What is Massachusetts COLA?
The Massachusetts Cost of Living Adjustment (COLA) is a crucial component of your retirement benefits, but it comes with a unique cap that many retirees don't fully understand. Here's everything you need to know about how COLA affects your Massachusetts pension. Use our pension projection tool to see exactly how COLA impacts your projected benefits.
The Massachusetts COLA provides annual increases to help your pension keep pace with inflation. Unlike many other states, Massachusetts has a fixed 3% annual COLA rate.
The $13,000 Cap Explained
The most important aspect of Massachusetts COLA is the $13,000 cap:
- COLA Rate: 3% annually
- Applied To: Only the first $13,000 of your annual pension
- Maximum Annual Increase: $390 ($13,000 Ă— 3%)
- Timing: Begins the first year after retirement
How COLA Calculations Work
Example 1: Pension Under $13,000
- Annual pension: $10,000
- COLA increase: $10,000 Ă— 3% = $300
- New annual pension: $10,300
Example 2: Pension Over $13,000
- Annual pension: $25,000
- COLA increase: $13,000 Ă— 3% = $390 (capped)
- New annual pension: $25,390
COLA with Pension Options
COLA applies to all pension options:
Option A (Single Life)
Full COLA on base pension amount
Option B (Life with Guarantee)
COLA applies to reduced pension amount
Option C (Joint and Survivor)
COLA applies to both member and survivor benefits
Learn more about how to choose the right option in our complete guide to Massachusetts pension options.
Long-Term Impact
Over time, the $13,000 cap significantly affects higher pension amounts:
- Year 1: $390 increase
- Year 5: $1,950 cumulative increase
- Year 10: $3,900 cumulative increase
- Year 20: $7,800 cumulative increase
Planning Strategies
- Understand the Real Impact: Higher pensions lose purchasing power over time
- Consider Supplemental Savings: 401(k), 403(b), or IRA contributions
- Factor COLA into Retirement Planning: Use realistic projections
- Review Annually: Track your COLA increases
COLA and Social Security
Massachusetts COLA is separate from Social Security COLA. Learn about the Social Security Fairness Act and how it affects Massachusetts employees:
- Social Security has its own annual adjustment
- Both can be received simultaneously
- Combined benefits help maintain purchasing power—see our Social Security integration calculator
For detailed COLA projections and retirement planning, use our MSRB pension calculator. Also explore our complete COLA resource center.
Disclaimer: This information is for educational purposes only. For official COLA calculations, consult the Massachusetts Retirement Board.
