You saw the headline. Social Security is getting a 3.6% cost-of-living adjustment in 2027. CSRS retirees are getting 3.6%. You scrolled down to find your number, and it says 2.6%.

Your first thought was probably, "Is that a typo?" It is not. And if you're planning your FERS retirement right now, this is one of those rules that genuinely catches people off guard, and it shouldn't. The system was not designed to explain itself, so let's do it together.

Pull up a chair. This one matters more than a single percentage point looks like it does.

Why FERS Retirees Get a Smaller COLA Than Everyone Else

Here's the thing: the 3.6% number comes from inflation. Specifically, OPM compares the July through September CPI-W average this year against the same stretch last year. This year that came out to about 3.6%, and Social Security and CSRS retirees get the full amount.

FERS retirees get what people call the "diet COLA." The rule works like this:

• If inflation is 2% or less, you get the full adjustment.
• If inflation is above 2% but not above 3%, you get a flat 2%.
• If inflation is above 3%, you get one percentage point less than inflation.

Inflation came in at 3.6%. Take off a point, and you get 2.6%. That's it. No error, no glitch. Just a rule that was written into the FERS design, and one that most people never hear about until the year it bites.

Also worth knowing: your FERS COLA generally only applies once you're retired and age 62 or older (with some exceptions, like disability retirees and certain public safety retirees). If you're still working or under 62, you may be waiting on that first adjustment.

This Is Not a Small Number (Because of Compounding)

One point sounds like nothing. Let's make it real.

Using the average annuity figures reported for this announcement, a typical CSRS retiree around $6,000 a month sees about $216 more per month. A typical FERS retiree around $2,400 a month sees about $62 more per month. Those are averages, and your number will be different, but notice the gap. Same inflation. Same year. Different rules.

Now picture it as an illustration, not a prediction. Say your FERS annuity is $2,400 a month. A 3.6% adjustment would add about $86. A 2.6% adjustment adds about $62. That's a $24 difference a month, or roughly $288 a year. Because each year's COLA builds on the last one, that lost point doesn't just disappear. It stays missing from every payment after that, for as long as you're collecting.

Over a 25 or 30 year retirement, in the years when inflation runs above 3%, that diet COLA adds up. After 20, 30, 40 years of service, you earned a pension that you'd hope keeps its buying power, and the formula quietly trims some of that in high-inflation years.

Here's what makes it even more annoying. The FERS Supplement, that bridge payment many early retirees get until age 62, does not receive a COLA at all.

Open Season Is Almost Here, and Premiums Are Going Up Too

Let me be direct about the timing. While your annuity goes up 2.6%, your health insurance premium is moving in the same direction, and possibly faster.

Based on what has been published for 2027, average FEHB premiums are rising about 9.3% overall, with the enrollee share rising roughly 10.9%. PSHB premiums are rising about 6.7% overall, with the enrollee share up about 8.2%. Those are averages across all plans, so your plan may be higher or lower. But look at those numbers next to a 2.6% raise. For a lot of retirees, the premium increase will take a bigger bite than the COLA adds.

Open season for 2027 coverage is reported to run from November 9 through December 14, 2026. (Always confirm the dates on OPM.gov, because dates are the one thing you don't want to guess on.) A few things to know:

• Your coverage carries over automatically if you do nothing. That's convenient, but it also means you could keep paying for a plan that stopped fitting your life two years ago.
• If your plan is one of the ones leaving the program, doing nothing means you get moved to a default plan. Do not let that happen by accident.
• Changes for annuitants and PSHB enrollees take effect January 1, 2027.

What HR Won't Tell You About Planning Around the Diet COLA

HR will confirm your COLA. HR will not sit down with you and ask what your retirement income looks like when inflation is running hot and your pension is trailing it. That isn't their job. Their job is compliance, not optimization.

So here's how I'd think about it, and it's the same way I walk clients through it:

1. Stop treating your pension as your whole income plan. The FERS pension is a powerful foundation. But in a year like this one, it's only one of the pieces that needs to keep pace. Your TSP, your Social Security timing, and any other income you've built all play a role in making the whole picture hold up.

2. Know your withdrawal strategy before you need it. How and when you pull from your TSP can matter just as much as how much you have in it. That's a decision to make on purpose, not in a hurry.

3. Watch what Medicare does to your Social Security raise. The 3.6% Social Security COLA is calculated on your gross benefit. If Part B premiums rise, some of that increase is eaten before it hits your account. Part B is $202.90 a month in 2026, and it comes straight out of your Social Security check.

4. Review your health plan every single open season. Not every few years. Every year. Premiums, networks, and plan availability change, and the plan that was a great fit last year might not be next year.

What to Do This Week

• Pull up your most recent annuity statement and calculate what 2.6% means in actual dollars for you.
• Compare your current health plan's 2027 premium against what you pay now, then compare it to at least two alternatives.
• Write down your current monthly expenses and ask yourself how many of them rise faster than 2.6% a year.
• Check whether your retirement plan assumes a COLA that is bigger than the one FERS actually pays.

That last one is the sneaky one. A lot of retirement plans built from rough estimates quietly assume full inflation protection. FERS doesn't always give you that.

The Bottom Line

Confusion about your benefits is not a character flaw. A 2.6% COLA sitting next to a 3.6% headline is exactly the kind of thing that makes smart people feel like they missed a memo. You didn't. The memo just never came.

The good news is that once you understand the rule, you can plan around it. That's what planning it correctly looks like. It isn't about fear. It's about knowing your numbers early enough to make the right decisions at the right time.

So let me ask you: have you run your numbers? Not the ballpark. The real ones, with a 2.6% COLA, a rising health premium, and the way you actually want to live. If not, this is the moment.

Ready to see where you really stand? Get your Federal Retirement Blueprint at quiz.fedsecure.org. It takes a few minutes, and the weight lifts when you can finally see the whole picture.

Frequently Asked Questions

What is the 2027 COLA for FERS retirees?

The 2027 COLA for FERS retirees is 2.6%, while CSRS retirees and Social Security recipients receive 3.6%. Inflation measured at 3.6%, and the FERS rule subtracts one percentage point when inflation is above 3%.

Why is the FERS COLA lower than the CSRS COLA?

The FERS COLA is lower because FERS uses a "diet COLA" formula. When inflation is above 3%, FERS retirees receive one percentage point less than the inflation rate, while CSRS retirees receive the full amount.

When will the 2027 COLA show up in my annuity payment?

Federal annuity increases generally appear in the January payment. Social Security's COLA is reflected in December benefits, which are paid in January. Your first COLA may be prorated if you retired recently.

Does the FERS Supplement get a COLA?

No. The FERS Supplement does not receive cost-of-living adjustments. It is paid until age 62 and then ends.

Are FEHB and PSHB premiums going up in 2027?

Yes. Average FEHB premiums are rising about 9.3% overall, and average PSHB premiums are rising about 6.7%, with enrollee shares rising more. Your actual change depends on your specific plan, so compare plans during open season.

This article is for education only and is not tax, legal, or individualized financial advice. Figures reflect information available as of publication, so confirm current numbers with OPM, the IRS, or your benefits office. FedSecure and Gigi Bodwin may be compensated if you choose to work with us.