Retirement Benefits

How Your Retirement Date Affects COLA

Mature man using laptop on table at home

If you’re thinking of retiring at the end of this year, don’t forget to factor in the annual cost-of-living adjustment (COLA) when you choose your retirement date. The year you retire is a key component of the COLA, as CalPERS members become COLA eligible two years after their retirement date.

This means members who retired in 2021 received their first COLA in May of 2023. Members who retired before 2021 also received their annual COLA increase.

Due to the two-year eligibility requirement, members who retired in 2022 won’t see an annual COLA until May 2024.

December 31 vs. January 1

One day can make a big difference. If your retirement date is December 31, 2023, your COLA would be based on the Consumer Price Index for 2024, and you would receive your first COLA in May 2025. If you retire instead on January 1, 2024, that single day’s difference can delay your eligibility by up to one year, and you wouldn’t receive your first COLA until May 2026.

COLA at a Glance

The annual cost-of-living adjustment (COLA) is a benefit to ensure your value of money at retirement keeps up with the rate of inflation.

COLA is dependent on three factors:

  1. The Consumer Price Index (CPI) for All Urban Consumers
  2. Your employer-contracted COLA provision
  3. The year you retired

Remember, the COLA is based on the national Consumer Price Index. CalPERS does not determine your annual COLA amount.

Contracted COLA Provision

Most California state and all school agencies contract for a 2% COLA provision, while local public agencies may contract for 2%, 3%, 4%, or 5%. Make sure to ask your employer about your COLA provision before you retire.

To learn more about the COLA and how it’s calculated each year, visit the Cost-of-Living Adjustment (COLA) page on our website.