2023 will see large increases in pay for the military world. Unfortunately, it’s not due to a generous windfall from Congress, but to compensate for our currently-high inflation rate.
Note that I’m consolidating the military COLA posts into one (this one) which I will update annually, rather than creating a new post each year for each cost of living adjustment. The posts updates from prior years are below this year’s update.
Active Duty & Reservist Military Pay Increase
The active & reserve pay raise announced for 2023 is 4.6%. While on its face this is one of the larger increases in recent years, sadly it’s below the consumer price index increase, and therefore below the retirement or VA disability COLAs. With inflation currently running north of 7%, military members will see a decrease in their purchasing power with this COLA.
Military Retirement Cost of Living Adjustment
Military retirement also received an 8.7% COLA for 2023, according to this Department of Defense announcement, effective December 1, 2022. Pursuant to 10 U.S. Code § 1401a, military retirement is subject to an annual Cost of Living Adjustment based upon the Consumer Price Index. And as explained in our Survivor Benefit Plan (SBP) article in the Military Divorce Guide, the same Cost of Living Adjustment applies to SBP payments and premiums.
DoD has a web page with a history of the military retirement COLAs from 1998 to present.
VA Disability COLA
As of the date of this post, the current VA disability rate tables still show the 2022 rate (which is understandable, since that’s the rate still in effect), but once the rate has officially increased, it will be reflected on this page.
—– 2021 Military COLA —–
Another year, and that means more annual Cost of Living Adjustments (COLAs) for the military across the board – active duty, reservists, military retirement, and VA disability.
Active Duty & Reservist Military Pay Increases
The military received a nice 3% pay increase for 2021 – see the 2021 military pay chart.
Military Retirement COLA
Military retirement also received a raise, effective December 1, 2020. Per a prior announcement from the feds, military retirees received a 1.3% Cost of Living Adjustment for 2021. This is less than the 1.6% military retirement COLA awarded to retirees for 2020, but it should result in the same purchasing power – Pursuant to 10 U.S. Code § 1401a, military retirement is subject to an annual Cost of Living Adjustment (COLA) based upon the Consumer Price Index. DoD has a web page with a history of the military retirement COLAs from 1998 to present.
And as explained in our Survivor Benefit Plan (SBP), the same Cost of Living Adjustment applies to SBP payments and premiums.
VA Disability Rate Increases
Veterans Administration rates increased by 1.3% in 2021, and the new VA Disability rate tables are on the VA web site.
—– 2020 Military Cost of Living Adjustment —–
Pursuant to 10 U.S. Code § 1401a, military retirement is subject to an annual Cost of Living Adjustment (COLA) based upon the Consumer Price Index. However, one caveat – if the increase would be under 1%, the retirement is not increased that year, but instead is “banked” and the retirement is only increased once the cumulative COLAs would exceed 1%, hence there have been years when certain retirees don’t actually receive a COLA. (See the history of COLAs from 1998 to present from the Department of Defense for year-by-year specifics).
The military retirement COLA is based upon the calculations used by the Social Security Administration, and the same increase applies to most federal retirees, Social Security recipients, VA disability, and military retirement.
The 2020 Military Retirement Cost of Living Adjustment
Former spouses who are receiving a percentage share of the military retirement (the overwhelming majority of former spouses) will also see the same 1.6% increase. If the former spouse is receiving his/her share of the retirement directly from DFAS due to having more than 10 years of service, neither the retiree nor former spouse needs to do anything, as DFAS will automatically adjust the share.
However, if the retiree is paying the former spouse’s share himself/herself, then the retiree will need to adjust manually the monthly payment to factor in the cost of living adjustment.
See the article Understanding Military Retirement Pay in the Military Divorce Guide for a full explanation of the military retirement system.
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