COLA to Increase 5.9% for Retirees, Disabled Veterans in 2022
The annual Cost of Living Adjustment (COLA) will increase by 5.9% on January 1, 2022. This means that many retired and disabled veterans will receive a bump in pay between $10 to $90 per month.
** LATEST ** Read about the 2023 COLA increase: Largest Retiree & Veteran COLA Increase In Decades Approved
What is COLA?
The COLA adjustment is determined based on inflation and is authorized to preserve the purchasing power of our nation’s veterans and those receiving Social Security.
According to KWTX of Temple, Texas, this COLA increase would be the largest pay raise since 1983.
The Military Officers Association of America (MOAA) hosts a unique COLA Watch, wherein they provide detailed analysis of COLA-related data.
How Much is the Increase for Military Retirees?
According to the MOAA, retired military members will see a $59 increase for every $1,000 of pension they receive.
How Much is the Increase for Disabled Veterans?
As for our disabled Veterans, they will see their checks rise by an average of $8.50 per month for each 10% increment of disability. So:
- 10% disabled = + $8.50
- 20% = + $17.00
- 30% = + $25.50
- 40% = + $34.00
- 50% = + $42.50
- 60% = + $51.00
- 70% = + $59.50
- 80% = + $68.00
- 90% = + $76.50
- 100$ = + $85.00
Remember, these are approximate and are provided to give a general idea of the expected per-paycheck increase.
RELATED: Military Benefits Changes in 2021
What is Inflation?
According to Forbes, the economic phenomenon called Inflation “describes the gradual rise in prices and slow decline in purchasing power of your dollars over time.”
Additionally, inflation is not limited to a price increase in one sector, say at the gas pump for example. Rather, inflation entails a broad increase in prices across an entire industry that impacts the country’s economy.
The Devil in the Details
While a 5.9% increase sounds great, remember that it is a response to an expected rise in the rate of inflation. If economists and those involved with the COLA increase perceive that inflation will jump, then so will COLA.
The Consumer Price Index (CPI), published each year by the Department of Labor, determines any COLA increase. The CPI compares the costs of certain goods or services today to the same goods and services of previous years. If the cost today is higher than it was before, that usually leads to a COLA increase.
(Image courtesy of Andrey Popov via Shutterstock)
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