Delivered on: Friday, October 14, 2022
Record High COLAs & Pay Raises – With a Catch
How you may qualify for one, both or neither of these increases in 2023
- COLAs: Newly announced COLAs for 2023 and how they are applied
- PAY RAISES: Anticipated pay raises for 2023 and how they are applied
- THE CATCH: Who gets COLAs, who gets pay raises and who gets neither one!
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Prefer to read instead? Below is the transcript:
Hello and welcome, everybody, to today’s webinar on a very, very timely topic, which is High COLAs and Pay Raises. So just yesterday, a historic raise to the Cost of Living Adjustment was announced, and we’re going to get into some of those details today. But some of you aren’t affected by COLAs right now – you’re affected by pay raises that we know will be coming here at the turn of the year. We want to give a little bit of a differentiation between COLAs and pay raises, who gets what and when.
Most of you know me, I’m Chris Kowalik of ProFeds. I am the founder here, the developer of the FedImpact Retirement Workshop, and the host of the FedImpact Podcast. So we’re delighted to have you here. As always, we’ve got a big, big audience, and so in order to get all of the content, the material out to you today and to get your questions answered, I’ve got my support team standing by in the Q&A area to be able to answer those questions.
I’m going to stay focused on delivering the material. Our team will answer the individual questions that you have. Of course, today’s topic, like I mentioned, all over the news, you can’t really be a federal employee and not have heard something about the Cost of Living Adjustments. Not only because you’re federal workers and COLAs affect pensions once you finally retire, but because we’re also seeing it in the national headlines with respect to Social Security benefits that the vast majority of Americans receive. So very timely topic, and we got by by just the hair of our chin here because the COLAs were announced officially yesterday. So I’m glad we were able to get the latest data in here.
Like I mentioned, the Q&A area in your webinar portal, the support team standing by to answer those questions, so please submit them there – just be a little bit patient – we’ve got thousands of you on today’s webinar, and so we want to make sure we get to everybody. But know we’ve got a lot of you that are likely armed with lots of great questions today, so be patient and we will do our very, very best to get to everybody. What I do ask on the questions, because we just have so many people on these webinars, we want to make certain that the questions that you’re asking pertain to today’s material.
Now, handouts, those are available for download. You can either do that right next to the Q&A area where it says, “Handouts” or at the very bottom of your screen, you’ll see a link to the handouts as well. Now, this session is being recorded. We will send out the replay to all of the registered participants, and that way you can listen to it as many times as you need, rewind any of that to make sure that you get the whole message. And do me a favor, stay till the end. There’s always so much that we have to share that I want to make certain that you hear the whole story.
I know if there’s one thing that federal employees always have their eye on, it’s how their pay changes. So we’re going to focus on specifically Cost of Living Adjustments and the annual pay raise in today’s session. But really, it’s with an eye on knowing what you qualify for and not being confused at the numbers that are being thrown around out there of whether you get it or not. So that’s what today’s session is going to be focused on. So we’re going to dig into the details of Cost of Living Adjustments and pay raises. So for each one, we’re going to talk about who gets it, what is it based on, how much you can expect, when does it get applied, where you must live to get it, and why does it affect you?
So again, for COLAs and pay raises, we’re going to go through this order to make sure that we’re really clear on the differences between these two programs or these two figures, that way there’s no confusion.
Annual Pay Raises
We’re going to start with the type of pay that you receive first, which would be your normal pay, annual pay raises, that kind of thing. Of course, COLAs will come later in retirement. So for annual pay raises, these are annual increases applied to your paycheck while you are still working. It only applies to active employees. It does not apply to retirees at all. Now, these annual pay raises are, of course, different than your normal pay grade increases or your step increases. So you might very well have other types of pay raises that happen that are specific to you, but what we’re going to be talking about are the annual pay raises that typically happen in January.
Pay Raises: What is it based on?
So what are pay raises based on? Well, they’re not tied to a specific economic index, they’re very subjective in nature and often political in nature, and are met with heavy scrutiny each year by various groups within the government and lobbyists. We want to make sure that you recognize that pay raises are certainly not automatic, and there’s a lot of opinion that goes into pay raises for federal workers.
