After retirement, the tier I portions of both employee and spouse annuities are generally increased for higher living costs at the same time, and by the same percentage, as social security benefits. These increases, effective December 1 and included in the January payment, are based on the rise in the Consumer Price Index from the third quarter of the last year a cost-of-living adjustment became effective to the corresponding period of the current year. Generally, if the Index increases by 5 percent, for example, the tier I portion increases by 5 percent. Under certain circumstances, the increase can be based on average national wage increases rather than price increases.
If an annuitant is receiving both railroad retirement and social security benefits, the increased tier I portion is reduced by the increased social security benefit.
The tier II portions of retired employee and spouse annuities are normally increased by 32.5 percent of the increase in the Consumer Price Index.
Tier II cost-of-living increases are generally payable at the same time as tier I cost-of-living increases. Vested dual benefit payments and supplemental annuities are not increased by these cost-of-living adjustments.