Most Popular Military Pay Articles

  • Military Pay Charts
    2016 Military Pay Charts
    Military.com
    Check out the 2016 US military pay scale charts for all ranks for active duty, as well as Reserve and Guard components.
  • Airman helping service member with paperwork
    Proposed Military Pay Charts for 2017
    Military.com
    The House has proposed a 2.1 percent increase in military pay for 2017. The White House is pushing for 1.6 percent.
  • Marine retirement
    The Military Retirement System
    Military.com
    The following is a summary of what you need to know regarding Military Retirement pay benefits.
  • Army Reserve logo
    Military Reserve Retirement
    Military.com
    National Guard & Reserve members who complete a minimum 20 qualifying years of service become eligible for retired pay at age 60.
  • USCG house in Alameda
    Basic Allowance for Housing Rates
    Military.com
    Each year the Basic Allowance for Housing (BAH) is updated to meet current housing costs in military housing areas (MHAs).

COLA for Retired Pay

Vietnam veterans Robert Rivers and Daniel Brown

Each year your military retirement pay is adjusted to meet the increased cost of living. This Cost of Living Adjustment varies from year to year based on the rise and fall of the Consumer Price Index (CPI).

Cost-of-Living Adjustment Explained

Each year Military Retirement pay, Survivor Benefit Plan Annuities, VA Compensation and Pensions, and Social Security benefits are adjusted for the rate of inflation. This annual Cost of Living Adjustment is determined by the Consumer Price Index for the previous year. In a normal cycle the CPI for a given year is compared to the previous year to determine the actual rate of inflation.

Note: Retiree Cost of Living Adjustment (COLA) differs from the Active Duty Cost of Living Allowance which is paid based on the cost of living in a given high-cost locality. This number will be released in late December.

More on Retiree COLA  from DFAS

Cost-of-Living Increases: Perhaps the most common change to retiree pay accounts are the Cost-of-Living (COLA) increases. Currently, federal law authorizes periodic increases to reflect rises in the Consumer Price Index (CPI). COLA increases impact your monthly gross pay, federal withholding tax, SBP premiums and annuities. While DFAS does not establish COLA increases, the agency does apply any authorized increases to your pay, SBP premiums and other account information.

COLA is applied depending on your date of entry into the armed forces and your date of retirement. If you entered service on or after Sept. 8, 1980, and became eligible for retired pay on or after Jan. 1, 1996, any authorized COLA will be decreased during your first calendar year of retirement. Full COLA increases will be applied for all subsequent years. Retirees who entered military service on or after Aug. 1, 1986 and opted in for the Career Status Bonus (CSB/Redux retirement plan), will have any authorized COLA increases reduced by 1 percent.

Not all retirees will see the full COLA in any given year. In fact there are two categories of military retirees who won't receive a COLA each year.

Those who retired in the previous year: Some servicemembers who retired during the previous year will receive a somewhat smaller, partial COLA for this year only, because they weren't in retired status for the full year. Their partial COLAs generally reflect the amount of inflation experienced in the calendar quarters since they retired.

Those who retired under REDUX: Servicemembers who entered service on or after Aug. 1, 1986 and who elected to accept a $30,000 career retention bonus at the 15-years-of-service point agreed to accept reduced retired pay and COLAs as a trade-off for the bonus. REDUX retirees' COLAs are depressed 1% below the normal COLA rate.

Related Topics

Military Pay Military Pay Calculator

Military News App by Military.com

Download the new Military.com News App for Android on Google Play or for Apple devices on iTunes!

© 2016 Military Advantage