Cost-of-Living Adjustment (COLA) FAQs

Unlike Social Security, your TCDRS benefit payment does not automatically increase to keep up with inflation.

Q) How do I get a cost-of-living adjustment for my TCDRS benefit?

A) The employer you retired from decides whether to adopt a cost-of-living adjustment for the year. Each employer considers the cost of their total benefits package when deciding whether to adopt one. COLAs don’t automatically renew each year, so even if you receive one, you should still consider inflation when figuring out your budget in the future.


Q) How will I know if I am getting a cost-of-living adjustment?

A) Every year, TCDRS sends you a Benefit Statement, which shows what your benefit payment will be for the upcoming year. This is where you would see if your former employer adopted a cost-of-living adjustment for the coming year.


Q) Why doesn’t my benefit automatically increase for inflation?

A) Your TCDRS benefit is a “fixed benefit payment”. That means the benefit amount will be the same every month for the rest of your life once you start receiving it. TCDRS and other public pensions often provide their retirees with fixed benefit payments for life. The upside of a fixed benefit payment is reliability. You’ll have a steady, predictable income stream for the rest of your life. The downside is that a fixed benefit payment will purchase less and less as the cost of living continues to increase.


Q) Will the COLA increase the taxes withheld?

A) A COLA increases the amount of your TCDRS benefit, which is taxable income. If your Benefit Statement shows that you have received a COLA, sign in to your TCDRS online account to double check your withholding and make sure it’s adequate for your individual tax situation. You can change your withholding anytime online or by calling TCDRS Member Services.


Q) When was the last time I received a COLA?  

A) Your annuity verification letter will show you the date of your last payment increase. You can access the letter when you sign in to your TCDRS online account. The letter also shows your current monthly benefit and your withholding amount.


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