Pay Raises: How much can you expect?
So how much can you expect? Well, if you’re curious, we’ve got the last 10 years’ worth of pay raises here on the screen. I do want you to know that pay raises are not guaranteed each year. In fact, many of you have been through those years where several years in a row, there were no pay raises for active workers. Now for 2023, the pay raises are not final yet. Those figures are not final, but it’s expected to be 4.6%.
A pretty substantial pay raise, if you look historically back just over the last 10 years, 4.6% if we’re looking across the board and the locality pay combined is substantially higher than what we have seen in the last 10 years. Now, if you happen to be in an area where you do not receive locality pay, you may not be at the beneficiary of this high of a pay raise, but certainly, the 4.1% across-the-board pay raise applies to everyone.
Pay Raises: When does it get paid?
When does a pay raise get applied? Normally pay raises are applied in January of a given year, sometimes, especially when there’s a big political struggle on approving a pay raise, and we have budgets and all of those fun congressional things we have to deal with, if it happens to be approved late, let’s say it’s March when the pay raise is finally approved, it is most often retroactively paid back to the beginning of the year.
Pay Raises: Where must you live to get it?
Where must you live to get a pay raise? Well, the across-the-board pay raises are not specific to your location. So you can live anywhere and still receive that normal pay raise. That’s just the regular pay table. Locality pay raises, of course, will take place if you happen to be in an area where you are receiving locality pay. This also applies to the rest of the United States schedule, so for those of you who are familiar with the RUS schedule, that does account for kind of the broader locality pay throughout the United States if you’re not in one of these particular locality pays and those areas.
Pay Raises: Why does it affect you?
Now, why does a pay raise affect you? Well, I know what you’re thinking, “Duh. We know why it affects you, because it means more money in your pocket.” But the idea with a pay raise is that it helps you at least somewhat keep up with inflation and the rising cost to support your standard of living.
Now, it’s promotions and step increases that reward you personally, but the overall pay raise, the normal pay raise that we see for everybody is simply to make sure that the purchasing power of your dollar continues to rise so that you can afford the things around you that are included in your standard of living. Now, it doesn’t perfectly keep pace with inflation, but that’s the idea that at least it’s trending in that direction. Now, as far as preparing for retirement, the higher your basic pay, the higher your pension is once you retire, if you’re close to the end of your career and presumably you are receiving your highest earnings at the end of your career, your pay raise may affect your high-3, which is great.
A common question…
So let’s take a quick look at a question that we get an awful lot of. So of course, we do retirement training for federal employees, and you guys are always looking for that edge, and I love it.
But here’s the question we get an awful lot, especially when we have a big pay raise looming. “If I retire on January 31st, in this case of 2023, so after the pay raise goes into effect, does the new pay raise get factored into my retirement pension?” This is a great question and I’ve got some kind of good news, but some kind of bad news, I suppose, for many of you. That one month of pay that you receive in January of 2023 at the higher level (after the pay raise has been applied), that will likely help to make your high-3 slightly higher. It’s not significantly higher because it’s only going to help one of the 36 months of pay that is included in your high-3 calculation because you only received pay for one month of the new year with the higher pay level in effect.
We’re going to show you an example of what this delay into January to retire versus going out in December really looks like.
The effect the pay raise has on your High-3
But I want to cover, at least at the very, very high level, the effect that a pay raise has on your high-3. The high-3 average is one of three components in your pension calculation. It’s a really important number, and it’s important that you get it right so that the estimates that you’re making in your pension are correct. The high-3 is the average of your highest three years or 36 months of consecutive earnings in your career. Now, most people earn their highest years of earnings at the end of their career, and that’s what we’re going to assume in today’s webinar with some of our examples. If you earned your highest three years 10 years ago, then that’s what you’re going to use. But for most people, we’re looking at their highest years of earnings at the very end.
