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COLA
Old 01-10-2016, 08:57 AM   #1
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COLA

I have a pension that has COLA but not a standard COLA. I get 4% of my initial pension amount and then get that same amount increase every year. In other words, its not compounded so the percentage gets slightly smaller every year. Is there any way to account for that in FireCalc?

Also, when you click "inflation adjusted" on the pension area, what inflation rate is used? Is it based on the other section where you can decide between PPI, CPI or a certain inflation percentage?
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Old 01-16-2016, 10:41 AM   #2
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I would just put in a second pension of 4% of the original one, starting the next year, and say that both are non-COLA.

Don't know about the other question.
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Old 01-16-2016, 11:33 AM   #3
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Originally Posted by Slow But Steady View Post
I would just put in a second pension of 4% of the original one, starting the next year, and say that both are non-COLA.

Don't know about the other question.
My understanding was that the OP gets 1.04 the 2nd year, 1.08 the 3rd, 1.12 the 4th etc. (rather than the usual (1.04)^(n-1) in year n). If so, one could use your suggestion in modeling, but would have to add the small 4% extra non-COLA'd pension starting in each additional year of retirement - a bit of a PITA.
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Old 01-16-2016, 11:48 AM   #4
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I have a capped COLA on my pension, I get the COLA up to the cap. After that, the risk is all mine.

What I did was split my pension payment in half - one half is designated to have a full COLA, the other half is non COLA'd. I figure that is good for estimation purposes given all the uncertainties the future holds.
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Old 01-16-2016, 01:07 PM   #5
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My understanding was that the OP gets 1.04 the 2nd year, 1.08 the 3rd, 1.12 the 4th etc. (rather than the usual (1.04)^(n-1) in year n). If so, one could use your suggestion in modeling, but would have to add the small 4% extra non-COLA'd pension starting in each additional year of retirement - a bit of a PITA.
I must have been delirious when I wrote that. Sorry.
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