After two years of having no annual adjustment, military retirees will receive a 3.6 percent cost-of-living adjustment effective Dec. 1. The money will first appear in January checks.

The same percentage increase will apply to Social Security, federal civilian retired pay and other government entitlements linked to the Consumer Price Index. The retiree increase is larger than the 1.6 percent pay raise expected on Jan. 1 for the military. The difference results from the fact retired pay is adjusted to keep pace with consumer prices while military basic pay rises to keep pace with private-sector wages.

Since 2009, there has been no retiree cost-of-living adjustment because weak economic conditions kept overall consumer prices flat or falling. Thing have been different this year.

Although the job market remains bleak, the cost of goods and services has been rising. The Bureau of Labor Statistics reported that the index of consumer prices was 3.9 percent higher in September than one year earlier. Gasoline, energy and food costs were the primary reason for the jump.

The COLA for military retirees is 3.6 percent, and not 3.9 percent, because COLA increases are calculated by comparing consumer prices for three months — July, August and September — to costs for the same three months in the previous year.

The two-year freeze in retired pay and other entitlements was not the result of Congress or the administration trying to save money, although that has been a popular belief. There is a chance, though, that future COLAs could be capped or even denied as a result of ongoing deficit-reduction talks in Congress.

The Joint Select Committee on Deficit Reduction, empowered to come up with a package of $1.2 trillion over 10 years in savings, is considering a change in how COLAs are calculated that would result in annual increases that are as much as 0.5 percent smaller than the current calculation. The proposed new formula would have lower consumer prices by disregarding price increases in some goods and services if people could use a less expensive alternative product or service.

Thanks for the info, Jim. If future payraises are tempered and it helps in some small way to reduce the federal deficits then I am all for it.

Here is the truth Randy. As for being all for it.... as long as the pork continues to roll into the coffers of lobbied activities, I believe that congress should keep promises made to veterans... period.

See link below

"Putting aside all the technocractic spin about the desire to find a more accurate measure of inflation, the only reason switching to the chained CPI has been proposed is that it will result in benefit cuts to Social Security and additional revenues to the federal budget. If Congress wants to cut Social Security, it should do so forthrightly so that it can be held politically accountable – not by asserting false claims of technical accuracy."

Jim . . . thanks for keeping us in the loop. I get more info about our benefits from this site than just about anywhere else. I often share the info with a few other retiree's that I work with that aren't aware of them otherwise.

Regarding the "less expensive" alternative. For those of us with medical issues, how do we find a les expensive alternative??? Hire a witch doctor?

See link below for the truth...

Oh goody, that should just about offset the $40 a month they have been holding back in withholding. Isn't it great we should get what we were getting in our checks 2 years ago!