A cost-of-living adjustment (COLA) is an annual adjustment applied to your retirement income to reflect changes in the economy (inflation). Most DRS retirement plans offer a COLA, but Plan 1 members in PERS and TRS only have a COLA if they selected it during retirement. View the 2025 COLA percentages by retirement date and plan. When will I receive the 2025 COLA? LEOFF Plan 1 COLAs take effect April 1 and start with April 30 benefit payments. All other DRS Plan COLAs take effect July 1 and start with July 31 benefit payments. You need to be retired by July 1 for at least one year to be eligible for a COLA. Once you’re eligible, you’ll receive any COLA starting with the pension payment issued at the end of July, and every year after. You don’t need to apply to receive the COLA – it’s automatic. How much will the COLA be? The maximum annual COLA you can receive for most DRS plans is 3%. If inflation that year is above 3%, the additional amount is applied to future adjustments (called COLA banking). Any year inflation is lower than 3%, the COLA can pull from banked amounts in prior years. This happens automatically and the adjustment is made for you. You could receive a different adjustment each year, depending on the amount available in your COLA bank. Will PERS 1 and TRS 1 receive a benefit increase? If the legislature changes the current law, most of these retirees could receive a one-time increase in July. There are several bills that could affect this decision. You can track all bills here.

Retirement is a topic and a mindset our culture tends to reserve for those who are perceived as old enough for it. You know, people with grandchildren, no mortgage payments and a subscription to AARP. The thinking goes, once you meet those standards, then you can start planning for retirement. Why waste today on a faraway goal, right? Well, you might want to think again. There’s a teacher in Washington state who holds a very different view. Her name is Ms. Allison McFadden, and she teaches kids about their personal finances, so they’ll be well equipped for a future retirement. Allison McFadden “It will be much easier for them than delaying important decisions until the deadline is near,” she says, adding “the theme for the school year is always ‘Planning for Your Future Self.’” Allison has spent the past 42 years teaching business and personal finance to kids at Olympia’s Capital High School. She earned her degrees at the University of Washington (Business Education) and St. Martin’s University (Masters, Computers in Education). But her parents taught her the basics when she was just a kid herself. She decided to blend her business and education disciplines, which led her to teaching. “If I had stayed in just the business side then I probably would have ended up in an accounting or finance pathway somewhere. I also considered going into real estate but with kids, teaching fit our lifestyle better.” Allison is married and has two children and four grandchildren. “They’re all local so I get to spend a lot of time with them,” she says. Her classes emphasize that decisions made today impact what you can do tomorrow. Multiple topics related to personal finances include saving, budgeting, credit, insurance, taxes and investing. “Retirement is woven into every unit and then we end the year with a specific retirement unit,” she says. The class is an elective, so most students take it willingly. Many have even said that personal finance should be a graduation requirement.* And the feedback after graduation has been positive. Lots of students have checked in with their mentor. “They’ve said how glad they were that they had a foundation of knowledge to be able to make decisions on their own,” says Allison Retirement advice from a teacher who knows Most of us probably haven’t been lucky enough to have a teacher like Ms. McFadden in high school. But that’s ok – she has some advice and resources for us so we can start planning if we haven’t already: Everyone focuses on the wealth accumulation phase, but the wealth distribution phase is just as important! And, hopefully, just as long. Don't leave it to the last minute to start working on it. Create a plan that includes minimizing taxes and maximizing gain while considering your risk tolerance level; you want to be confident that you won’t outlive your money when you make the decision to retire. There are a lot of factors to take into account and there isn’t a “one-size-fits-all” strategy. Also, it’s a lot of work to quit work. But that’s not all! Allison uses the DRS website to check her plan information. She also watches the videos and follows along with the Retirement Planning Checklist. And then there’s an array of other non-DRS resources, including books and other websites she refers to. “I might already know the information, but then someone explains it in a different way that makes me re-evaluate how it applies to me,” she says. “I use a lot of resources like books and websites and listen to finance podcasts daily.” So what will Allison do in retirement? “We built a house about five years ago and still have a to-do list to get to the ‘maintenance’ stage. My grandkids are all involved in sports and activities so my calendar is pretty full. I’m going to enjoy having more ‘me’ time as well.” Congratulations on your upcoming retirement, Ms. McFadden. Well done! Well done indeed! *KREM 2 News featured Ms. McFadden along with a bill that was introduced in Washington state to make personal finances a requirement for high school graduation.

