Inflation and COLA Pension Calculator
This page calculates the effects of inflation and your COLA (cost-of-living-adjustments) on your annual pension payment. It shows both the dollar amount of the checks you will receive each year (adjusted precisely for your specific COLA), and then it shows the value of these annual checks after adjustment for inflation. In other words, you can see what your annual payments will be in today’s dollars, which lets you plan better for the future.
After you calculate the results, you will have the opportunity to download a .pdf that summarizes your inputs and the exact amount of the annual benefit and the exact value of that annual benefit in today’s dollars for each year until you reach age 100.
Unless your pension has an unusually high COLA or you project an unusually low future inflation rate, the buying power of your pension benefits will drop sharply across decades. A 53-year-old who projects a $48,000 per year pension starting at age 65 with no COLA and a 2.99% inflation rate will receive $48,000 in checks at age 65, but those checks will only be worth $33,172 in today’s dollars. At age 75, that $48,000 benefit will only be worth $24,707 in today’s dollars. At age 85, the annual benefit will only be worth $18,402 in today’s dollars.
Present value calculations take into account inflation (through a Treasury interest rate), any COLA you might have, as well as mortality rates.
For a very rough, free, ballpark estimate of the present value of your pension, you can try this present value estimator.
|Age||Year during which Age starts||Partial Year||Gross Annual Benefit Including COLA||Value of Annual Payment Adjusted for Inflation (Value in Today's Dollars)|