It now looks likely that there will be no cost of living adjustment (COLA) raise for military retirees (and social security recipients) this January. This marks the second year in a row where military retirees will not see a raise in their monthly retirement pay.
So, what's going on? According to the Federal Government, it's a lack of inflation. By law, annual military retiree pay raises are connected to the increases on the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers, which measures inflation. Officials compare inflation in the third quarter of each year — the months of July, August and September — with the same months in the previous year.
By law, if inflation increases from year to year, military retirees automatically get a pay raise beginning in January. If infation does not increase, or is negative, military retirement pay stays the same.
This year, like last year, the CPI inflation rate is projected to be negative, which means no military retiree pay raise.
By the way, the same system is used to compute COLA increases in Social Security, so military retirees who also receive monthly social security wages will not see an increase, either.
Military retired pay last increased by 5.8 percent in 2009, the largest increase in 27 years, after energy prices spiked in 2008.
But energy prices quickly took a down-turn. In the summer of 2008, the average price for a gallon of gasoline was $4.00. However, by January 2009, the prices had dropped by 50 percent. However, because of the way that military retirement pay raises are computed, this resulted in a COLA increase in 2009 of 5.8 percent.
Officially, the Government won't announce next year's rates until the end of October. However, the numbers are in, leaving little doubt that there will be no military retiree pay raise for next year.