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COLA cool off?
Old 09-20-2008, 10:45 AM   #1
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COLA cool off?

I got this from an email from MOAA recently. I thought that a previous communication indicated that the COLA would be at least six point something. Oh well, no matter what it will be a stout COLA in January checks.

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If the September CPI-W remains unchanged from the August CPI-W, the December COLA would be 5.9%.
MOAA: Military Officers Association of AmericaCOLA Watch
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Old 09-20-2008, 11:42 AM   #2
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is this the COLA for retired military only, or the one for retired federal employees? or are they the same? i always get these confused...
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Old 09-20-2008, 01:14 PM   #3
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is this the COLA for retired military only, or the one for retired federal employees? or are they the same? i always get these confused...

I don't know if it's the same, but this number would be true for CSRS employees. If you look at that thread, a bew folks pointed out that it was too early to know what it would be. That won't be known until Oct 16 release of September CPI numbers. If Sept. CPI-W is same as Aug, then 5.9 is the number. It could be lower, could (though not likely) higher.

And there have been a few times when the cola was either suspended (early 80's I think) or delayed for several months (early 90's). These incidents occurred at times when the COLA due was significantly higher than "normal", and were applied to CSRS pensioners (though not to SS benefits).

Though if I recall, based on the actual numbers involved, budget-wise it was insignificant, but it was politically symbolic.

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Old 09-20-2008, 01:20 PM   #4
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The COLA fluctuates as the data comes in.
Social Security COLA for 2009 Still Heading Toward Six Percent Increase with New Data
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Old 09-20-2008, 05:59 PM   #5
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Originally Posted by mickeyd View Post
I got this from an email from MOAA recently. I thought that a previous communication indicated that the COLA would be at least six point something.
The difference is that we had to pay six point something for gas & groceries over the last few months, for which we'll be "compensated" next January at the 5.9% rate.

Kinda like being on travel and only getting compensated at the "government rate".

Which is better than not being compensated at all, and is nearly double the military's proposed 2009 pay raise.
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Old 09-21-2008, 08:24 AM   #6
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interesting article comparing CSRS and FERS at a top level...
CSRS vs. FERS: 2008 Edition (9/19/08) -- www.GovernmentExecutive.com

and i saw the answer to my earlier question about the COLA. see 1st paragraph, Inflation Protection.
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Old 09-21-2008, 09:40 AM   #7
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interesting article comparing CSRS and FERS at a top level...
CSRS vs. FERS: 2008 Edition (9/19/08) -- www.GovernmentExecutive.com

and i saw the answer to my earlier question about the COLA. see 1st paragraph, Inflation Protection.
Assuming a steady 4% CPI-W annually, over the course of 30 years, the FERS "diet COLA" results in 24% less pension at the 30 year mark than the old CSRS pension & SS.
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Old 09-21-2008, 11:27 AM   #8
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Kinda like being on travel and only getting compensated at the "government rate".
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Old 09-21-2008, 11:30 AM   #9
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Assuming a steady 4% CPI-W annually, over the course of 30 years, the FERS "diet COLA" results in 24% less pension at the 30 year mark than the old CSRS pension & SS.
ouch.
I recently saw a historical chart for the COLA and "diet COLA" at Federal Retiree COLA History CSRS COLA and FERS COLA

BTW, I am a FERS escapee (resigned). I will be a bona fide FERS retiree in 6 years when i reach my MRA of 56, at which time I will apply for my deferred retirement. I know there will be some sort of offset applied to the pension I receive at my MRA and the minimum SS age of 62.

Any idea where there might be a calculator for this? OPM was a dead end.
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Old 09-21-2008, 11:52 AM   #10
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ouch.
I recently saw a historical chart for the COLA and "diet COLA" at Federal Retiree COLA History CSRS COLA and FERS COLA

BTW, I am a FERS escapee (resigned). I will be a bona fide FERS retiree in 6 years when i reach my MRA of 56, at which time I will apply for my deferred retirement. I know there will be some sort of offset applied to the pension I receive at my MRA and the minimum SS age of 62.

Any idea where there might be a calculator for this? OPM was a dead end.
I believe it is 5% per year reduction. Since you will be 56, that is 6 years under 62 so 6 x 5% = 30% reduction. You will receive 70% of your monthly pension payments each month. See page 5 of the booklet at the following link and see if this applies to you:

