The 2022 military retirement pay increase has been calculated, and it’s a doozy – 5.9% for those who retired prior to 2021! This projected increase is based on the Social Security cost-of-living adjustment. The Social Security adjustment changes the VA disability compensation rates by law, and while it isn’t law, military retirement pay has customarily been increased by the same amount.
This post talks about the annual cost-of-living adjustment that is applied to military retirement pay and other federal benefits such as Social Security payments and VA disability payments. It has nothing to do with the military’s cost-of-living allowance paid to active duty military members who are serving in areas with a high cost of living.
So, what does this mean for your military retirement paycheck?
If You Retired Prior To 2021
If you retired before 1 January 2021, then you can take your gross retirement pay from 2021 and multiply it to 1.059 to see how much you will receive in 2022. This is the gross amount of your retirement pay before any deductions for anything.
It looks like this on your Retiree Account Statement (RAS):
Keep in mind that if you elected the Survivor Benefit Plan (SBP), SBP premiums will also increase by the same percentage so that your total premium remains 6.5% of the covered amount.
If You Retired in 2021
In the first year of military retirement, your cost-of-living adjustment is pro-rated so that you don’t benefit from both the prior year’s military pay increase and the new cost-of-living adjustment. It’s an imprecise equation and many people would like to see it changed, but it is the law for now. The pro-rating is calculated yearly and hasn’t been released yet. I’ll update this chart when it is released. In the meantime, you can read more about this in the DoD’s Financial Management Regulation, Volume 7B, Chapter 8. Here’s the Fiscal Year 22 Memorandum talking about the breakdown: Adjusted Cost of Living Memorandum.
|Month of Retirement||2022 COLA for 2021 Retirees|
|January through March||5.7%|
|April through June||4.4%|
|July through September||1.8%|
|October through December||0.0%|
Career Status Bonus/Redux Retirees
Those of you who elected the REDUX retirement plan receive a smaller cost-of-living adjustment each year, 1% less than the full adjustment. That’ll still be significant this 2022 – 4.9%.
Redux retirees do have this unique one-time adjustment at age 62 that brings them up to the retirement pay they would receive without the reduced cost-of-living adjustment. Thereafter, they continue to receive the reduced adjustment each year.
VA Disability Compensation
Disability compensation paid from the Department of Veterans Affairs will also increase in 2022, also by 5.9%.
Survivor Benefit Plan Payments
Payments received from the Survivor Benefit Plan will also increase by the same percentage. Your specific amount will depend on the amount of SBP received.
These increases reflect the increase in the cost of goods and services as calculated by the Consumer Price Index.