Retirement

[James48843]

Big news- June’s inflation figures showed up as 6.1%, after having been at 5.3% in May

Why is this big news: the inflation rate is directly tied to the amount of retired pay increase come next January. The higher the inflation rate, the bigger the retiree pay increase next January.

This past January only saw a 1.2% increase in retired pay, but the current inflation rate means it’s likely to be a big jump next January.

CSRS retirees get a raise equal to the rate of inflation, and FERS retirees get inflation minus 1%.

If the current 6% rate continues through September, that would mean at least a 5% raise for FERS retirees, and 6% for CSRS come next January.


More info:

https://federalnewsnetwork.com/mike...06/will-the-super-cola-pump-up-the-pay-raise/

Super Cola likely to be coming!


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[Boghie]

Uh, James...

If the inflation rate is 6% then the cost of living increased 6%. Thus, your pay increasing 6% means absolutely nothing.

Actually, less than nothing... Why? Because you are losing value to ongoing inflation throughout the year. For example if inflation is 1% for July and you do not get a pay increase for July than your purchasing power just lost 1%.

Also, guess what. My understanding is that they use the core rate for cost of living increases. That core rate does not include gas and food. Hmmm.

Finally, if inflation comes to your home value what do you think happens to property tax.

Inflation is NOT a reason to be happy. It is horrid.


Bro, we be getting jobbed. And, retirees will get jobbed the worse. I can still dump this job mid-stream in July and get another higher paying job. Retirees, not so much.

 

[bleeck]

Non for us retirees that get the FERS supplement. Still happy to be retired!

 

[Bullitt]

Inflation is the single biggest threat to retirement because it can silently erode purchasing power without noticing as opposed to a dramatic crash that takes years to recover.

My "pay raises" only seem to cover a few bucks more than my health insurance. I'd hate to imagine what a 6% pay raise would mean to health care costs.

 

[James48843]

We can’t do anything about inflation. Do I wish inflation was zero? Sure. But that isn’t reality.

We can, however, be grateful we have such a thing as a COLA increase in our pensions. Most people these days don’t get a pension at all; hose that do usually don’t get a COLA. We should be grateful to get an increase- and this upcoming one is going to be substantial fir many of us.


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[Boghie]

Inflation was almost zero - so that can be reality.

Anyway, there would be some natural inflation - if there was deflation due to the COVID lockdowns. There was likely deflationary pressure from the lockdown so a bounce back to normal would initiate inflationary pressure.

However, most currency inflation is policy driven. Good monetary and fiscal policy with an eye on both inflation and deflation can avoid or minimize the danger of both. Bad monetary and fiscal policy leads to both. Additionally, things that restrict the flow of goods and services is inflationary. Such inflation is purely policy driven. If we get a couple/three months of inflation and then things settle than it is just a reaction to the COVID issues. If it is persistent than it is policy driven. You CAN (not you, but you know what I mean) do something about policy that creates inflationary pressure.

Sometimes, it is best to eat a bit of inflation for the greater good. Sometimes you have to play hardball with inflation if it is placing folks with fixed incomes in a bind - or, if people start adjusting their personal economics because of it. That is a judgement call.

We shall see.