The 2027 COLA gets announced on October 14. The Senior Citizens League currently projects 3.6% for Social Security and CSRS, down from 3.8% a month ago, and the running count from the CPI-W data we have so far is tracking a bit under that, closer to 3.1%. Nothing is final until the September numbers come in.
If you’re on FERS, subtract a point from whatever gets announced. The FERS COLA is reduced by a full percentage point in any year the CSRS number lands above 3%. So 3.6% for CSRS works out to 2.6% for you, and 3.1% works out to 2.1%. And if you retired before 62 on a regular FERS annuity, you’re not getting a COLA at all until you turn 62. That one catches people who go out at 57 under the MRA rules and haven’t done the math on five years of a flat check.
That’s the number everybody’s looking for right now. I want to put a different one next to it.
Ten years of premiums against ten years of COLAs
These are the increases in the enrollee share of FEHB premiums that OPM announces every fall, set against the COLAs for the same years.
| Year | FEHB enrollee share | CSRS / Social Security COLA | FERS COLA |
|---|---|---|---|
| 2017 | 6.2% | 0.3% | 0.3% |
| 2018 | 6.1% | 2.0% | 2.0% |
| 2019 | 1.5% | 2.8% | 2.0% |
| 2020 | 5.6% | 1.6% | 1.6% |
| 2021 | 4.9% | 1.3% | 1.3% |
| 2022 | 3.8% | 5.9% | 4.9% |
| 2023 | 8.7% | 8.7% | 7.7% |
| 2024 | 7.7% | 3.2% | 2.2% |
| 2025 | 13.5% | 2.5% | 2.0% |
| 2026 | 12.3% | 2.8% | 2.0% |
| Average | 7.03% | 3.11% | 2.60% |
| Compounded | +96.2% | +35.5% | +29.0% |
Over that decade the enrollee share of premiums nearly doubled while a FERS annuity grew 29%. The last two years are worse than the ten-year average, not better: 13.5% in 2025 and 12.3% in 2026, back to back, against FERS COLAs of 2% both years. I don’t see anything in the 2027 filings that suggests a reversal.
What that looks like in dollars
Take a $4,000 monthly annuity and a $500 monthly premium, which is an ordinary enough starting point, and run both forward through the actual increases in the table.
After ten years the annuity is $5,161 and the premium is $981. The annuity gained $1,161 a month, the premium took $481 of it, so about 41% of the raise went to health insurance. The premium started at 12.5% of the pension and ended at 19%.
Nothing went wrong in that scenario. The COLA did what it’s supposed to do, the pension paid, the coverage stayed in force. The gap is structural, and it keeps widening for as long as you’re alive to see it. You can run your own version with the FERS Pension Calculator and the FEHB vs. Medicare Part B Cost Calculator.
The benefit isn’t the problem
I don’t want this read as an argument that federal retirement is in bad shape, because it isn’t. A pension that pays for life and adjusts every year is genuinely rare now. Put Social Security next to it doing the same thing, plus the FERS supplement bridging you to 62 if you qualify, and you have two or three inflation-adjusted lifetime income streams. Most people retiring out of private-sector jobs have one, and a pile of money they have to ration themselves.
The issue is narrower than the benefit. Every piece of your retirement income is indexed to the same slow measure, and for FERS it’s that measure minus a point. Your largest unavoidable expense isn’t indexed to anything. Stretch that over a thirty-year retirement and the two lines don’t converge.
Three places to work on it
The Medicare decision at 65. This is the biggest lever most retirees have and the one people most often decide casually. Whether to take Part B alongside FEHB, whether IRMAA is going to reach you, how well your specific plan coordinates once Medicare is primary. A good answer and a mediocre one are frequently a few thousand dollars a year apart, and that difference compounds at the 7% rate rather than the 2.6% one. Start here.
Don’t make the TSP absorb all of it. Traditional TSP withdrawals are ordinary income, and pulling a rising amount every year to cover a rising premium is the pattern that does the most lasting damage when your first few retirement years land in a bad market. Most of the fix happens earlier than people expect, in the gap years before RMDs start, and it’s worth knowing the rollover mistakes before you move anything.
Build a second pension outside the federal system. You already know what a pension is worth because you have one. What most federal employees haven’t considered is that you can buy yourself another one with money you already have, structured to pay a set amount for life on terms you agree to up front rather than terms written into statute. Some versions include income that rises over time.
These are insurance contracts, and I’d rather say so than talk around it. I’ve written a longer piece on where they make sense and where they get sold badly. The short version is that they trade liquidity for certainty, they’re the wrong answer if your guaranteed income already covers your spending comfortably, and anyone steering you toward putting most of your savings into one contract is not looking out for you. But if you’re planning for thirty years in which one major expense grows at 7% and none of your income does, a layer of income that isn’t tied to CPI-W minus a point deserves a look before you write it off.
If you’re retiring in Colorado
The state’s treatment of retirement income works in your favor and is underused. At 65 and over you can subtract up to $24,000 of pension and annuity income, and Social Security comes out entirely. Between 55 and 64 the cap is $20,000, with Social Security fully subtracted if your AGI is $75,000 or less filing single, $95,000 filing jointly. Which account your income comes out of moves your state bill, not just your federal one.
Working the other direction, health costs on the Front Range don’t run below the national average. If you’re planning thirty years in Denver, Littleton, Highlands Ranch, Lakewood or Colorado Springs, 7% isn’t a conservative assumption to plan around.
Before October 14
You’ll know the real COLA in October and it won’t change anything you should be doing between now and then. The exercise worth an hour is building your own version of that table, with your pension and your premium, out twenty or thirty years instead of ten.
If you’d rather we do it with you, request a Federal Retirement Report and we’ll lay your actual numbers out before anybody talks to you about a product. We also cover this at the federal retirement workshops.
Calculators
FERS Pension · FEHB vs. Medicare Part B · Retirement Income · Social Security Claiming · FERS Supplement · TSP Withdrawal · Survivor Benefit Plan · FEGLI Reduction
Related reading
Federal Retirement · FEHB and Medicare at 65 · Should Federal Employees Buy Annuities? · Roth Conversions in the FERS Gap Years · TSP Rollover Mistakes · The FERS Supplement Earnings Test
Sources
OPM FEHB premiums · SSA COLA information · TSCL COLA Watch · CSRS and FERS COLA history · Colorado DOR, Social Security, Pensions and Annuities