For decades, New Jersey teachers paid into the system with the understanding that their pension would provide stability in retirement. The promise wasn’t flashy. It was simple: a defined benefit, predictable income, and cost-of-living adjustments (COLA) to help keep up with inflation.
Today, that last piece is missing.
While New Jersey teacher pensions technically include a COLA provision, it has been suspended for years due to pension underfunding. Legislative discussions continue around restoring automatic COLA for members of the Teachers' Pension and Annuity Fund (TPAF), but until the law changes and the fund’s financial position materially improves, retirees should not expect increases to their pension checks.
And that’s where the quiet damage begins.
What COLA Was Supposed to Do
A Cost-of-Living Adjustment is designed to protect purchasing power. Inflation happens whether we like it or not. Groceries go up. Utilities go up. Property taxes go up. Health insurance premiums rarely move backward.
When pensions have a COLA, your monthly income gradually increases to keep pace with rising costs.
When pensions do not have a COLA, your income stays flat… while everything else climbs.
Over time, that gap compounds.
The Real Impact of Losing COLA
Let’s be direct: inflation is not theoretical.
Even a modest 3% average inflation rate cuts your purchasing power dramatically over time.
If you retire at 60 and live to 85:
After 10 years, your fixed pension buys roughly 26% less.
After 20 years, it buys about 45% less.
After 25 years, it buys close to 53% less.
That means a $60,000 pension at retirement may feel more like $28,000–$35,000 in today’s dollars two decades later.
No dramatic headline. No sudden collapse.
Just quiet erosion.
Why This Matters More for Women
In New Jersey, the teaching workforce is predominantly female. Women also tend to:
Live longer
Spend more years in retirement
Take breaks in service for caregiving
Longer retirement means more exposure to inflation risk. And without a COLA, the math becomes unforgiving.
This is especially important for teachers who left and returned to service, caregivers who stepped out temporarily, or women who may retire single due to divorce or widowhood. Inflation does not care about life transitions.
Legislative Efforts to Restore COLA
There have been ongoing conversations in Trenton about restoring automatic COLA to TPAF retirees. Advocacy groups and unions continue to push for reform.
But here’s the practical reality:
Until legislation is passed and the pension system’s funding stabilizes, retirees should not build their financial plans assuming COLA returns.
Hope is not a strategy.
How the Loss of COLA Affects Your Retirement Plan
If you are a current NJ teacher or a retired TPAF member, here is what this means for your planning:
1. Your Pension Is a Foundation — Not the Whole House
The pension provides stability, but it does not grow with inflation. That means your supplemental savings must do the heavy lifting over time.
2. Your 403(b) and 457(b) Become Inflation Fighters
Investments in diversified portfolios—ETFs, equities, and other growth assets—are often the only mechanism retirees have to outpace inflation.
If your supplemental accounts are sitting in high-fee, low-growth products, inflation will win.
3. Withdrawal Strategy Matters
Pulling too much from supplemental accounts early can create strain later when inflation has compounded.
4. Healthcare Costs Are the Wild Card
Healthcare inflation has historically outpaced general inflation. Without COLA, rising medical costs can quickly pressure a fixed pension income.
A Hard Truth Teachers Deserve to Hear
You worked hard for your pension. You earned it.
But the pension system today is not the same one many teachers expected when they started their careers.
There is no automatic inflation protection right now.
That doesn’t mean retirement is in jeopardy. It means planning must be intentional.
What You Can Do Now
If you are within 10 years of retirement—or already retired—ask:
Have I projected inflation into my retirement plan?
What does my income look like 15–20 years out?
Is my investment allocation built to combat inflation?
Am I paying unnecessary fees that reduce long-term growth?
Do I understand how Social Security integrates with my pension?
These questions are not optional anymore.
The Bottom Line
The missing COLA is not a political talking point.
It is a mathematical reality.
Inflation quietly shrinks fixed income over time. Without proactive planning, even a strong pension can lose purchasing power.
Teachers have carried classrooms, families, and communities for decades. Your retirement plan should carry you just as reliably.
If you’re a New Jersey teacher and you want to understand how the loss of COLA affects your specific numbers, let’s run the projections properly. Assumptions matter. Strategy matters.
And in an environment without automatic pension increases, disciplined planning matters more than ever.
Canonico Wealth Management works with New Jersey public service professionals to build retirement strategies that account for pension realities, inflation risk, and long-term income sustainability.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Ready to stress-test your retirement plan?
Let’s start the conversation.
More Blogs on Teachers Retirement:
What Administrators Get Wrong About 403(b) Vendors
A Big Win for Teachers: NJ Restores Original Pension Tiers After a Break in Service