Social Security beneficiaries and many retirees will get a 3.6% cost-of-living adjustment (COLA) in January 2027, but FERS annuitants will see a smaller 2.6% increase under the program's COLA rules, FNN — Benefits reports.
Key Facts
- 3.6% COLA applies to Social Security payments and many retirement benefits beginning January 2027.
- 2.6% COLA applies to FERS annuitants who are eligible for an adjustment.
- The 1-point gap comes from the FERS formula. When inflation exceeds 3%, the FERS COLA equals the inflation measure minus 1 percentage point.
- Other FERS thresholds: If inflation is 2% or less, FERS retirees get the full adjustment. If it falls between 2% and 3%, the FERS COLA is capped at 2%.
- CSRS retirees are not subject to that reduction and generally receive the full adjustment.
What It Means For You
The difference shows up in monthly annuity checks. Here is an illustration based on a hypothetical $2,500 monthly annuity:
- At 3.6%: an increase of $90, for a new total of $2,590
- At 2.6%: an increase of $65, for a new total of $2,565
- Difference: $25 per month, or $300 per year
The gap compounds over time because each future COLA is applied to a slightly lower base.
Not every FERS retiree receives a COLA right away. Under FERS rules, annuitants generally become eligible at age 62. Exceptions include disability retirees, survivors, and those who retired under special provisions for law enforcement officers, firefighters, and air traffic controllers. Check your own status with OPM.
Retirees still working toward their annuity can estimate how a smaller COLA affects long-term income with a FERS retirement calculator.
Context
The FERS COLA formula is written into federal law and is separate from the Social Security adjustment. Social Security's COLA is tied directly to inflation, while FERS applies its tiered structure on top of it. As a result, the two adjustments match only when inflation is low.
The 2026 COLA figures and OPM's official 2027 annuity notices will confirm exact dollar amounts. Annuitants should watch for notices from OPM and, for Social Security recipients, the Social Security Administration.
Source: FNN — Benefits