No 2010 COLA...

[mickeyd]

but we already knew that. Anyway, here's part of an email that I received from MOAA...

Quote:

The Bureau of Labor Statistics announced that inflation dropped 0.2% in July. For the first 10 months of FY2009, cumulative inflation has declined 2.3%. What would it take for retirees and survivors to see any COLA for 2010? Inflation would have to rise more than 2.4% each month for August and September. That's just not going to happen, barring some kind of disaster that nobody wants to see. One last reminder: The law doesn't allow a negative COLA. If inflation is negative for the year, as seems almost certain, there just won't be a COLA.

[freebird5825]

Double whammy here - dh2b is retired military and I have a CSRS survivor pension.
We live well below our means, so no critical impact. It would be really nice if our bills were deflated.

[Notmuchlonger]

All our costs are down or equal this year. Food is way down for us. Change of habits or a real cost lowering. I couldn't tell you. Im not that detailed in cost tracking Seems appropriate.

[Nords]

Quote:

Originally Posted by freebird5825 Double whammy here - dh2b is retired military and I have a CSRS survivor pension.

Check those COLAs we've been getting the last few years!

I don't want to have to cope with an economy that delivers large COLAs.

[freebird5825]

Quote:

Originally Posted by Nords Check those COLAs we've been getting the last few years! I don't want to have to cope with an economy that delivers large COLAs.

Point and match. I wasn't thinking of a zero COLA as a positive thing.
I understand the tradeoff.

[Notmuchlonger]

Yeah in a deflationary environment. Not sure why you would be seeking a cola

[freebird5825]

Quote:

Originally Posted by Notmuchlonger Yeah in a deflationary environment. Not sure why you would be seeking a cola

I usually prefer ginger ale. Freebird on caffeine is not funny, trust me.

I'll definitely survive with zero COLA.

My monthly bills have not deflated one little bit. Like Amethyst says, across-the-board costs are still increasing. So what is really deflating besides my bank account?

[FinallyRetired]

Quote:

Originally Posted by Nords Check those COLAs we've been getting the last few years! I don't want to have to cope with an economy that delivers large COLAs.

I did, and let me tell you how it works. Say the govt COLA is supposed to be 10%. The gummint says, we know you're supposed to get a 10% govt COLA, but we also know you are patriotic and want to keep serving your country. Therefore we know you won't mind if we cap your COLA at 5% and serve as an example to those who get civilian COLAs so they can voluntarily cut their COLA in half (never happen). Thank you sir, may I have another?

[Bikerdude]

Quote:

Originally Posted by FinallyRetired I did, and let me tell you how it works. Say the govt COLA is supposed to be 10%.

You have been retired since the 1970's?

[FinallyRetired]

Quote:

Originally Posted by Bikerdude You have been retired since the 1970's?

No, not that old First retired from the Air Force in 1987. Another thing about COLA caps, once the idea starts, in the 70s, it's hard for it to stop. My COLA was capped for several years after retirement. Inflation then wasn't 10%, I was just giving an example, but the caps were pretty significant. After a few years I saw my retired pension drop to below that of more junior officers who retired a few years before me. I don't remember the exact numbers, I've put that episode out of my mind.

[donheff]

I always heard the COLA calculation described as based on the percentage increase in costs this year over last year calculated at end of August (e.g. 2009 against 2008). But if costs go down this year does the following year's COLA get calculated as the increase against this year's costs (i.e. 2010 against 2009) or at the higher 2008 base (2010 against 2008)?

[W2R]

Good question, Donheff. I think it is always computed in comparison with the previous year but I have no reference to back that up.

In my particular case, I would not be eligible for the 2010 COLA anyway and my FERS diet-COLA will begin in 2011 because I will have turned 62 by then. I will be retiring on the newer FERS retirement plan, not the older CSRS retirement plan with the bigger "annuity"(=pension), that was discontinued for new hires over 20 years ago, and we have different rules.

