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what is the federal retiree pay raise for 2025

what is the federal retiree pay raise for 2025

2 min read 02-12-2024
what is the federal retiree pay raise for 2025

The annual adjustment to federal retirement benefits is a significant event for millions of retirees and their families. Understanding how this increase is determined and what to expect is crucial for financial planning. This article will break down the process and provide the confirmed pay raise percentage for federal retirees in 2025.

How is the Federal Retiree Pay Raise Calculated?

The annual cost of living adjustment (COLA) for federal retirees is tied to the change in the Consumer Price Index for Wage Earners and Clerical Workers (CPI-W). This index measures the average change in prices paid by urban wage earners and clerical workers for a basket of consumer goods and services. The Office of Personnel Management (OPM) uses the average percentage change in the CPI-W for the third quarter (July, August, and September) of the year preceding the pay raise.

The 2025 COLA Calculation:

The official COLA for 2025 is 3.2%. This was announced by the Office of Personnel Management (OPM) on October 12, 2024. This means that federal retirement benefits will increase by 3.2% starting January 2025.

What Does the 3.2% Increase Mean for Federal Retirees?

A 3.2% increase affects all retirement benefits derived from federal service, including:

  • Annuities: Your monthly annuity payment will be increased by 3.2%.
  • Survivor Benefits: Payments to surviving spouses and dependents will also increase by 3.2%.
  • Disability Retirement: Payments under disability retirement will receive the same 3.2% adjustment.

To calculate your new monthly payment, simply multiply your current monthly payment by 1.032. For example, a retiree receiving $2,000 per month would see an increase of $64 ($2,000 x 0.032 = $64).

Important Considerations for 2025:

  • Timing of the Increase: The 3.2% increase will be reflected in your January 2025 benefit payment.
  • Tax Implications: Remember that any increase in your retirement benefits may affect your tax liability. Consult a tax professional for personalized advice.
  • Social Security: While separate from federal retirement benefits, Social Security also has its own annual COLA adjustment, which will be announced later in the year and is calculated differently.

Where to Find More Information:

For the most up-to-date and official information regarding your 2025 federal retiree pay raise, always consult the official website of the Office of Personnel Management (OPM). You can find detailed explanations of the COLA calculation and other relevant information there.

[Link to OPM Website]

Conclusion:

The 3.2% COLA for 2025 provides a crucial adjustment to help offset the rising cost of living for federal retirees. Understanding the calculation method and its impact on your benefits is essential for effective financial planning. Remember to check the OPM website for the most current and accurate details. This modest increase allows for a small improvement in the purchasing power of your retirement income in the coming year.

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