TRS COLA — Does Texas Teacher Retirement Have a Cost of Living Adjustment?

TRS Does Not Have an Automatic COLA

Unlike Social Security or federal employee pensions, TRS has no built-in annual cost-of-living adjustment. Your monthly annuity is calculated at retirement and stays at that dollar amount unless the Texas Legislature specifically authorizes an increase and Texas voters approve it through a constitutional amendment. This means the purchasing power of your TRS check erodes with inflation every year unless the state acts.

Understanding how COLAs work — and how they have worked historically — matters for anyone planning a TRS retirement, because the absence of automatic indexing is one of the biggest long-term financial risks retirees face.

The 2023 One-Time COLA: Proposition 9

In November 2023, Texas voters approved Proposition 9, a constitutional amendment authorizing a one-time cost-of-living adjustment for eligible TRS retirees. The increase ranged from 2% to 6%, with higher percentages going to retirees who had been retired the longest — those who retired on or before August 31, 2020. TRS applied the increase to eligible annuity payments beginning in January 2024.

This was not a permanent annual adjustment. It was a single bump to the monthly annuity, funded by the legislature and requiring voter approval. Retirees who retired after August 31, 2020, did not receive any increase.

The Texas Retired Teachers Association (TRTA) lobbied for the increase for years, pointing out that retirees who left in 2004 had lost roughly 30% of their purchasing power to inflation by 2023. The 2%–6% adjustment partially closed that gap for the longest-retired members but left newer retirees without any increase.

Why Automatic COLAs Are So Difficult in Texas

Three structural barriers keep TRS from implementing automatic inflation adjustments:

Legislative and actuarial approval. TRS does not provide regular COLAs. State law allows the legislature to consider benefit enhancements only when the Pension Trust Fund is actuarially sound, and any post-retirement increase must be authorized by the legislature. The one-time 2024 COLA also required a constitutional amendment approved by voters.

Funding constraints. TRS is a defined benefit plan funded by member contributions (8.25% of salary), state contributions, and investment returns. Adding an automatic COLA would require either increasing contribution rates, diverting investment returns from building the fund's long-term solvency, or finding new revenue. The legislature has historically prioritized getting the fund to actuarial soundness over adding inflation protection.

Political cycle dependency. Each COLA requires a separate legislative act. The Texas Legislature meets every two years for 140 days. Pension adjustments compete with every other priority, and there is no guarantee any given session will take up the issue.

What This Means for Your Retirement Planning

If you are retiring from TRS in the next few years, plan as though your annuity will stay flat in nominal terms. Your monthly check will be the same in year 20 as it is in year 1, barring future legislative action.

This is where the annuity option decision intersects with COLA risk. A Tier 1 member choosing between the Standard Annuity ($4,025/month) and a PLSO with reduced monthly payments ($3,400/month) should factor in that neither amount will grow with inflation. Taking the lump sum and investing it may provide some inflation hedge — but it also introduces market risk and requires disciplined management.

Members who also qualify for Social Security benefits — particularly after the January 2025 repeal of WEP and GPO — have a partial inflation hedge, since Social Security does include automatic annual COLAs. Texas educators who worked covered employment (check Box 3 on your W-2) may now collect unreduced Social Security alongside their TRS pension.

Advocacy and Future Prospects

TRTA continues to lobby for additional COLAs in each legislative session. Their position is that retirees who spent careers in public education deserve inflation protection. Whether the 90th Texas Legislature (convening in January 2027) will take up another pension adjustment is uncertain, but the advocacy infrastructure is in place.

As a practical matter, do not build your retirement budget around a future COLA. If one comes, treat it as a bonus. If it does not, your plan still works.

The Texas TRS Retirement Guide includes a budgeting section that accounts for inflation erosion on a fixed TRS annuity and shows how to bridge the gap with other income sources.

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