FERS COLAs Don’t Always Show Up When You Expect—And That’s By Design

Missy E
November 14, 2025

Key Takeaways

FERS retirees do not receive full Cost-of-Living Adjustments (COLAs) until age 62, and even then, the increases are often reduced.
The COLA calculation formula for FERS is intentionally less generous than that of CSRS or Social Security, which can significantly affect long-term retirement income.

Why You Don’t Always See a FERS COLA Right Away

If you’re a retired government employee under the Federal Employees Retirement System (FERS), you might have noticed that your annuity doesn’t increase with inflation as expected—or at least not immediately. This is not an error or oversight. It’s how the system was designed.

The FERS annuity includes a Cost-of-Living Adjustment (COLA), but it comes with strict limitations and delayed eligibility. Most notably, you don’t begin receiving any COLAs until you reach age 62 unless you qualify under special provisions.

Who Gets a COLA Before 62?

Some FERS retirees are eligible for COLAs before age 62, including:

Law enforcement officers
Firefighters
Air traffic controllers
Military reserve technicians
Disability retirees

If you don’t fall into these categories, your FERS annuity will remain fixed with no COLA until your 62nd birthday.

How FERS COLAs Are Calculated

Even once you become eligible, your COLA won’t necessarily match inflation fully. The formula works like this:

If the Consumer Price Index (CPI-W) increase is 2% or less: COLA = CPI-W increase
If the CPI-W increase is more than 2% but not more than 3%: COLA = 2%
If the CPI-W increase is more than 3%: COLA = CPI-W increase – 1%

This means if inflation is at 5%, your FERS annuity increases only by 4%. By comparison, Civil Service Retirement System (CSRS) retirees and Social Security beneficiaries receive the full increase.

Why Is the FERS Formula Less Generous?

The reasoning is tied to how FERS was structured. FERS is a three-part system:

Basic annuity
Social Security
Thrift Savings Plan (TSP)

The COLA limitation is meant to offset the assumption that retirees will supplement their income with TSP withdrawals and Social Security.

Timing of COLA Payments

Even after you become eligible, COLAs are not immediate. Here’s what you need to know:

COLAs are paid starting in January of each year.
You must have been receiving your annuity for a full year to receive the full COLA.
If you retired mid-year, your COLA is prorated.

For example, if you retired in July 2024, you would receive only 50% of the full COLA in January 2025.

The Impact of Delayed and Reduced COLAs

Missing out on full COLAs during your early retirement years can have long-term effects:

Lower lifetime income: Delayed COLAs mean your annuity doesn’t keep up with inflation during early retirement.
Compounded shortfalls: A lower base each year means future COLAs are also smaller in absolute dollar terms.
Gap vs. CSRS retirees: Those under CSRS often experience less erosion in purchasing power.

Over decades, even small percentage differences can add up to tens of thousands of dollars in lost income.

How Social Security Plays Into This

FERS retirees also receive Social Security benefits, usually starting at age 62. These benefits are fully indexed to inflation using the CPI-W, which helps somewhat balance the equation.

However, many retirees choose to delay Social Security until full retirement age (FRA) or later, meaning they experience several years with only their FERS annuity—an annuity that may not include COLAs until age 62.

The Special Retirement Supplement Is Not COLA-Protected

Another important point: If you receive the FERS Special Retirement Supplement (SRS), it does not receive COLAs at all.

This benefit, meant to bridge the gap between retirement and age 62, is based on your Social Security estimate. But unlike Social Security, it does not grow with inflation.

So if you retire at 57 and rely on the SRS until 62, you’re looking at five years of flat income from that source.

What You Can Do to Offset COLA Delays

Planning is critical. Consider the following strategies to protect your retirement income:

Delay retirement: Working longer can increase your annuity and reduce the number of years without a COLA.
Save more in TSP: This gives you more flexibility to supplement income if inflation erodes your annuity.
Bridge with Roth IRAs or taxable accounts: These can provide inflation-adjusted withdrawals without depending on the timing of COLAs.
Claim Social Security strategically: Delaying Social Security can yield higher inflation-adjusted income later.

You’re Not Alone—But You Need to Be Prepared

Many government employees retire unaware of these built-in restrictions. While the design is intentional, it can feel like a surprise if you haven’t factored in the impact of inflation and timing.

You can’t change how COLAs are calculated, but you can prepare for them. Being proactive with your withdrawal strategy and understanding the limits of your FERS benefit is your best defense.

When to Expect COLAs If You Retire in 2025

Let’s say you retire:

January 1, 2025: You will receive your first full COLA in January 2026.
July 1, 2025: You will receive a prorated COLA (approximately 50%) in January 2026.
December 31, 2025: Your first COLA will be tiny—roughly 1/12 of the full amount—in January 2026, and your first full COLA will come in January 2027.

The further into the year you retire, the longer you’ll wait for a full adjustment.

Planning Ahead Is the Only Way to Stay Ahead

If you’re banking on your FERS annuity to carry the full weight of your retirement income, you may need to reassess. COLAs are real—but restricted. And that restriction isn’t going away.

Understanding when and how these increases apply allows you to make smarter decisions about retirement timing, withdrawal rates, and supplemental savings.

Get in touch with a licensed professional listed on this website to review your FERS projections and plan for long-term financial security.