Pension COLA Calculator
Estimate future retirement income with compound indexing adjustments. Model how small inflation variances impact 20+ year pension totals.
Pension Parameters
Monthly Benefit in Final Year
---Total Lifetime Payout
---Loss vs Uncapped Inflation
$0Effective loss if inflation > capAbout
Retirement planning often focuses on the starting number: the monthly check you receive on day one. However, the real danger to a secure retirement is the slow, silent erosion of purchasing power over decades. This Pension COLA (Cost of Living Adjustment) Calculator projects the future value of your pension benefits under various inflation scenarios. It is designed to demonstrate the "Compound Indexing Effect", where a difference of just 0.5% in annual adjustments can result in a cumulative difference of tens of thousands of dollars over a 20 or 30-year retirement.
The tool includes a projection engine based on historical Social Security Administration (SSA) COLA data and allows users to input fixed vs. capped indexing rules common in private and public funds. Use this to stress-test your retirement portfolio against high-inflation environments.
Formulas
The projection uses the compound interest formula applied to the monthly benefit payment. For any given year n, the benefit is:
Cumulative Payout over T years is the sum of the geometric series:
Reference Data
| Year | Monthly Benefit (No COLA) | Monthly Benefit (2% COLA) | Monthly Benefit (4% COLA) |
|---|---|---|---|
| Year 1 | $2,000 | $2,040 | $2,080 |
| Year 5 | $2,000 | $2,208 | $2,433 |
| Year 10 | $2,000 | $2,438 | $2,960 |
| Year 20 | $2,000 | $2,972 | $4,382 |
| Year 30 | $2,000 | $3,623 | $6,486 |