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After rising steadily through most of 2022, the monthly numbers used to calculate annual raises for military retirees, Social Security recipients, VA disability payers and others have leveled off in recent months, ending talk of a possible double-digit cost-of-living adjustment (COLA). ).
Military Retiree Cola
The latest estimate from the nonpartisan League of Senior Citizens puts the 2023 COLA at 8.7%, equal to the adjustment military retirees received on March 1, 1982.
How Big Is The Retired Military Pay Raise In 2022?
It is important to note that the adjustment calculations have changed frequently over the past 40 years. The current COLA calculation for military retirees, using the Consumer Price Index for City Wage and Office Workers (CPI-W), is also used to determine the Social Security COLA, but this has not always been the case; For example, Social Security recipients received a 7.4% COLA in 1982, after an 11.2% increase the previous year.
The COLA Watch page continues to track monthly CPI-W numbers and provides details on the calculation. The new article also defines the math. July, August, and September numbers will be averaged to determine the COLA increase, and the last of those three numbers will be released on the morning of October 13.
Reporting these COLA numbers helps inform members' financial plans. But interest in the adjustment goes beyond that, as evidenced by what happened the last time COLA numbers reached current levels;
Not all of these legislative trends date back decades. Many retirees remember the fight to end the "COLA minus 1 percent" in 2013. A small change in the COLA calculation that would make a big difference for an O-5 retiring after a 20-year career would lose $124,000. at the time of retirement.
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Preventing the erosion of your earned benefits remains an advocacy priority, and the need to protect the value of military pension payments from inflation is a prime example of that mission. Stay connected through s efforts
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The 5.9% cost-of-living adjustment is the largest in decades, and as that number rises, the potential for Congress to use the COLA cut in your earned benefits to pay for other programs increases.
Kept its members informed throughout the process, not only with monthly COLA Watch updates, but with readings on inflation and the hard-fought history of the current COLA system. But in real terms, what could the system change mean for your bank account, not just this year or next, but for decades?
Military Retirees To See Largest Pay Increase In 40 Years
Many factors affect retirement benefits, so it's difficult to represent each retiree's compensation in one chart. But if we use the scenario of an O-5 retiring in 1987 after 20 years of service and plot the impact over the 34 years to date with actual Consumer Price Index (CPI) and COLA data through 2020, we get this annual breakdown;
But that chart doesn't tell the whole story. The cumulative effect of these cuts is staggering. This is what they will look like from 1987 to 2020.
Based on the case described above, the coalition's cooperation to stop the planned changes in 1985 saved this retiree more than $200,000 over 34 years. Since then, plans in place may cost retirees more money. you can see what the damage would have been in recent decades, but with inflation rising, it will be worse in the years to come.
How can you join the fight? Stay tuned to your newsletter for updates and possible petitions as it continues its work with TMC to ensure that all eight of our uniformed services continue to receive COLA increases under current law.
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Merry was commissioned in 1989 through AFROTC and commanded the DoD Port Mortuary at Dover AFB, Del. He has served in multiple foreign conflicts since the 1990s and has served as vice president for government relations since August 2016. The 2023 cost-of-living adjustment will be 8.7% for Social Security checks, VA disability benefits, and other government pension and benefit programs. .
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Military retirement pay is based on a percentage of the base pay you received before you left active duty, the National Guard, or the military reserve. One of the benefits that makes a military pension so valuable is the built-in annual cost of living adjustment (COLA).
The COLA is tied to the Consumer Price Index (CPI), a Bureau of Labor Statistics formula that tracks inflation for the cost of certain consumer goods.
Social Security Cola 2023 Release News Summary
The final measure determines COLA increases for federal pension programs (including military retirement contributions, FERS and CSRS pensions), as well as Social Security benefits, VA disability compensation and other government benefit programs.
The 2023 cost-of-living adjustment will be 8.7% for Social Security checks, VA disability benefits, and other government pension and benefit programs.
COLA increases for Social Security benefits and some other benefits are automatic. But each year, Congress must pass a bill to implement COLA increases for veterans' benefits, including disability and dependency compensation, clothing benefits, and dependency compensation and reimbursement.
As you can see from this chart, there were no annual COLA increases in 2010, 2011, and 2016 because inflation was low then. Remember, the purpose of a COLA is to preserve the purchasing power of your pension, so COLA rates are higher in years with higher inflation.
Cost Of Living Adjustments For Federal Civil Service Annuities
If you retired under the military's final pay or top 3 retirement plans, you should receive the full COLA increase as long as you have been retired for more than one year. If you retire in 2023, you may not receive the full COLA increase because DFAS applies the COLA to service members who retire during the calendar year.
Here's an earlier example for military members who retired in 2013 (2014 COLA increase was 1.5%). You can use them as a reference point.
Recent military retirees receive a COLA based on the quarter they retired. For example, those who retired between January 1, 2013 and September 30, 2013 received a full or partial COLA as follows:
The reduced payment is a one-off deal and only affects retirees during their retirement years. Retirees will receive a full COLA increase in subsequent retirement years.
Veterans, Retirees To Get 8.7% Cola Boost
If you signed up for a career status bonus of $30,000 during your 15 years and agreed to retire under the REDUX pension plan, you'll receive a smaller spending adjustment each year. REDUX pensioners receive a COLA that is 1% below CPI. For the 2023 COLA, REDUX retirees will only see a 7.7% COLA increase.
There is a one-time adjustment at age 62 that brings REDUX retirees' pay back to what it would have been at age 62 without the reduced COLA rate. After this increase, however, the reduced annual COLA rates resume.
The measure the government uses is called the Consumer Price Index for Urban Wage Earners and Clerks (CPI-W), but you'll often hear it simply called the CPI.
The Bureau of Labor Statistics determines the CPI by measuring price increases for consumer goods such as food and beverages, housing, clothing, transportation, health care, recreation, education, communications, and more.
Military Retirement Pay Cola
The government is exploring several ways to reduce the annual COLA wage increase for military retirees and other government beneficiaries.
Ryan Guina is the founder of The Military Wallet. He is an author, small business owner and entrepreneur. He served in the USAF for over six years and is a member of the Illinois Air National Guard.
Ryan started The Military Wallet in 2007 after separating from active duty military and has been writing about finance, small business and military benefits ever since.
It is described. Ryan's writing has been featured in Forbes, Military.com, US News & World Report, Yahoo Finance, Reserve & National Guard Magazine (print and online editions), Military Influencer Magazine, Cash Money Life, The Military. Guide, USAA, Go Banking Rates and many other publications.
Retired Pay For Soldiers
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