COLA change could cut retiree benefits

COLA change could cut retiree benefits
By Rick Maze - Staff writer
Posted : Wednesday Jul 6, 2011 11:24:34 EDT
A possible change in how cost-of-living adjustments are calculated for military retired pay may sound small — just an average 0.25 percentage point reduction — but it could result in big lifetime losses.

An E-7 retiring this year with 20 years of service would, over 40 years, receive $109,335 less in retired pay, a 5.6 percent loss.

An O-5 retiring this year with 20 years of service would receive $207,991 less over 40 years, a 5.5 percent difference.

The potential COLA calculation change has been under discussion by White House officials and congressional leaders as part of a larger package of cuts in federal spending, with talks under way on Capitol Hill and at the White House.

Military retired pay would not be singled out for the change; it would also apply to federal civilian retired pay, Social Security, and most likely to veterans disability and survivors benefits. Unlike military retired pay and other federal entitlements that adjust automatically each Dec. 1 based on changes in consumer prices, veterans-related benefits increase only through an act of Congress, although lawmakers traditionally provide the same percentage increase for veterans that goes to other federal entitlements.
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COLA change could cut retiree benefits