COLA Increase Provides a Raise for Social Security Income and Benefits to Federal and Military Retirees

This article was last updated on September 11

2013 COLA Increase For Social Security and Retiree Pay

[2014 COLA Increase Update]  The Congressional Budget Office has forecast a 1.5% COLA raise based on preliminary data. This is 0.2% less than the 2013 increase discussed below. For more see this article on the 2014 COLA increase.


[2013 COLA Increase] It’s official, the 2013 COLA rate will be 1.7%. The Social Security administration confirmed this figure and as a result Social Security and Supplemental Security Income (SSI) benefits for nearly 62 million Americans will increase 1.7 percent in 2013. This is marginally higher than the Congressional Budget Office (CBO) estimate of 1.3% released last month. The 2013 increase is significantly below the 2012 COLA increase of 3.6%, reflecting a persistent low inflation and interest rate environment.  The 1.7% increase will be effective December 1st and will be seen in January 2013 payments. For the average retiree this is equivalent to an extra $22 a month.

The COLA increase is based on the percentage increase (if any) in the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the current year over the average for the third quarter of the previous year in which a COLA became effective. The government publishes the official annual cost-of-living adjustments typically in late October, with changes to social security, retiree benefits and medicare effective for the subsequent year.

Retiree pay increases for military and federal civilian workers is also linked to the COLA adjustment and is automatically adjusted on an annual basis. Federal retirees, whether they are covered by the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS), will receive the full 1.7 percent COLA adjustment for 2013. According to the government formula, if the full COLA increase is 3 percent or higher, as it was for 2012, FERS retirees receive 1 percent less than the full increase. So FERS retirees received 2.6 percent for 2012. If the COLA falls between 2 percent and 3 percent, then FERS retirees would receive 2 percent. If the increase is less than 2 percent, as it is in 2013, FERS retirees receive the same as CSRS retirees. In other words, 1.7 percent.

However, adjustments in veterans’ benefits covering disability and survivor are not automatic, and must be approved by Congress and signed into law by the president. The House has already approved the COLA increase (HR 4114), and the Senate (via S2259) will soon follow suit.

Change in 2013 Maximum Taxable Earnings – The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $113,700 from $110,100. Further the earnings per quarter required to earn a social security credit will increase by $30 to $1,160. You need to have 40 minimum earning quarters (10 years) to be eligible to receive social security benefits.

I’ll soon publish updated articles on 2013 SSI taxable earnings and medicare impacts. I encourage you to subscribe via RSS, Email, Facebook or Twitter to get the latest news.

17 thoughts on “COLA Increase Provides a Raise for Social Security Income and Benefits to Federal and Military Retirees

  1. The cost of living increase sounds nice in the beginning, but most do not see the effects. Most people on disability get food assistance and live on public housing. The increase makes their food stamps go down and their rent go up even more. In the end it really didn’t do anything in the long run to get it.

  2. The small amout I will be getting does nothing more than put a half tank of gas in my car if that. I suffer from many medical problems and live in severe pain daily. I can haedley get out of bed some times to get out of my apartmenr or just use the restroom. With my disabilty I got a state medical card. I am on several medications and now The state have taken my pain meds away and will only pay for 4 prescriptions :( ~ So since I can not afford the prescriptions, I have stopped takeing most of them and take high blood pressure meds every other day. I feel our system is failing all the way around. Serously thinking about moving to another state, but probably have the same problem. I know for sure the pain pills are being given to the wrong people!!!!!!

  3. Retire over seas! Your retirement will go further over there. Im 33 years old I plan on buying some property in Nicaragua or Costa Rica. I get Veterans Service Connected Disability at 30% which I plan on using to pay on the property, yeah it’s that cheap! I’m at $1225 a month with Social Security if I were at the retirement age, I’m hoping it’ll go up by the time I retire. So if you’re young look into buying property overseas.

    Good luck.

  4. It is so cruel … the people who make these decisions are making millions … plus free health care. for 2 of us in our household with social security, we pay 800.00 per month for insurances. What are we supposed to do? 1.3 percent is like zero! What are we supposed to do? I raised 6 children and worked 2 & 3 jobs at one time. My husband worked 35 years at his place of employment; we deserve to be treated human!

