So much for the much-vaunted federal retirement system.

If the Trump administration has its way, the Federal Employees Retirement System will be like the incredible shrinking man—getting smaller and smaller as people get deeper and deeper into retirement, with no way to make up the loss.

So says a report on Federal News Radio, which points out that the proposed elimination of the cost-of-living adjustment for current and future retirees will “save the government lots of money. And it would quickly eat into future benefits for all FERS retirees. Big time.”

While the change isn’t inevitable—plenty of groups will undoubtedly fight it—it would provide a pretty bleak future for government employees who spent their careers literally banking on the availability of steady income in their old age—when deteriorating health would likely make it difficult, if not impossible, to make up for a shrinking check that no longer even tries to keep up with inflation.

In fact, the battle over this one is likely to be extremely political, says the report, with “federal workers and retirees who represent a lot of votes in key states like Virginia, North Carolina, South Carolina, Wisconsin, Pennsylvania, Texas, Florida and other states where current and former feds live, work and vote” using the power of the polls to register their dissatisfaction with the measure.

And they wouldn’t be the only ones, it continues, with “local House races in New Jersey, Maryland, Indiana, Illinois and federal hub cities from Ogden, Utah to Huntsville and Anniston, Alabama,” as well as federal voters in Oklahoma and semirural areas where military bases, federal prisons and VA hospitals are among the biggest employers.

Such substantial blocks of voters would no doubt be angry enough to take action against any politicians who might buy into the plan—at least once they see how much of a retirement pay cut they’re likely to end up with.

Figures provided by financial planner Arthur Stein in the report indicate the annual reduction in annuity payments if inflation is either 2 percent, 3 percent or 4 percent, and show that over as short a period as 10 years, “a 72-year old retiree would ‘lose’—as in not receive—up to 18 percent in COLA payments if inflation was 3 percent, and lose up to 26 percent if inflation during the period averaged 4 percent.”

That’s an awfully big bite out of a check that would likely already be subjected to careful budgeting.

Instant Insights /

Federal workers fear Trump COLA elimination in retirement

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