Pension Decreasing at Inflation Rate

I have entered a pension with a given annual amount from Social Security covered employment and a 50% survivor rate.

I have set the inflation rate under Assumptions to 2%

No matter what I set the Annual Inflation Index to for the pension (0%, 2%, 4%) the Pension Income on the non-Asset Income Report drops by 2% per year. My expectation was that it would remain constant.

What am I missing?

Comments

dan royer's picture

If the pension gets a full COLA adjustment each year per your assumed rate of inflation, enter 100%. If it gets no cost of living adjustment, enter 0%. If inflation, say, is set at 3% and your pension gets a 2/3rds adjustment (i.e. 2% in a 3% inflation environment) then enter 66%. etc.

It sounds like you want a 100% indexed to inflation setting.

Dan

stanswiercz's picture

Thanks Dan. That clears it up. This explanation would be good in the user manual.