Q:

How does the annual COLA affect military retiree pay?

A:

Quick Answer

Cost of living adjustments, or COLAs, increase retired U.S. military service members' pay, according to the Social Security Administration and the Office of the Undersecretary for Personnel and Readiness. Both agencies determine their COLAs through analysis of the Bureau of Labor Statistics' Consumer Price Index.

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Full Answer

Retired U.S. service members receive benefits from both the Social Security Administration and the U.S. Department of Defense. Social Security calculates its annual COLA adjustment in October of every year, according to the SSA. The Department of Defense compares third-quarter Consumer Price Index data from the current year and prior year to calculate its COLA.

If the cost of living decreases from year to year, the Department of Defense applies a 0-percent COLA, reports the Military Pay and Benefits website.

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