If you retire in December 2022
I want to break down some of the details of the high-3, not so that we can get super specific on the high-3, but so that we can understand the effect that a pay raise will have on it. So this chart illustrates if you separate in December of 2022, in our example, what this would look like. So let’s start with the year 2020. At that time, you are making $96,407 per year, and going into 2021, you got a 1% pay increase. So you’ll see now the salary is 97,371. Here we’re looking at the very top bar of this chart or this table. Going into 2022, the year we’re obviously currently in, we got a 2.7% pay raise for feds. So now you’re at a hundred thousand dollars a year.
So this shows you presumably your highest three years of earnings that were at the end of your career, just at the very top level of that table. But I wanted to break down what was happening for each of those months. I’m oversimplifying a little bit on the high-3. It’s a little bit more complicated than what I’m showing you here, but I want you to understand the concept of what happens if you move into a new year. What we’ve got here is 36 months of earnings. If you were to individually add all of these 36 months together and divide by three, you would get a high-3 average of $97,926. You see that in the lower right-hand corner of our slide. You would get that same number if you took the top line salaries, the $96,407, add that to $97,371 and add years of earnings of a $100,000, you would get that number divided by three, and it would come up with $97,926.
Same concept, it’s just you’re adding different versions of the numbers. So it’s really easy when you retire at the end of December of a given year to do this math.
If you retire in January 2023
But what happens if you’ve got your eyes on this big pay raise that’s coming and you think, “Well, I think I should wait until January 31st instead of December 31st to retire. Let me get to January,” and you think it’s going to have some miraculous change or effect to your high-3? Well, let’s see if it does. So here’s what happens, on the far right-hand side, you see we’ve added 2023.
So if you get a 4.6% pay increase, your pay has now gone to $104,600. That is a pretty substantial pay raise. So at this point, your monthly pay will be $8,717, and we’ve highlighted that in green here, so that you see that we are adding $8,717 to this chart. But if you look back to January of 2020, you’ll see that one month of pay of $8,034, we struck that from this table because we can only count 36 months. So we have to drop a month of lower pay to be able to add the new month of higher pay.
So in an effort to arrive at the high-3, if we were to add all 36 months of earnings that you see here, again, including the new month of earning, $8,717, and not including one of the $8,034 a month pay, we add all 36 together, we divide by three, and we would come up with a high-3 of $98,153. This has made a difference of $227 in your high-3 average. Now, I wish it was simple to say, “And here’s what that means in your pension,” but the reality is we have so many different kinds of employees on this call that… We’ve got our CSRS, our CSRS offsets, our FERS, our FERS transfers, we’ve got our law enforcement, firefighters, air traffic controllers, military reserve technicians, customs and border protection officers. We’ve got all these different styles of pensions that it’s a little bit difficult for me to show that without going into a lot of detail, but hopefully you know what your retirement pension is supposed to look like, and you can plug in these different high-3s or whatever yours would be, and be able to see what a true difference that makes in your pension.
I will share with you that it is an insignificant difference, and while it still might be okay to go into January of 2023 or perhaps even later in the year to really make the most out of this historic pay raise, certainly going one month into the new year doesn’t make a substantial difference. Hopefully, I’ve not confused you more with the explanation of the high-3 and how it works, but this breakdown, I think, is helpful because it makes it clear that we strike one month of lower pay to add a higher month of pay to really determine what the difference is.
Cost of Living Adjustments
Next up, let’s talk about Cost of Living Adjustments. So Cost of Living Adjustments, of course, this is the big announcement that was made just yesterday. We’re going to dig into some of the details. So just like we did on pay raises, let’s start with who gets it.
COLAs: Who gets it?
For Cost of Living Adjustments or COLAs, these are annual inflation adjustments applied to a former federal employee’s CSRS or FERS pension once they are retired. So COLAs don’t affect employees, just like pay raises don’t affect retirees. They’re completely different figures based on two completely different things. It’s also worth noting that Cost of Living Adjustments, that same figure that you’ve seen blasted all over the news applies to Social Security benefits as well. So we’re going to see how some of you, those numbers might be identical between your pension and Social Security increases, and some of you, those might be offset a little bit based on the retirement system that you are in.
COLAs: What is it based on?
