Many of the EAC functions allow an optional COLA parameter. The COLA is applied as a post-commencement annual cost of living increase, where the first COLA is applied to the first payment at the start of the second year, the second COLA is applied to the first payment at the start of the third year, etc. The COLA is applied annually on a compound basis.

For example, if we have the following annuity:

·        current age = 45

·        commencement age = 65

·        monthly payments at the beginning of the month

·        COLA = 4%

Then the annuity will be calculated on the following payments:

The COLA can be entered in various ways including:

·        A single rate. (Note: if a single rate is preceded by a caret “^” symbol (e.g. ^5% or ^.05), then the COLA will be applied on a “simple” basis instead of a “compound” basis.)

·        An array of rates in a named range or a reference to a range.

·        An array of rates in a text string containing multiple rates delimited with semi-colons. For example, a text string of “1;2;3” will produce COLAs of 1% in the 2^nd year, 2% in the 3^rd year, and 3% in each year thereafter.