Pensions Beyond Pay

We all get that cost of living adjustments (COLAs) can carry a retiree's pension above his or her highest working salary, and it's not necessarily insidious. Somebody who lives long enough to be retired for thirty years has seen inflation erode the buying power of a dollar such that a salary from the early '80s might not cover basic expenses.

But I've taken a closer look at the phenomenon, and the reasonable scenario that I've just described doesn't appear to apply. For one thing, older retirees appear much less likely to have pensions that exceed their final salaries than retirees who've been off the job for just a few years. For another, the entity for which the retiree worked appears to make a significant difference.