Military service members at some locations outside the continental United States (OCONUS) may see some pretty large changes to their Cost of Living Allowances (COLA) during the next few months. The COLA index, which is used to calculate a location's COLA, has dropped for most locations in Hawaii and the United Kingdom, and Cape Town, South Africa. It has increased for about half of Italy, the countries of Kuwait and Niger, and the island of Hawaii in Hawaii.
Each year, local area authorities conduct Retail Price Surveys, which help to determine the COLA for each location. Based upon the prices found in the most recent Retail Price Surveys, COLA is adjusted so that the service member's actual buying power remains relatively constant. In cases where there is a big drop in COLA in a specific area, the decrease in rates may be spread out across a few months.
The biggest losers in this round of COLA adjustments are the Hawaiian islands of Kauai, Maui, and Oahu, the Cheltenham/Innsworth area of the United Kingdom, and Cape Town in South Africa. In each of these areas, COLA will be decreased by 8%.
An 8% drop in COLA can equal several hundred dollars a month, depending on the service member's rank, location, years of service, and number of dependents. You can use the Overseas COLA calculator to see current and historical COLA rates for each location, but it doesn't show how the changes will affect your COLA. I am trying to find the instructions on how to calculate the change, but I'm not having any luck and I don't want to tell you the wrong formula.
In any case, if you are in one of the areas who will be having a large drop in COLA this summer, start looking at your budget and figuring out where you can make some cuts. The good news is that these changes are occurring because the data shows that costs have decreased in your area, relative to the cost of goods and services in the United States. But that isn't going to help if you're stretched thin!
If you need help with your spending plan, be sure to reach out to the many resources available, including financial specialists at your base family service center (Airman and Family Readiness Center, Marine Corps Community Services, Army Community Services, or Fleet and Family Readiness Center) and telephone counseling through Military One Source.