The ongoing government shutdown has led to a significant delay in the release of the September Consumer Price Index (CPI), a critical component for determining the 2026 COLA for both Social Security beneficiaries and federal retirees under the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS).
Impact of the Delay
The Bureau of Labor Statistics (BLS) had initially planned to release the September CPI data in early October. However, due to the shutdown, this report was postponed. A BLS spokesperson has now confirmed that the data will be published on October 24, 2025. This delay pushes back the timeline for the Social Security Administration (SSA) and the Office of Personnel Management (OPM) to finalize and announce the 2026 COLA, which typically occurs by mid-October.
How COLA Is Calculated
The COLA for both Social Security and federal retirement benefits is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The calculation compares the average CPI-W for the third quarter (July, August, and September) of the current year with the same period from the previous year. If the average CPI-W increases, the difference, rounded to the nearest 0.1%, represents the COLA for the following year.
For instance, if the average CPI-W for Q3 2025 is higher than that of Q3 2024, the percentage increase will determine the COLA for 2026. Conversely, if there’s no increase or a decrease (deflation), no COLA would be applied. However, deflation is unlikely in 2026, making a positive COLA adjustment more probable.
FERS-Specific Considerations
Federal retirees under FERS should be aware of specific rules regarding their annuity adjustments:
- COLA Eligibility: FERS retirees typically become eligible for COLAs at age 62. If you retire before this age, you will not receive a COLA until you reach 62. For example, retiring at 57 means a five-year gap without a COLA increase.
- Retiree Annuity Supplement (RAS): The RAS, which bridges the gap between retirement and Social Security eligibility, does not receive a COLA, regardless of age.
COLA Formula
The COLA is calculated based on inflation:
- If inflation is 2% or less, the COLA matches the inflation rate.
- If inflation is between 2% and 3%, the COLA is capped at 2%.
- If inflation exceeds 3%, the COLA is calculated as inflation minus 1%.
What it Means For You
While the delay in CPI data release has postponed the announcement of the 2026 COLA, the adjustment will still take effect in January 2026. Agencies are working to finalize the calculations and ensure that any adjustments are applied retroactively if necessary.
The FERS COLA likely won’t outpace inflation, which means you could be losing buying power. A Federal Retirement Consultant (FRC®) can help you develop a strategy to make up for this loss.
