Each year your military retirement pay is adjusted to meet the increased cost of living. This Cost of Living Adjustment (COLA) 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 COLA is determined by the Consumer Price Index for the previous year. The CPI is compared to the previous year, if there is an increase there is a COLA. If there is no increase, there is no COLA.
Exceptions To The Cost Of Living Increase
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 COLA increases reduced by 1 percent.