Floored COLA Calculator
Apply a minimum adjustment rate.
Floored COLA Calculator: Scenario Inputs
Annual percentage rate or benchmark index change.
Inflation & Purchasing Power Analysis
Over 3 years at 3.5% inflation, a $75,000 salary requires $83,154 to retain equal purchasing power. Without matching raises, your real compensation experiences an effective reduction of $7,355 (-9.81%).
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How Floored COLA Calculator Works?
The Floored COLA Calculator works by taking the larger of actual inflation and the floor each year.
Enter pay or benefit
Type the salary or benefit that receives the guaranteed minimum.
Set the floor
Type the minimum yearly COLA.
Enter yearly inflation
Type inflation for each year, including negative years.
Read the gain
The output shows floored pay, full-inflation pay and the extra paid through the floor.
Floored COLA Calculator Formula
The Floored COLA formula uses the higher of inflation and the floor as each year's adjustment.
COLAt = max(πt, Floor)
Payt = Pay0 × Π (1 + COLAk)
Variables
- πt
- Inflation in year t
- Floor
- Minimum guaranteed COLA
Worked example
With a 1% floor and inflation of 1.2%, −0.4%, 0.2%, 1.8% and 0.7%, a $40,000 benefit grows to $42,457, against $41,414 under pure indexation.
Floored COLA Calculator Conversion Table
This table applies a 1% COLA floor to a $40,000 benefit in a low-inflation period.
| Year | Inflation | Floored COLA | Floored pay | Pure indexed pay | Real gain from floor |
|---|---|---|---|---|---|
| Year 1 | +1.2% | 1.2% | $40,480 | $40,480 | +0.00% |
| Year 2 | -0.4% | 1.0% | $40,885 | $40,318 | +1.41% |
| Year 3 | +0.2% | 1.0% | $41,294 | $40,399 | +2.22% |
| Year 4 | +1.8% | 1.8% | $42,037 | $41,126 | +2.22% |
| Year 5 | +0.7% | 1.0% | $42,457 | $41,414 | +2.52% |
What is Floored COLA Calculator?
The Floored COLA Calculator is a tool that applies a cost-of-living adjustment (COLA) with a minimum rate, such as 1%, paid even when inflation is lower or negative. The floor guarantees growth in low-inflation years.
A floor helps recipients in low-inflation periods. In years with inflation above the floor, the COLA equals actual inflation.
What are the uses of Floored COLA Calculator?
There are 4 main uses of the Floored COLA Calculator.
Value a guarantee
Measure the value of a minimum COLA to recipients.
Cost a floor
Plans and employers cost the floor in low-inflation years.
Model deflation
See how a floor protects pay when prices fall.
Compare plan rules
Compare floored and unfloored COLA designs.
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