Determining Your Total Cost-of-Living Adjustments (COLAs)
COLAs are Cumulative
To determine how much of an overall (cumulative) COLA increase you have received, you cannot simply total the COLA percentages that have been given over the years.
- Only the first COLA you receive is based on your original monthly benefit amount under the benefit plan you selected.
- Subsequent cost-of-living increases are calculated by multiplying your current monthly benefit amount (at the time of the COLA) by the percentage of COLA increase.
- Each subsequent COLA percent increase is figured on the new, larger benefit amount created by the previous COLA(s).
- The result over time is a compounding effect that causes the overall percent increase in the monthly benefit to be higher than the total you get by simply adding together all of the COLA percentages you have earned over time.