finance calculator

Fixed vs COLA Pension Calculator

Compare a larger fixed pension with a smaller pension that grows with a COLA each year to see break-even timing and total payouts.

Results

Break-even year (COLA vs fixed): 17
COLA payment year 1: $36,000
COLA payment final year: $57,904
Total fixed payout: $1,050,000
Total COLA payout: $1,153,091
COLA advantage vs fixed: $103,091

How to use this calculator

Enter the fixed annual pension and the starting COLA pension amount.
Set the annual COLA increase and how many years to compare.
Review break-even year, yearly COLA growth, and total payouts for each option.

Inputs explained

COLA increase: Annual percentage bump applied to the COLA pension each year.
Years: Comparison horizon. If COLA never catches up within this period, break-even will show 0.

How it works

Fixed pension stays level each year; COLA pension starts lower and grows by the entered annual percentage.

We sum payouts across the comparison horizon to show totals for each option.

We also find the first year the cumulative COLA payouts exceed the fixed pension; if it never happens within the timeframe, break-even shows 0.

When to use it

Choosing between a higher fixed pension and a lower pension with annual COLA.
Stress-testing retirement budgets with different COLA assumptions.
Explaining trade-offs to a spouse or advisor with a simple break-even year.

Tips & cautions

Use conservative COLA assumptions; guaranteed COLAs may differ from inflation.
If inflation is high or you expect long retirement, a COLA pension may catch up faster.
You can rerun with longer horizons to see long-term effects; this model is purely nominal (no discounting).
No present-value discounting—totals are nominal dollars.
Does not model taxes, survivor options, or varying COLA formulas beyond a flat percentage.
If COLA is compounded more or less frequently than annually, adjust the rate accordingly.

Deep dive

Compare a fixed pension to a COLA pension, see break-even year, yearly COLA growth, and total payouts over your chosen horizon.

Enter pension amounts and COLA rate to find when the COLA option overtakes the fixed pension and by how much.

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