There are two ways to contribute to Washington’s Deferred Compensation Program (DCP). You can choose to invest a set dollar amount every month, or you can opt to invest a percentage of your gross pay. DCP is a savings program, that helps you invest for the retirement lifestyle you want to achieve. One way to make sure you’re putting away a smart amount is to think of your savings as a pennies-on-the-dollar amount rather than a percentage. If you’re saving 10% of your income, that’s 10 pennies for every dollar earned. Making cents of the numbers A recent study by Voya found that workers who saw their savings as percentages chose to save an average of 6.9%. But workers who saw their savings in pennies for each dollar saved an average of 8%. The UCLA Anderson School of Management says that this change in how information is shown could increase retirement savings by almost 20% if it’s used over a whole career. Over time, saving just a few pennies more can add up to thousands of dollars of retirement funds. Saving automatically DCP has easy, smart investment options. You can either select your investments, or have your contributions automatically invested in the target date fund for your age. All funds are managed by the Washington State Investment Board. When you save with DCP, your contributions are deducted from each paycheck and you have the option to increase or cancel your contributions at any time. DCP also offers an auto-escalation option, which automatically raises your contribution based on a frequency you choose. Take action: Log in to your DCP account, visit “Contributions and Savings”, “Manage Contributions” and “Choose Set up Now” to create an automatic increase for your contributions. Ultimately, no matter your financial situation, it’s important to save today. Saving now allows you to benefit from the power of compound earnings. Compounding is taking the money you earned from your investments and reinvesting it to earn even more, which helps your savings grow. Estimate future potential DCP savings. Find out how much you can save, withdraw and how long your money will last with the DCP calculator. See the list of employers who offer DCP. Sign up by filling out the quick online enrollment form.

Once you’ve reached the required age and years of service for your plan, you can apply for your pension retirement through DRS. We have a complete retirement checklist as well as live and recorded seminars to guide you through the retirement process, but basically it goes like this: 1. Make sure you qualify for retirement. Do you meet the age requirements? Do you have the number of service years needed for your plan? See your plan page for age and service requirements. This is also a great time to run a quick estimate of the retirement income you’ll receive by using the benefit estimator tool in your online account. 2. Request an official benefit estimate from DRS 3 to 12 months prior to your retirement date. Make this request through your online account or by contacting us. In most cases, we will provide your estimate 5 to 8 weeks before your retirement date. If you haven’t received your requested estimate within 5 weeks of your retirement date, contact us. Estimates are prioritized by retirement date, which allows DRS to use the most recent information available for you and gives you ample time to submit your retirement application. An official benefit estimate is not the same as the benefit estimator tool available to all customers. However, the dollar amounts you preview in both estimates will likely be similar. Use the benefit estimator tool through your online account to assist your retirement planning any time before or after requesting your official benefit. 3. Complete a retirement application We recommend you apply at least 3-5 weeks from the date you intend to retire (once you receive your official estimate). If you can’t make this timeline, contact us right away so we can help keep your retirement on track. Complete the application online or request a paper form. For a preview of the questions you’ll answer while retiring, as well as a checklist of information to gather, see this example retirement application. At any point in your retirement journey, you are welcome to attend a free nearing retirement seminar, hosted by DRS. The following video offers a preview of the online DRS retirement application: Are you in more than one plan? If you are a member of more than one Washington state retirement system, you are a dual member. You can combine service credit earned in all dual member systems to become eligible for retirement. However, being a dual member does require more attention than a single-plan retirement. For example, you’ll need to apply for your pension using a paper retirement application. Visit this section for members of multiple plans to find out more. Consider your DCP income If you have a DCP account, you can access these funds separately anytime after you leave employment. You can complete this withdrawal online or contact the DRS record keeper, Voya Financial at 888-327-5596. See DCP withdrawals for more. If your employer offers DCP, and provides compensation for unused leave, consider deferring these cash-outs into DCP to maximize your savings at retirement. Find out more about leave deferrals. Plan 3 has two separate parts If you are in Plan 3 you have two sources of retirement income: The investment account you contribute to throughout your career. Your employer-funded pension account. Plan 3 members access these income sources separately. This means you will submit two separate requests for collecting the funds in retirement. You’ll have your pension retirement application you complete with DRS (step 3 above), and you’ll set up withdrawal for your investment funds. Access your investment funds through the DRS record keeper, Voya Financial. Here’s the convenience of having two parts to your Plan 3 account – You don’t have to collect this retirement income at the same time. You can choose to postpone receiving either. When you reach age 73, the IRS requires you to begin withdrawing funds from your investment account—otherwise, the timeline is up to you. Customers sometimes access retirement contributions from their investment account and delay submitting for the pension retirement—usually to start the pension income when they reach full retirement age, or to start an early retirement with an unreduced pension. See this two-minute video about delaying retirement. Plan 3 customers also have the option to purchase the TAP Annuity using their Plan 3 investment account. The time it takes to access your Plan 3 investment money can vary depending on where your contributions are invested. Find out more about withdrawing from your plan on your plan page. Separation Date - the last day you're paid for employment. Typically, your last day in public service. Retirement Date - the first day of the month AFTER your separation date and you've applied to retire.