Even when I qualify for the COLA it won't make that much of a difference to me, since a FERS pension is intended to comprise a much smaller fraction of total retirement income than the CSRS pension. I am grateful for what pension I get, and would love to see it grow, but realistically the COLA won't make or break my retirement. The TSP is much bigger part of the FERS retirement plan than it is for CSRS folks.

[Boxkicker]

I just retired from the Navy on 31 Dec 08, and this would have been my first COLA. Oh well...Not losing anything if the prices of food, gas, etc.. goes down!

On the plus side..my TSP just went a + from being negative since 2007!!!!

[Nords]

Quote:

Originally Posted by donheff I always heard the COLA calculation described as based on the percentage increase in costs this year over last year calculated at end of August (e.g. 2009 against 2008). But if costs go down this year does the following year's COLA get calculated as the increase against this year's costs (i.e. 2010 against 2009) or at the higher 2008 base (2010 against 2008)?

Apparently that's a more difficult question than expected. Here's text from this week's MOAA update:

Quote:

Last week, we officially threw in the towel on any prospect for a 2010 COLA for Social Security, military/federal retired pay, SBP, and VA disability compensation recipients. With inflation 2.3% in the hole through the first 10 months of the fiscal year, inflation would have to rise more than 4.6% in the next two months (the COLA is based on the July/August/September average) for there to be a 2010 COLA, and that’s not going to happen. But this is the first time the nearly 50-year history of COLAs that there’s been negative inflation for the full year, and that sent us back to research how the COLA law deals with that event. We know there won’t be a cut in retired pay, Social Security, etc. There just won't be a COLA. But how about 2011? Does the "COLA clock" reset at zero, or do we start the new fiscal year in the hole by whatever negative number the CPI represents at the end of September? The short answer is that it's a cumulative calculation, and we will, in fact, start FY2010 in the "COLA hole." The law says the COLA is calculated based on CPI growth from the third quarter average to the next year's third quarter average. However, it specifies that the starting point for the calculation is the third quarter of the year prior to "the most recent adjustment..." So if there's no COLA in 2010, then the starting point for the 2011 COLA calculation still remains the third quarter of 2008. So inflation will have to rise at least a couple of percentage points during the next fiscal year before the 2011 COLA clock will even start.

[BLS53]

Amazing how much misinformation there is from callers on the various talk shows. "Congress decided to reduce SS this year" etc. I even heard one at a townhall healthcare meeting, saying "they've already slashed SS for next year, Medicare is next."

A little education on COLA is obviously needed. But people will believe what they want to believe.

[Walt34]

Same here. I got a notice that my COLA'd retirement will go down .1%. Not a big deal. Yet.

[Notmuchlonger]

Quote:

Originally Posted by Walt34 Same here. I got a notice that my COLA'd retirement will go down .1%. Not a big deal. Yet.

Wow interesting. Never heard of one being lowered.

[bizlady]

Those that get COLA are lucky. My husbands pension is in default status, was revised so we only will get about 80%-- if that even holds until he is out in 19 months. And they wiped out COLA increases going forward for all of us not yet collecting.

[Amethyst]

Thing is,I cannot "buy" that inflation is so low. Our expenses are up. While a few items, such as gas, cost less than last year, those aren't a huge part of our expenses anyway. We pay more for services every year. Our health care premiums rose 10% this year (with reduced benefits). It cost us 30% more to have our townhouse's carpet professionally cleaned than it did 2 years ago (dirt not a factor -- the quotes are by square footage). Our car insurance keeps going up every 6 months, even though our car is getting older and we haven't done anything naughty. Property taxes rose again this year, even though the value of the properties has dropped. Negative inflation? Not seeing it.

[youbet]

DW's pension increases 3%/yr regardless of inflation. I had assumed this would be bad and that the 3% would frequently be less than actual govt measured CPI. But it looks like this year will be deflationary and that 3% increase is going to look pretty sweet. Of course, in future years when today's deficit spending results in high inflation, the 3% will look pretty sad.......