❓ Frequently Asked Questions: 2026 Federal Retiree COLA

Q: What are the 2026 COLA rates for federal retirees?

A: As announced in October, the Cost-of-Living Adjustment (COLA) rates for 2026 are:

• CSRS Annuitants: 2.8%

• FERS Annuitants: 2.0%

Q: When will the 2026 COLA increase take effect?

A: The COLA is effective on December 1st of the current year.

Q: When will the COLA adjustment appear in my retirement payment?

A: The COLA adjustment will first appear in your annuity payment on the first business day of January. This payment reflects your December benefit, which is when the COLA officially takes effect.

Q: Do FERS retirees receive the COLA regardless of age?

A: Generally, no. Federal Employees Retirement System (FERS) and FERS Special Cost-of-Living Adjustments are not provided until age 62.

• Exceptions apply for disability retirement, survivor benefits, and other special provision retirements.

• Note: If you are a FERS retiree with a CSRS component, that component is subject to the CSRS COLA calculation.

   

Q: How is the COLA percentage determined?

A: The COLA is calculated using a formula based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Specifically, the percentage increase is determined by comparing the average CPI-W from the third quarter of the current year to the average from the third quarter of the last year a COLA was granted. The increase is then rounded to the nearest tenth of one percent.

The Markets

It’s beginning to look a lot like a rate cut…

A lot of information about the economy arrived last week. Some was delayed by the government shutdown. Some was right on time. Investors took a look and decided their holiday wish could come true. The Federal Reserve (Fed) might deliver a cut rate cut this week. Here’s a brief recap of the information that landed just in time for the Fed to consider it.

Inflation rose in line with expectations. From August to September, headline inflation increased from 2.7 percent to 2.8 percent year over year, while core inflation (which excludes volatile food and energy prices) fell from 2.9 percent to 2.8 percent, according to the Personal Consumption Expenditures (PCE) price index. It’s one of the Federal Reserve’s favorite inflation measures.

September spending mirrored rising prices. “U.S. consumers continue to be cautious with their wallets, spending more on basic goods and less on fun extras…gains in spending were largely concentrated on household necessities like gas and energy, housing and utilities, and healthcare…Spending on discretionary items like recreation services and goods actually decreased from the previous month…,” reported Nicole Goodkind of Barron’s.

The holiday shopping season got off to a strong start. Fast forward from September to November, and Americans were less cautious with their wallets over the Thanksgiving holiday shopping week. A software company that tracks consumer spending online reported that Americans spent $79.6 billion that week – a 5 percent increase year over year. “More than half of consumers shopped exclusively or mostly online during the five-day period…,” reported a research company cited by Spencer Soper of Bloomberg.

Consumer sentiment crept higher. Although the University of Michigan Consumer Sentiment Index remained near all-time lows, sentiment improved from November to December.

University of Michigan Surveys of Consumers Dec 2024 Nov 2025 Dec 2025 Historic monthly average

Index of Consumer Sentiment 74.0 51.0 53.3 84.8

Index of Current Economic Conditions 75.1 51.1 50.7 -

Index of Consumer Expectations 73.3 51.0 55.0 -

Major U.S. stock indexes closed higher last week with the Standard & Poor’s 500 Index just below an all-time high, reported Connor Smith of Barron’s. Yields on U.S. Treasuries notes and bonds rose over the week.

LANGUAGE IS CHANGING. There are a lot of languages in the world (7,159), but almost half the world’s population (3.7 billion people) communicates using just 20 of them. Individual languages change over time. “They’re living and dynamic, used by communities whose lives are shaped by our rapidly changing world,” reported Ethnologue, a research center for language.

Dictionaries catalogue the ways language changes, adding new words that reflect the world around us. Several English dictionaries recently announced their Words of the Year (WOTY) for 2025. They include:

Parasocial, which is the Cambridge Dictionary’s WOTY. Parasocial is defined as “involving or relating to a connection that someone feels between themselves and a famous person they do not know, a character in a book, film, TV series, etc., or an artificial intelligence.” Searches for the term increased significantly “following the release of personalized AI chatbots by multiple companies in the preceding year, public discussion about the psychological impact of parasocial relationships expanded from being mainly about influencers and celebrities to including the benefits and dangers of chatbots.”

Rage bait, which is the Oxford Dictionary’s WOTY. It was selected after three days of voting during which 30,000 people offered their insights and opinions. Use of the word increased three-fold in 2025. Rage bait is defined as: Online content deliberately designed to elicit anger or outrage by being frustrating, provocative, or offensive, typically posted in order to increase traffic to or engagement with a particular web page or social media account.

AI slop, which is the Macquarie Dictionary’s WOTY. It is defined as “low-quality content created by generative AI, often containing errors, and not requested by the user.” It was chosen by staff editors, who wrote, “While in recent years we’ve learnt to become search engineers to find meaningful information, we now need to become prompt engineers in order to wade through the AI slop.”

67 (pronounced six-seven), which is Dictionary.com’s WOTY. The word “is a viral, ambiguous slang term that has waffled its way through Gen Alpha social media and school hallways. While the term is largely nonsensical, some argue it means ‘so-so,’ or ‘maybe this, maybe that,’ especially when paired with a hand gesture where both palms face up and move alternately up and down…Because of its murky and shifting usage, it’s an example of brainrot slang and is intended to be nonsensical and playfully absurd.”

It will be interesting to see how language in Australia changes over the next few years. Effective December 10, 2025, the nation implemented a law that requires people to be 16 or older to have social media accounts. As you can tell from some of the words above, online communications can have a transformative effect on language.

“Social media enables new words, phrases, and expressions to go viral in a matter of hours, sometimes reaching global audiences…language, once shaped primarily by formal institutions, now responds to

grassroots innovation and mass participation, especially among youth cultures and online communities.”

WEEKLY FOCUS – THINK ABOUT IT

“Sharing meals has a strong impact on subjective wellbeing – on par with the influence of income and unemployment. Those who share more meals with others report significantly higher levels of life satisfaction and positive affect, and lower levels of negative affect. This is true across ages, genders, countries, cultures, and regions.”

– The World Happiness Report 2025

💰 2026 Thrift Savings Plan (TSP) Contribution Limits

The Internal Revenue Code (IRC) has set the TSP contribution limits for 2026. Here is what you need to know about the annual Elective Deferral and Catch-up Contribution limits:

1. Annual Elective Deferral Limit

The standard annual limit for all participants will increase to $24,500.

2. Catch-up Contribution Limits

The Catch-up Contribution amounts for participants aged 50 and older have also increased:

Key Information & Action Items

• Roth Requirement (Secure 2.0 Act): Federal employees must make all Catch-up Contributions as Roth Contributions.

• Action: You can make your TSP contribution elections using myPay.

• Note: There are 27 pay periods in 2026. Please plan your contributions accordingly.