  5. There was a cost-of-living increase in 2008 which barely covered inflation. Another was not “doled out” until 2012 – and was TOTALLY eaten up by the increase in the cost of medicare. The number in this article (1.2%) tells me medicare is going up 1.2%. When you exclude food and fuel from the inflation figure, it may be possible to state ther is no inflation. However, all citizens eat and some travel. The ACTUAL inflation (with printing of money 24/7/360 under this administration) has been 24% since 2008. The same manipulation of inflation numbers as with unemployment figures. At least we now know that the medicare “Board” (death panel) is not our greatest concern … survival is.

  6. The American Institute for Economic Research came out with their estimate today and said Social Security recipients may get a cost-of-living increase between 1.5% to 1.7%. The exact size will be known after the Labor Department releases the consumer price index for urban wage earners and clerical workers on Oct. 16. I will update the article accordingly.

  7. Inflation is a lot more than 1.3%. It is the same story with the unemployment percentage. The government in the social seccurity case does not take into account gas prices as well food increases in arriving at this figure. Certainly it is not fair to the retiree.

  8. Yes, the 3.6% increase last year was just enough to DOUBLE my Part D medicine copays. I now pay more per month on meds, than the increase was.

    Maybe this years tiny little increase of 1.3%, which works out to a big $10 a month, won’t hurt me like last years did. It sure won’t help me, as my rent went up $55. So much for truly considering our cost of living increases! And that is just the rent part of my cost of living increases.

  9. Interesting comments, clearly has strong political undertones. Not surprising in an election year. I would also caution about dismissing the COLA increase, particularly after last years 3.6% increase. Most folks in the private sector have not seen a pay raise in the last 3 years and are likely to see a modest 1 to 2 percent raise this year. What hits retirees more is the lack of return on their non-equity assets thanks to low inflation and interest rates.

  10. I’m CSRS retired.A 1.38% COLA is certainly better than nothing,but it’ll be offset by health premium increases.I’ve lost all faith in the COLA formula since it doesn’t reflect the much higher true inflation rate.And I empathsize with working FEDS who are getting royally hosed again in 2013.The fiscal cliff is coming quickly.It seems our congressional/administration/Bernanke “geniuses” are just trying to postpone the inevitable recession/high inflation/even depression scenario.Everything I’ve ever known about economics isn’t being ptacticed by these clowns.

  11. watch next year Gail! , if Romney gets the chance, he will turn this economy around! Give him a chance, you gave B.O. a chance!!!! you have been hood winked !

    1. Yep. Romney will take credit for the economy improving thanks to obama’s policies! If things get worse he will just blame Obama. Sadly the country has not had a good leader in 12 yrs

      1. Gail, NObama has been blameing Bush for the last 4 years,esp. when his own polices fail. If you recall NObama said if he did not accomplesh his goals in his first term (note he has not) he would not run for re-election. But here we are in 2012 and he has lied yet again (no surprise there).
        For the record I am not republican or democrat so please do not lump me into any grourps.

  12. Most of my life I thought that SS was mandatory. A Trust, SS Trust fund, that you paid into for retirement. The (Trust) was robbed, and is continued to be robbed, by politicians to pay for foreign wars, and bail out fat cats, and line Corporate pockets. Where is the TRUST? The Govt. can bail out GM, an big banks, and foreign countries, and they cut their obligations to their seniors.

  13. 2011 my SS check was ….$1238. today it is $1183…….. what is wrong with this picture? I qualify for NO entitlements…… NONE……ZILCH…….. I repeat what is wrong with this picture?….. I was told by a SSA employee to stop paying credit cards and other bills and definitely NO cable!!!!! Hmmmmm I will tell the judge this when I am sued…..:( My hubby and I worked hard thinking and being told thar we were investing in our retirement years……… now I am told that Soc Sec is an entitlement? Who is crazy here?…….

  14. 1.3%, barely enough information to keep above inflation. Seniors get shafted once again. But at least its better than what Romney will do to us.

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