Many teachers are retiring this summer and they may want to know how the Cost of Living (COLA) works once you retire.
Back in 2000, the State agreed to give a COLA to State and Local public employees. However, the COLA has restrictions that come with it. They are as follows.
- The COLA is one half the Consumer Price Index (CPI).
- Only the first $18,000 is subject to the COLA.
- The COLA adjustment starts five years after retirement if you retire at 62 or older.
- The COLA adjustment starts ten years after retirement if you are 55 or older.
- Maximum COLA is capped at 3% for CPI over 6%.
- Minimum COLA is 1%.
- Surviving spouse gets only one quarter of the COLA adjustment.
- Disability Retire starts getting a COLA five years after starting disability.
- Any outstanding loan at retirement will be considered income and taxed. Pay off the loan before retiring.
The average NYC teacher pension is $45,000 from 2016 data, that means that only 40% of the pension is subject to the inflation adjustment. You can use the pension table to determine how much money you will get in your pension assuming the maximum.