Not Checking for Pension COLA—Inflation Slowly Strangles Flat Payments

Some pensions include a cost-of-living adjustment (COLA), while others stay flat for life. Many retirees assume their pension increases each year—only to learn too late that it does not.

The Inflation Problem

A flat pension loses real value every year. With even modest inflation:

• After 10 years, purchasing power may drop 20–30%

• After 20 years, it may drop 40–60%

Without a COLA, a pension that seems generous at age 60 can feel inadequate at 80.

Why COLA Details Matter

Some plans offer:

• Automatic COLAs

• Conditional COLAs (funding dependent)

• No COLAs at all

• COLAs capped at low percentages

Not knowing which category your plan falls into can be disastrous.

Plan Ahead

If you lack a COLA:

• Delay Social Security for inflation-protected income

• Adjust investment strategy to hedge inflation

• Reevaluate survivorship benefit choices

• Consider annuities with inflation features

Ignoring COLA details is like ignoring the slow leak in your retirement income.