When you hear “COLA,” you might think of a fizzy drink, but in this case, we’re referring to the cost-of-living adjustment you received on May 1, which you can view in your myCalPERS account now.
The COLA is a modest annual increase that you’ll receive in the second calendar year of retirement that is designed to help your pension keep pace with inflation and rising prices, ensuring it stretches further over time. This is where the power of compounding growth works to your advantage.
Your pension is a steady stream of monthly income to keep you comfortable in retirement. But life doesn’t stand still. Prices for groceries, gas, and even your favorite coffee at the local café tend to creep up over time. That’s inflation, and it can slowly chip away at the buying power of your pension.
That’s where COLA steps in to give your pension a little boost every year to help it keep up with rising costs. And the power of COLA is that it doesn’t just grow — it compounds over time, meaning each year’s adjustment builds on the last. This infographic shows you exactly how that works.
Breaking It Down: Year-by-Year Growth
Years 1-5: At first, the boost from COLA is small — just $247 extra a month by year five. You might not notice it much yet, but it’s quietly working behind the scenes to grow your pension.
Years 6-10: By year 10, your COLA boost has grown to $585 a month. That’s more than enough to cover rising costs for essentials and maybe even treat yourself.
Years 11-15: By year 15, your COLA boost has climbed to $958 a month. That’s nearly an extra $1,000 every month added to your pension — money that helps you stay ahead of inflation and enjoy the retirement lifestyle you deserve.
Year 20: And by year 20, COLA has added a $1,370 to your monthly pension. That’s like having an extra paycheck every month. Your original $3,000 has grown into $4,370, all thanks to the power of COLA’s compound growth.
Why COLA Matters
Without COLA, your pension would stay flat at $3,000 a month, while inflation keeps driving up costs. Over time, that flat pension would feel smaller and smaller. But with COLA, your pension grows alongside inflation, keeping your buying power strong and your retirement secure.
The COLA isn’t just a small adjustment — it’s a long-term strategy for protecting your pension.
Do You Still Have Questions About the COLA?
Check out our FAQs on the COLA to get the answers you need. Also, don’t forget to check your myCalPERS account to see your May 1 COLA details.