How to calculate your 2021 Federal Cost of Living Adjustment

By Sam •  Updated: 01/01/21 

How big is the 2021 Federal Cost of Living Adjustment?

Welcome to 2021 where federal employees earned a 1% cost of living adjustment. The President signed an Executive Order formalizing the 2021 pay raise just hours before the new year. Locality pay did not change as part of the EO.

Trying to predict how big your first paycheck in 2021 will be is complicated! In addition to the 2021 Federal Cost of Living Adjustment, your health insurance premiums will also change. To calculate your individual pay increase, you can first look up your health insurance premium. Luckily, they have a column in the table with the change in the biweekly premium. Then, you need to calculate your pay increase. OPM has posted the 2021 GS pay schedule here. It’s easiest to use the hourly rate tables. Subtract your 2020 hourly rate from your 2021 rate and multiply by 80 (if you get paid biweekly as most feds do). You can then subtract the increase in your biweekly health insurance premium from this to find your individual 2021 Federal Cost of Living Adjustment (pre-tax). For me, this number worked out to $7.92 per pay period.

How I’m maximizing my 2021 Federal Cost of Living Adjustment

If you’re like me, the 1% federal cost of living adjustment barely covers your increase in health insurance premiums. (It’s not like last year where my net salary increased by $98 per pay period. I put the entirety of that $98 toward maxing out my TSP.

While I am contributing the maximum amount each year to my TSP, I have not yet maxed out my contributions to my health savings account (HSA). I am currently planning on adding an extra $8 per pay period to my HSA.

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How you can maximize your 2021 Federal Cost of Living Adjustment too

Today, as we speak, you’re living on your 2020 salary (in 2021!). Maybe things are tight and you desperately need this salary increase. Maybe your health insurance premiums increased more than your 1% COLA. That is okay!! I just want you to do two things for yourself:

  1. Calculate the size of your COLA (after health insurance)
  2. Make a conscious plan for how you will allocate those dollars (if anything is left)

Most employees have until January 16th to make changes to their PP1 direct deposits. If you do the math now and make adjustments, you’ll never “see” the COLA.

So tell me– Is your COLA bigger than your health insurance increase?


Sam i.e. "Gov Worker" started working for the government at age 18 and loved it so much that he never left. He started GovernmentWorkerFI in 2019 to help fellow federal employees understand their benefits, take control of their finances, and live their best lives.

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