http://www.opm.gov/forms/pdfimage/ri90-11.pdf

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If you are eligible for a deferred annuity beginning after you attain your MRA (see paragraph B1 above), your deferred annuity will be reduced by 5/12 percent for each month (5 percent per year) by which the commencing date of annuity precedes your 62nd birthday, unless you have at least 30 years of service; have 20 years of service and postpone the commencing date until you are age 60; or have at least 20 years of service as an air traffic controller, firefighter, law enforcement officer, or Member of Congress.
I am mildly surprised that you weren't told of this during your exit counseling or exit clearance process somewhere along the line, or at your pre-retirement seminars. Maybe I shouldn't be surprised, though!
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Old 09-21-2008, 12:45 PM   #11
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oh, i knew i was taking a beating by escaping. i used the benefits calculator at the BEST site and plugged in all sorts of exit dates, like today, 1 yr from now, 3 yrs from now, etc.
but trust me, my health and sanity overruled the loss by not sticking it out til the MRA. i did 18 yrs 3 mos. i could have done an early out if i waited 1 yr 9 mos more, but my carpal tunnel and RSI were the deciding factor there.
recall i have federal survivor benefits for the health insurance and a pension from LH. a unique situation.
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Old 09-21-2008, 02:28 PM   #12
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I think you made an excellent decision, and nothing to regret!! Besides, FERS is not exactly luxurious anyway (IMO) so 70% of very little is not much difference. I am planning to take FERS 7 months before age 62 myself, and I figure the difference will be very little.
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Old 09-21-2008, 03:10 PM   #13
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TY TY i think so too. i was amazed at how "little" a difference it made. It was duly filed into the "No Brainer" folder. LOL
we both know the proof is in the puddin' with the TSP.
How much longer for you now?
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Old 09-21-2008, 03:27 PM   #14
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TY TY i think so too. i was amazed at how "little" a difference it made. It was duly filed into the "No Brainer" folder. LOL
we both know the proof is in the puddin' with the TSP.
How much longer for you now?
I have most of my TSP in G-Fund. By ER it will all be in G-fund and my equities in mostly Vanguard index funds in my taxable account. What little I have in C-, S-, and I- Funds has been been getting clobbered lately, but due to all that G-Fund overall I am not losing (with a $20,500/year contribution plus 5% match). Still, by the time I retire I will finish with at least $100K less than I would have had, had the 2003-2006 bull market continued. Such is life.

I am at Franks and don't have my spreadsheet with me, but it's around 413 days give or take a day!! A year from November.
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Old 09-22-2008, 06:06 PM   #15
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I have most of my TSP in G-Fund. By ER it will all be in G-fund and my equities in mostly Vanguard index funds in my taxable account. What little I have in C-, S-, and I- Funds has been been getting clobbered lately, but due to all that G-Fund overall I am not losing (with a $20,500/year contribution plus 5% match). Still, by the time I retire I will finish with at least $100K less than I would have had, had the 2003-2006 bull market continued. Such is life.

I am at Franks and don't have my spreadsheet with me, but it's around 413 days give or take a day!! A year from November.
very smart lady using the G fund this close to retiring.
and who knows what a year can bring in the market? as luck would have it, i converted my TSP in July 07, just a few weeks before all hell (the first tiny wave) started breaking loose. don't lose hope.

do you have your countdown clock on your desk going yet? heeheehee
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Old 09-22-2008, 06:22 PM   #16
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Thanks.

So true, it is always possible that the market will recover faster than I think. It always surprises me.

Today, I have 411 days left. Every morning I compute how many (in my retirement spreadsheet) and mark the number in red on my whiteboard. Nobody asks, but I think they know!
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Old 09-22-2008, 06:38 PM   #17
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well, we all await the COLA news...it affects my current suvivor CSRS pension as well as dh2b's military retirement so we are very interested. this past year has been a real education for me with respect to living on a fixed income. no grave outcomes...but some real hard lessons learned.
Lesson #1 - you can never quantitatively forecast the unexpected pop-up expenses. there is no such thing as "enough" emergency cash.
Lesson #2 - relearn Lesson #1.
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Old 09-22-2008, 06:44 PM   #18
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Sounds grim!

I won't be getting a COLA until 2011 (after I am 62), and even then it will be the FERS "Diet Cola", not a full CPI COLA. But I can live with that, because my FERS pension is not that much anyway. Hopefully if/when the market recovers, I'll be able to make up for it.

I decided that even if this turns into a huge economic collapse that changes the world as we know it, I will still retire somehow. I am so tired of working! I'd
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Old 09-22-2008, 06:44 PM   #19
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Sounds grim!

I won't be getting a COLA until 2011 (after I am 62), and even then it will be the FERS "Diet Cola", not a full CPI COLA. But I can live with that, because my FERS pension is not that much anyway. Hopefully if/when the market recovers, I'll be able to make up for it.

I decided that even if this turns into a huge economic collapse that changes the world as we know it, I will still retire somehow. I am so tired of working! I'd rather live in poverty than do this much longer.
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Old 09-22-2008, 06:59 PM   #20
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not too grim...but pretty tough to predict. what i meant by "quantitatively forecast" was that in spite of all my pre-FIRE number crunching, there was no fixed number for emergency reserves that worked for me.
Lesson # 3 - always expect the unexpected.
being a numbers maniac , i did all sorts of real data budget tracking using 2007 data to nail down my yearly expenses, added a 4% fudge factor for expected inflation, and added some padding on top of all that. my spreadsheet was a real piece of work by the time i got done.
so this 2009 COLA will be my friend, after the fact. and for many others, especially the elderly collecting SS.
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