) takes the change in the price index — the CPI-W, measured from one third calendar quarter to the last one that produced an adjustment — and grants a percentage from it in two branches, not the three tiers the rule is usually summarised as:

change ≤ 3%  → the lesser of the change, or 2%
change > 3%  → the change, less 1%

The three-tier paraphrase arrives at the same numbers, but it hides two things. The cap and the haircut are alternatives rather than a sequence, so nothing is ever subtracted from a 2% change. And the grant jumps upward at the branch point: a 3% change pays 2%, while a change one tenth of a point higher pays 2.1%. Every percentage in both statutes is rounded to the nearest tenth of a percent.

§ 8340(b) gives CSRS annuitants the whole change with no band at all, which is where the nickname comes from. For third quarter 2025 over third quarter 2024 the CPI-W rose 2.8%: CSRS annuitants were granted 2.8% effective December 1, 2025, FERS annuitants 2%.

The age-62 restriction: whether anything is granted at all

§ 8462(c)(3)(A) provides that an adjustment “shall not be effective with respect to the annuity of an annuitant who is under 62 years of age”. The useful thing about the sentence is what it applies to: it reaches annuities payable under §§ 8412, 8413 and 8414 and nothing else. So the list of who escapes it is not an exemption list, it is a scope question:

• Disability annuitants. Paid under § 8452, which the restriction never mentions. They receive adjustments at any age — with one exception noted below.
• Survivor annuitants. Paid under subchapter IV, likewise outside the sentence, and § 8462(c)(2) separately credits them with every increase the deceased’s annuity would have received.
• Special provisions retirees. Law enforcement officers, firefighters, nuclear materials couriers, CBP officers and air traffic controllers retire under § 8412(d)(1) or (e), which are inside the sentence and then excepted from it by name — along with military reserve technicians separated under § 8414(c).

Escaping the restriction is not escaping the bands. A firefighter who retires at 47 is granted an adjustment every year from the start, and every one of those adjustments is the diet one.

Nothing withheld is ever repaid

This is the part that costs the most and is understood the least. § 8462(b) measures each year’s change from “the base quarter of the preceding year in which an adjustment under this subsection was made”. That is the year the systemadjusted, not the year this annuitant last did. A FERS employee who retires at 57 waits five Decembers, and on the sixth is granted that one year’s percentage — applied to the same dollar figure they retired on. The five years of inflation that passed in between are simply gone, and every later increase compounds from the lower base. In the worked example this page opens on, that single rule accounts for most of the loss.

The first adjustment is granted in twelfths

§ 8462(c)(1) makes the first increase “the product … of (A) one-twelfth of the applicable percent change … multiplied by (B) the number of months (not to exceed 12months, counting any portion of a month as a month)” the annuity has been payable. § 8340(c)(1) says the same for CSRS, and the product is itself rounded to the nearest tenth of a percent. An annuity commencing in January has been payable through November and earns eleven twelfths; one commencing in November earns one.

It follows — and this is the piece most descriptions get wrong — that the proration never applies at 62. It counts months on the annuity roll, and someone who retired at 57 has sixty of them by the December they become eligible, long past the cap. Their first adjustment is a whole one.

What this does not model

• Actual future inflation. The tool holds your assumed rate flat for the whole projection. Real inflation varies, and because the FERS bands are not linear, the same average delivered in a volatile way produces a different result from the same average delivered steadily — usually a worse one, as years above 3% lose a point while years below 2% give nothing back.
• The first year of a disability annuity. No adjustment is payable during the first twelve months on the roll while the annuity is the 60% rate. Start this projection from the 40% phase, which the disability retirement calculator computes.
• The FERS annuity supplement. It receives no adjustment at all, ever, and it ends at 62 — which is exactly when the annuity itself starts receiving them. See the FERS supplement calculator.
• Tax, insurance premiums and survivor reductions. The figure you enter should be the gross annuity. FEHB premiums rise on their own schedule, typically faster than the CPI-W, so net income falls further than this page shows.
• Rounding of the payment itself. OPM rounds a monthly annuity down to the next whole dollar. Repeated over thirty steps this works slightly against the annuitant, and it is not modelled here.
• Social Security and the TSP. Social Security is adjusted on the full CPI-W, like CSRS. A TSP balance has no adjustment mechanism at all. Neither is part of this projection.

Sources

• 5 U.S.C. § 8462 — the FERS adjustment: the base quarter in (a), the two branches in (b), the twelfths proration in (c)(1), survivors in (c)(2), and the age restriction with its exceptions in (c)(3).
• 5 U.S.C. § 8340 — the CSRS adjustment: the whole change in the price index, at any age, with the same first-year proration.
• OPM CSRS/FERS Handbook, Chapter 2 — Cost-of-Living Adjustments — the administrative detail: which months count, who is eligible, and the rule that a FERS annuitant who was not eligible in their first year receives a whole adjustment rather than a prorated one once they are.
• OPM — Cost-of-living adjustments — OPM’s own summary, and where each December’s figures are published.
• Social Security Administration — latest cost-of-living adjustment — the measured CPI-W change the same base quarters produce: 2.8% for third quarter 2025 over third quarter 2024, which this tool uses as its default assumption.
• Bureau of Labor Statistics — Consumer Price Index — the source of the CPI-W itself, published monthly.

Last reviewed: August 2026