What is a COLA based on? Each year, the Bureau of Labor Statistics sets a number called the CPI-W, and in fact, they don’t just do this once a year, they do this every single month, but they come back and evaluate at the end of September, and early October, what is the change over the whole prior year for these items that you see on the screen?
Housing, food, medical care, recreation, all the normal things that people consume on a normal basis, and this is a pretty broad list. It doesn’t include every aspect of our economy, but it’s pretty darn broad. Transportation, this is not just thinking about the price of cars, this is thinking about the cost of gas, big deal, over the last year. This CPI-W, this figure is determined each month and that number, over the last prior year, is used to determine the actual COLA amount. On the right-hand side, let’s take a look at the Cost of Living Adjustment for retirees.
And here we’re of course talking about federal retirees, but you’ll see on the far left-hand side some different levels of CPI-W, whatever that number ends up being. So when the CPI-W, again, the annual version of this, is greater than 3%, then CSRS retirees get that number, whatever that number is. FERS retirees, we like to say they get diet COLA, they get whatever the CPI-W is minus 1%. So FERS retirees are always behind when we have a high COLA or a high CPI-W. Now, in the event that CPI is relatively moderate between two and 3%, again, CSRS retirees are going to get whatever that number is, and FERS retirees will get 2%.
In the event that we have low CPI-W, so less than or equal to 2%, then both CSRS and FERS retirees will get the exact same change to their pension for that year. That’s the difference between CSRS and FERS. CSRS are always going to keep pace with inflation because that’s what the CPI-W is measuring, and FERS retirees will likely fall behind over the years. There’s nothing you can do about this. You can’t pick which one you get. It’s just a function of which retirement system that you are in. But it is important to recognize that the purchasing power for a FERS pension continues to deteriorate over the years, especially the higher the inflation, the higher the CPI-W, the more and more FERS fall behind. So if you’re wondering how much you can expect, couple of things that I want to review.
COLAs: How much can you expect?
The first is just like pay raises, COLAs are not guaranteed each year. It would be very unusual not to have much of a change, as you can see over the last 10 years, but it’s certainly not guaranteed. Now, for 2023, again, just yesterday, an 8.7% CPI-W was just announced. So if you remember from our previous slide, our CSRS retirees will get 8.7% and our FERS retirees will get 7.7%. Now, I’m not arguing that this is fair, I’m simply arguing that this is how it works. So if you’re curious what the last 10 years have looked like, it does put into perspective how unusually high this COLA is for both CSRS and FERS retirees. I mean, 8.7% is out of left field when you compare it to the last 10 years, but when was the last time we saw inflation this high?
So there’s got to be something that’s done to help the retirees to maintain the purchasing power of their money. Again, 2.57% on average for CSRS retirees and 2.18% average for FERS retirees.
COLAs: When does it get applied?
So when does the COLA get applied? Well, there’s a couple of important dates we need to know. The first is when it’s announced. Mid-October, just like it was yesterday that it was announced on October 13th. So that’s the normal time that the COLA is released. It will be applied to the pensions that are accruing in December, they’re always paid the next month. So it’ll be December’s pension accrual and that it’s payable in January’s pension payment. So there’s a little bit of a delay in how that’s payable to a retiree, but it’s also important to know between CSRS retirees and FERS retirees when they start. So for a CSRS retiree, they receive Cost of Living Adjustments regardless of their age when they go to retire.
FERS retirees, on the other hand, will not receive COLAs until they reach the age of 62. So if they’re eligible and choose to retire at 57, they’re not going to have an increase to their pension for five years. That’s a pretty big deal, especially if you’re in a year like now where we have such high inflation, your pay as a FERS retiree prior to the age of 62, will remain level. There is an exception to that, and that is our law enforcement, firefighter, and air traffic controller community, they receive Cost of Living Adjustments immediately regardless of their age when they retire. They are simply forced to retire much earlier than the average person, and so that’s the accommodation that’s been made.
But here’s the part that I think confuses a lot of people, especially if they’ve not been retired for a while and haven’t seen this play out in real life, and that is that the first Cost of Living Adjustment that you receive might be prorated based on the number of months you are retired from December to November of the prior year.
