The Defense Department announced this week that an annual cost of living adjustment (COLA) will be applied to retirement pay for military retirees and survivors beginning in 2019.
Most military retirees will receive a 2.8% increase to their retired pay beginning with the pay they receive on January 1, 2019. Likewise, survivors of members who died on active or inactive duty, or survivors of military retirees who participate in the Survivor Benefit Plan, will, in most cases, see a 2.8% increase to their annuities beginning in January.
Beginning in 2019, survivors who are eligible for the Special Survivor Indemnity Allowance (SSIA) will also receive an increase to their SSIA payments that reflects this 2.8% adjustment. Since October 2008, surviving spouses whose Survivor Benefit Plan (SBP) payments have been offset (partially or totally) as a result of receiving Dependency and Indemnity Compensation (DIC), including surviving spouses of members who died while serving on active duty, are eligible for the SSIA. Monthly payments are taxable and are $310 a month until the end of 2018, at which time the maximum amount of SSIA payable will be $318 beginning in January.
Those military retirees who retired during calendar year 2018, and all military retirees who retired under the REDUX retirement system, receive a slightly different annual cost of living adjustment.
DoD has provided a memo on the 2019 COLA with a detailed breakdown of which retirees will receive the COLA and what amount they will receive.
The 2.8% increase is the same figure that was recently announced by the Social Security Administration. It represents the largest COLA increase for federal retirees since 2012.
The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and is calculated according to a set formula.
Current federal employees do not receive a COLA but instead will get a pay raise if it is authorized by the president and/or Congress. The COLA only applies to federal retirees and the amount retirees under different retirement systems receive can vary. See How is the Annual COLA Different from an Annual Pay Raise? for more details.