Articles | July 25, 2023
Persistently high inflation has serious implications for retirees living on fixed incomes.
Many public pension plans have cost-of-living adjustments (COLAs) that provide inflation protection. How does that protection compare to what Social Security provides?
That question is addressed in an article published in the Summer 2023 issue of PERSist, the newsletter of the National Conference on Public Employee Retirement Systems (NCPERS), which you can access from this page, with permission from NCPERS.
The article covers:
As inflation increases, members not participating in Social Security who receive a typical COLA — or no COLA — will lose net purchasing power and likely fall behind public sector employees who participate in Social Security. These plans may find retirees struggling to keep up with rising costs, especially during years of high inflation.
It includes illuminating graphs on the Social Security participation rate of public employees by state, average Social Security COLAs for 10-year periods, and monthly annuity payments under three COLA scenario graphs, as well as a table comparing annual Social Security COLAs and the cumulative increase for two 10-year periods.
This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.