Financial advisers are reporting that the increase in annuities for retired Massachusetts government workers, military retirees, and veterans is expected to be lower next year after the largest cost-of-living adjustment in four decades occurred in 2023. This news is being viewed as positive by financial advisers.
President Joe Biden signed a measure into law on June 14 that will provide military retirees and veterans with a cost-of-living increase that is equivalent to the raise that Social Security recipients will receive. For decades, there has been a connection between two sets of benefits. However, despite this link, federal regulations still require Congress to pass the corresponding legislation annually.
According to a recent statement, Jon Tester, the Senate Veterans’ Affairs Committee Chairman from Montana, has proposed a plan to combine veterans’ benefits increases with other federal payouts. The aim of this plan is to safeguard family finances during a time when people are grappling with the escalating costs of housing and groceries.
According to recent data, the rate at which costs are increasing has slowed down compared to the previous year.
According to a nonpartisan advocacy group that focuses on educating Americans on retirement issues, the Senior Citizens League, the estimated baseline COLA for the upcoming year is 2.7%. The Federal and military retirees, as well as veterans, received a significant boost to their benefits in 2023. The Cost of Living Adjustment (COLA) saw a surge of 8.7%, marking the highest inflation increase since the early 1980s. Inflation rates have been on the rise, reaching a four-decade high in 2022. However, there is some good news as the inflation rates are now slowly leveling out. As a result, the Cost of Living Adjustment (COLA) is expected to be more modest. The COLA is based on inflation figures from July through September.
According to Dallen Haws, a financial planner for Haws Federal Advisers, having a low COLA is actually beneficial. In an interview with Federal Times, Haws explained his perspective on the matter. According to sources, the current state of inflation is relatively low. According to a recent statement, the performance of a certain system experiences a decline as it begins to increase in height. “The moment it starts getting higher, it lags more,” the source reported. Further details on the matter were not disclosed.
Federal employees may receive varying cost-of-living adjustments (COLAs) depending on the specific government retirement plan they are enrolled in, according to recent reports. In the United States, federal employees are divided into two retirement systems based on their date of entry into civil service. The Civil Service Retirement System is applicable to those who started working for the government before 1984, while the Federal Employee Retirement System covers those who entered civil service from 1984 onwards.
Military retirees, veterans, and individuals receiving Social Security and annuities under the CSRS will receive a Cost of Living Adjustment (COLA) equivalent to the Consumer Price Index for Clerical Workers. This index reflects the average fluctuation in prices of consumer goods over a period of time. According to Haws and other experts, the adjustments made were meant to provide a cushion against economic instability, but not to completely compensate for the decrease in retirement benefits’ value. Retirees may find themselves falling behind on their finances due to the reactive nature of COLAs, or cost-of-living adjustments. These adjustments are made in response to inflation, but by the time they appear in benefit checks, retirees may find that their money has already lost value.
According to Thiago Glieger, a private wealth expert at RMG Advisors in Maryland, people are facing a challenge as they have not witnessed a significant decrease in costs, especially in the area where they spend the majority of their money. According to recent statements made by a concerned citizen, grocery bills have remained significantly high when compared to prices from a year ago.
According to the Bureau of Labor Statistics, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has experienced a 3.6% increase in the past 12 months. This marks the lowest increase since March 2021.
According to a report by the Senior Citizens League, retirees with average benefits of $1,694 may see an increase of $52 in their monthly buying power. This is due to the fact that as of January, the inflation rate of the CPI-W was lower than the 2023 COLA. The report highlights the potential impact of this difference on retirees’ finances.
Inflation has significantly impacted the value of currency over the past two years, making any difference difficult to discern. According to recent reports, the average Social Security benefit has fallen behind by $1,054.
Should you be in the midst of a military divorce or need assistance in obtaining a percentage of your former spouse’s military pension, contact the Law Offices of Renee Lazar at 978-844-4095 to schedule a FREE one hour no obligation consultation.
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