COLA years are not January to December, they’re the prior December to the current November. We have to make sure that we’re looking at the right timelines. And believe me, this can get a little bit confusing, so we’ve got to chart for you, don’t worry, we’ll get to that here in a second.
A common question…
But I want to cover the question that we get from so many people, and that is, “If I retire in December of 2022, so December 31st of this year, do I get the Cost of Living Adjustment in January’s pension check?” The answer is no. It’s a really easy answer. No. You’ll only get a prorated portion of the new 2023 COLA based on how many months of the prior year (from December of 2021 to November of 2022) that you were receiving a pension. And in this case, if we look back to December of 2021 to November of 2022, you didn’t receive any pension. You would receive 0% of the 2023 COLA, again, if you retire December 31st of this year.
And while I wish that explanation was enough for everybody, everybody’s on a little bit different of a timeline. I wanted to do my part in trying to lay this out in a way that y’all could look at where you are in the retirement timeline as far as when you plan to go to know what your COLA situation is going to look like. This chart gets a little bit interesting because we’ve got all sorts of different types of people on this call. Some of you might have already retired, and you’re simply popping on to learn about these things of what to expect.
So if you would’ve retired in January of 2022, so beginning of this year, your pension would have been accruing in February, and that would mean that for the January 2023 COLA, you would get 10/12ths of that COLA. That would be the amount that was prorated for you to receive. And then from January of 2024 and January of 2025, you’ll receive 100% of those COLAs from that point. So the proration only happens in that very first year of receiving your Cost of Living Adjustment.
But let’s fast forward to now, to October of 2022. Let’s say that with this big announcement of COLA, you think it’s a perfect idea to go ahead and retire and you say, “October 2022, I’m going to go ahead and separate, my pension’s going to start accruing next month in November of 2022.” You will only receive 1/12th of the Cost of Living Adjustment for January of 2023, so only about 8% of it, 8% of either 8.7% or 7.7% depending on which retirement system that you are in. Of course, you’ll see the following two years, and all the years after that, you’ll receive normal COLAs at the full level. But for that first year, you’re only going to get 1/12th of the increase.
Now, if you wait to retire in November or December of this year, you will not receive any of the Cost of Living Adjustment that was put in place for retirees for 2023. You will notice if you go ahead and leave in November of this year, you won’t get anything in January of 2023 for a COLA, but you will get the whole January 2024 COLA. So again, there’s just a delay in how all this is going to apply to you.
Then, of course, the longer that you wait each month, so December of 2022, for example, very, very popular time for people to retire, you won’t get anything for the 2023 COLA, but you’ll get 11/12ths of the 2024 COLA and then all of the COLAs from that point forward.
No doubt there is an awful lot on this slide, but I wanted everyone to be able to pick their individual separation date of when you plan to retire from federal service and see really how you are personally going to be impacted. And by doing so, we had to put all of these months on the calendar.
But it’s not enough just to stay there. At that point, we have to look at what happens if you separate in 2023, some of you aren’t quite ready to retire, and you’re thinking, “Well, what happens to me if I retire next year?” Well, if you retire at any point during 2023, you won’t get the 2023 COLA, but you might get some or all of the 2024 COLA. Again, depending on the month in which you separate from federal service, it will determine what percentage of that next year’s COLA you will receive.
We tried to make this as user-friendly as we can. Our slides are only so big, and I know we can only make the font so small to be able to try to fit all of this, but hopefully, these two reference slides are helpful to you as you’re trying to sort through your planned retirement date and what this would mean to you with respect to COLAs.
COLAs: Where must you live to get it?
If we’re following along in our list of things that we’re covering for both pay raises and COLAs, the next thing we have to cover is where must you live to get the COLA? Well, where you live in retirement has absolutely no effect on your pension amount. Your pension is set when you retire, and Cost of Living Adjustments are applied uniformly regardless of your location.
