May COLA 1%

[mickeyd]

Gleaned this from a recent MOAA email. Inflation inches up.

[Mulligan]

Quote:

Originally Posted by mickeyd Gleaned this from a recent MOAA email. Inflation inches up.

My fiscal year to determine annual COLA wraps up this month. Up until 2 years ago, COLA was annual CPI rate capped to 5%. Pension system decided to change it to automatic 2% annual. I figured I would take it in the shorts on this change, but ironically in the short term anyways the past 2 years I have came out money ahead.

[martyp]

My university pension COLA will be 2% this year. They use a cost of living formula based on northern and southern california rather than national.

[Chuckanut]

Quote:

Originally Posted by Mulligan My fiscal year to determine annual COLA wraps up this month. Up until 2 years ago, COLA was annual CPI rate capped to 5%. Pension system decided to change it to automatic 2% annual. I figured I would take it in the shorts on this change, but ironically in the short term anyways the past 2 years I have came out money ahead.

Sound like they want to be able to reliably predict costs in the future. Assuming this makes your pension more secure, it is highly likely this is a good thing. However, you may wish to invest a bit of your pension every month to provide a cushion for those times when the cost of living exceeds 2%, which I imagine it will do more frequently than we wish.

What depresses me is seeing the inflation losses in my insured savings due to the Fed's war on savers attempts to boost the economy. Of course, my stocks are up and I have to ask myself if would they be up as much if the interest rates were higher?

Diversification is still the best protection.

[Mulligan]

Quote:

Originally Posted by Chuckanut Sound like they want to be able to reliably predict costs in the future. Assuming this makes your pension more secure, it is highly likely this is a good thing. However, you may wish to invest a bit of your pension every month to provide a cushion for those times when the cost of living exceeds 2%, which I imagine it will do more frequently than we wish. What depresses me is seeing the inflation losses in my insured savings due to the Fed's war on savers attempts to boost the economy. Of course, my stocks are up and I have to ask myself if would they be up as much if the interest rates were higher? Diversification is still the best protection.

Yes that is correct. In their actuarial summaries of the past they assumed 3% though it was variable. 2% automatically increased the prefunding status of the system. I save about 20-25% of my pension each month as you never know what the future holds.

[almost there]

I wish inflation was really only 2%............