Largest Retiree & Veteran COLA Increase In Decades Approved
A major increase in the federal Cost of Living Allowance (COLA) is coming in 2023. The Social Security Administration adjusts government retirement and disability payments each year to account for increases in the cost of living due to inflation. That means both civilian and military retirement and disability pay, so veterans are due for the biggest increase in their checks since the 1980s. Other payments affected by this increase include Social Security.
Who Else Benefits from COLA Increases In 2023?
Military retirees and VA beneficiaries will enjoy higher COLA in 2023 along with Social Security beneficiaries and Civil Service retirees. For both there could be as much as $140 per month in COLA in typical cases.
COLA Increases for Retirees and Veterans by the Numbers
Those who draw military retirement pay or VA compensation for service-connected medical conditions will see their monthly payments increase by 8.7% in 2023. The increase is meant to offset inflation, and it’s the largest increase since 1981 when the COLA increase topped 11%.
How significant is the COLA increase? Compared to the last two years, you can see for yourself:
- 2021 COLA Increase: 1.3%
- 2022 COLA Increase: 5.9%
Annually, the increase averages out to 1.9% over the last decade.
What Does the COLA Increase Mean In Dollars and Cents?
For 2023, retired military members may collect an additional $87 per each $1000 of retirement pay for a given month. But not all retirees and veterans drawing disability pay will see the same increases. Why?
Some entered the military in an era when a retirement program called CSB/REDUX was an option. Those who opted into this program (offered from 1986 onward) will have a smaller COLA increase as part of that plan. These veterans will get $77 per $1000 when the new COLA payments begin in 2023.
Retirement Pay / VA Disability Pay Offset Issues
Military retirees who have VA disability ratings may have choices to make when it comes to cost-of-living adjustments. A veteran who draws both VA disability compensation (at 40% or lower) and military retirement pay can only get ONE cost of living adjustment, which is applied to either the disability pay or retirement monthly payment.
The thing making it harder to choose which to apply COLA to? Retirement pay is taxable, but VA disability pay is not. Deciding which to apply the cost of living adjustment is a personal matter, but it pays to compare the numbers before making a decision.
VA Disability Pay COLA Increases
Disabled veterans will see higher COLA payments in 2023, but the numbers aren’t as impressive as for retirement pay. The same percentages apply; an 8.7% increase in pay means someone with a VA disability rating at 10% will see their checks increase by roughly $13 per month for a 10% disability rating. Those rated at 100% disabled will see a COLA increase of approximately $289 per month.
How Are COLA Adjustments Calculated?
The annual Cost Of Living Adjustment is calculated using something called the Consumer Price Index which measures the cost of living including what it currently takes to purchase goods. This information is compared to the same data gathered the year prior and if there is an increase in those costs, COLA goes up. COLA cannot be revised downward. In years where there is an actual decrease in the cost of goods and services, there simply is no COLA adjustment.
- VA to Replace Life Insurance Program in 2023
- 2023 Military Pay Chart: Largest Pay Raise In a Decade Proposed
- Military Housing Benefits Can’t Keep Up with Rising Housing Costs