I suppose that can be good news and bad news as the image implies, because if you leave an area where you have very low cost of living and your locality pay is very low, then your pension is calculated based off that pay level. And if you move to an area that’s really expensive, your pension doesn’t go up. You don’t get locality pay in your pension check, you simply are moving to an area that’s more expensive for you to afford with no change whatsoever in your pension for that purpose. But the opposite is true as well. If you’re in a high locality pay area when your pension is initially calculated (because locality pay is included in your high-3 that goes into the initial calculation), if you move to a lower cost to living area, then your pension doesn’t go down. So that’s, again, good news, bad news, it depends which direction you are going.
COLAs: Why does it affect you?
All right. So why does a COLA affect you? Well, COLAs are critical to somewhat retaining the purchasing power of your pension money. If you don’t have Cost of Living Adjustments to your pension, over the years, you’re going to have to take out more and more and more of your other assets like your TSP, and those accounts will start to spiral down in an unrecoverable way because you’re just having to rely so heavily on those accounts. I suppose it’s worth mentioning, if it makes you feel any better, that most private sector pensions that are still around, not many of them are around, but if they’re still here, they don’t have a Cost of Living Adjustment at all. So it is calculated one time, and that is the dollar amount that you receive no matter how long you live. And so this is a good thing that the federal government has some sort of COLA, even if you don’t get all of it, or even if you don’t feel like it’s enough, it’s at least something.
When we’re thinking about why does it affect you, I want to talk a little bit about the longer term. So let’s get a wider swath of years in this inflation window here. So let’s go back the last 20 years, US inflation has been at 2.57% on average for the last 20 years. Of course, the CSRS COLA is that same number because that’s what it’s based on, 2.57%, and then the FERS COLA, the average over the last 10 years, is 2.18%. I want to show you an example of what happens to the purchasing power of money. So we’re going to take a hypothetical $10,000 a year pension, and we’re going to look at it from someone who retired in 2004, and we’re going to fast forward 20 years and see what the purchasing power looks like. We’re going to start by looking at the second column in the table on the right-hand side of your screen.
So we’re going to show this $10,000 adjusted by the inflation figure for the United States, again, over the last 20 years at 2.57%. So year over year over year, that $10,000 in 2004 would now be $16,611. And this is true whether it’s a pension or another type of money that’s adjusted by inflation. We’d have to have $16,611 to pay for the same types of things that we would have back in 2004 at $10,000. So the numbers are identical for our CSRS retirees because their pension is adjusted by the actual inflation number. But for our FERS retirees, this is where things get a little bit interesting. If we adjust that $10,000 by an average of 2.18% over the last 20 years, we’re looking at that $10,000 now being $15,393. So we’re over a $1,000 short of what we would need to have maintained the purchasing power of that money.
Again, there’s not a lot you can do about this with respect to choosing which COLA you get, you don’t have that choice. But we do want you to recognize that you’re going to have to rely more and more on other assets that you have, like the TSP, like your spouse’s 401(k), like an IRA that you have out there, or maybe some non-qualified money that’s not in an IRA or 401(k), that you’re going to have to do something to supplement your income. Or the alternative is you have to lower your standard of living. So I just want to give a little perspective there on inflation and what it’s really doing with respect to the CSRS and FERS pensions over a long period of time. And I hope that we all hope to live 20 years in retirement at least, that seems reasonable. And so we have to look at kind of that longer-term effect.
What happens if…
Now, you might still have some questions about how COLAs or pay raises are going to affect you. And so what I’d like to do at this point is answer that question, “What happens if…” What happens if you retire now, next month, the month after that, the first couple of months of the year? Kind of zoom in on how you’re going to be affected both for COLAs and for pay raises. On the left-hand side, you’ll see different separation dates. So these would be the days that you retire from federal service or the months that you retire. And answering the question, do you get the 2023 pay raise, and do you get the 2023 COLA? So if you retire in October, so here we are in October of 2022, if you retire at this point, you will not get the 2023 pay raise, and you’re only going to get 1/12th of the COLA starting in January, and that’ll be applied for the whole rest of the year.
