With the following calculator, STRS members can quickly enter three pieces of information regarding pension losses experienced over time.
This post about the COLA Loss Calculator was published in the Ohio STRS Member Only Forum (MOF) Facebook group by retired teacher Trina Kay Prufer.
“To recognize that no member has a legitimate expectation of any particular future cost-of living adjustment.. at any particular time, under Ohio law” - Intent Statement, SB 342 (reform legislation), signed 12/26/2012
Because Ohio’s educators have no legal right to a COLA, STRS is considered a no COLA retirement system in a non Social Security state. From a beneficiary's perspective, the defined-benefit is also a financial product (an annuity) that all members need to understand. The purpose of this calculator is to look at the financial consequences of eliminating a secure COLA from the benefit model.
Not having a COLA should be unacceptable for any public retirement system without Social Security, and nearly all teacher retirement systems without SS provide some form of inflation protection. What has made the plight of Ohio’s retired teachers much worse than all others, is that the guaranteed annual automatic COLA was removed from the benefit AFTER retirement, leaving aging retired teachers unprepared for losing about 3% buying power each year.
The problem with eliminating the 3% annual COLA, is that at first glance, it does not seem all that significant…. until its cumulative losses are calculated. Several years ago, Bob Buerkle had an innovative idea, and created the COLA tree we are all familiar with. For the past month or so we have been collaborating on a calculator that would bring life to the tree, making it an interactive tool.
Using the calculator, members can enter 3 pieces of information (base benefit, % promised COLA increase, % FAS at retirement) and see pension losses over time and project into the future. As a caveat, the calculator does not adjust for partial COLAS or add in years the COLA was granted. Additionally, it is not based on actual levels of inflation but assumes 3%. Each member will need to decide for themselves how many COLAS they have lost.
The calculator was designed to understand the consequences of a public policy that provides a retirement benefit without inflation protection. Despite its limitations, we feel it delivers what has been missing from the debate… the reality experienced by retirees, the amounts lost compared to what was promised and what the benefit will look like in the future. For example, after 20 years without a COLA, a retiree with an FAS of 66% is living on about 37% FAS, which is lower than the amount provided by Social Security ( 40%).
Was this what the Ohio Legislature intended when it removed the COLA from the defined-benefit in 2012? Who knows, because it appears as though no one bothered to calculate the consequences of the legislation." - Trina Kay Prufer
For more information, or to try out the calculator, visit the COLA Loss Calculator at https://colalosscalculator.com.
"I hope that everybody who tries out this COLA loss calculator is as amazed as I was. The most important thing that all of us can do now is to forward this simple link, COLALOSSCALCULATOR.COM to all of your retired friends and co-workers and ask them to do the same. THIS IS A GREAT TOOL AND EVERYBODY SHOULD USE IT. Next, send a copy to the Ohio Legislators and Senators that represent you, asking them to try it out and see for themselves how far behind you are falling in purchasing power. And don't forget the Governor, the Attorney General and the Ohio State Auditor, because they are so very interested in our welfare, you know. They are so interested in us that they will see thousands of our retirees on welfare." - Bob Buerkle*
Use this tool to find out who represents you: https://www.legislature.ohio.gov/members/district-maps
Mike Dewine, Governor of Ohio: https://governor.ohio.gov
Dave Yost, Attorney General: http://www.ohioattorneygeneral.gov
Keith Faber, Auditor of State: http://ohioauditor.gov/about/auditor.html
*Bob Buerkle, retired teacher from Cincinnati, is the creator of the COLA Trees, graphic representations of the loss of COLA. You can read about Bob's COLA Trees on Kathie Bracy's Blog. Trina Kay Prufer's "COLA Loss Calculator" is able to show many more details, individualize them based on your entered information and give you instant results on your losses to date. Then it shows you exactly how much more you will lose in the future, depending on whether you believe STRS will ever be able to permanently restore COLA's for retirees again in the future.