If you choose to leave in November, you don’t get either one, you don’t get the pay raise, and you don’t get the COLA either. Same thing for December. So November and December, December is by far the most popular month of the year to retire, but we have to recognize that you don’t get to take advantage of the pay raise, and you don’t get to take advantage of the Cost of Living Adjustment that’s just been announced. So you kind of don’t get either one, and that might not feel very good to you. Now, in the event that you choose to retire in January of next year, you will get the pay raise and it will account for one of the 36 months of your high-3 average. If you choose to go in February of next year, yes, you will get the pay raise, and it will count for two of the 36 months of your high-3 average, and of course, so forth and so on.
It’s going to continue to go the further down 2023 you go, but know that you will not receive any of the Cost of Living Adjustment for 2023. So in our explanation of this webinar, how do you know if you get one, both, or neither of the pay raises and COLAs that are expected for next year? The reality is, in order to at least get some of the 2023 COLA, you’ll need to retire now. I’m not suggesting it’s a good reason to retire now, but that’s the only way that you’re going to get any part of the 2023 COLA if you are not already retired. We know that in November and December, if you retire in those months, you will not receive either one. And then in January or February, if you retire, you’re going to get a little bit of a boost to your high-3, not much, but a little bit, and of course, none of the COLA.
There is no way that you’ll receive both the pay raise and the Cost of Living Adjustment no matter which month of the year you choose to retire. And this is true for any year where we’re going into a pay raise, there will simply be no overlap of when you get both the pay raise and the COLA.
Wrap up and next steps
Let’s wrap up and talk about next steps. So remember, pay raises and COLAs are paid in very, very different ways, and neither one of them are guaranteed. Please do not base your decision to retire solely on pay raises and COLAs. You’ve got to look at the bigger picture of your financial situation to determine, should you be retiring at all? Are you even remotely close to financially being ready to retire? Don’t do it for something shortsighted like, “Can I get 1/12th of the COLA for 2023?”
It’s got to be a bigger decision than that. And remember, if you’ve been to one of our trainings, you know that this is something we really believe in, and that is when you know your numbers, your financial decisions become obvious. If you have not taken time to really figure out all of your retirement numbers, you are making a decision about something like pay raises and COLAs in a vacuum, in a bubble. And that will lead to almost certain financial demise because there’s so much that goes into getting retirement right, that if you don’t know your numbers, chances are you’re not going to get the retirement you want.
Attend a FedImpact Workshop
So to fix that, please come to one of our workshops, double-check your retirement math. Even if you think that you have all this stuff squared away, what’s a double-check? How can that hurt you? I have a feeling you’re still going to learn something (probably a lot of somethings) that you didn’t know before to give some context to your retirement by attending one of our workshops.
So this is in-person training that we deliver in lots of cities throughout the United States. There is no cost for you to attend, and we cover all of the federal benefits topics and those decisions that you’re going to need to make when you step into retirement. What I love about our workshops is afterwards, you have some one-on-one help available where you can get your individual questions answered. So you can see all of the details by going to FedImpact.com/Attend. You’ll see all of our open retirement trainings, we’ve got lots of them that are full, so we’re opening up the next one in an area. But reserve your spot. Don’t be afraid to get your numbers.
Handouts and Replay
Now for today’s session, the handouts and the replay, if you’re not able, for whatever reason, to download the handouts right now, they will be emailed to you along with the link to the replay. So standby for that. That will be out in the next day or two.
Our next webinar
For our next webinar, it is Maximizing Your TSP for 2023. This will be on November 16th at one o’clock Central. With respect to the TSP, there have been an enormous amount of changes in this past year, and we want to make certain that you are crystal clear on how those changes are really affecting the decisions that you’re making for the TSP in the coming year. So we’re going to highlight all of those important changes for next year and how to leverage the TSP to your advantage in the coming year.
So you can sign up for that webinar the same place you signed up for this one, which is FedImpact.com/Webinar. Well, that’s it for today, everybody. Thank you so much for joining us. Again, to find a workshop, you can go to FedImpact.com/Attend. And to register for our next webinar on TSP in 2023, go to FedImpact.com/Webinar. So we’ll see you there, November 16th. In the meantime, I hope you’ll stay tuned for benefits and news updates from us here at ProFeds. Thanks so much and we’ll see you next time.