2014 COLA Announced: 1.5%

Man writing at desk.

Every year, most people receiving federal payments receive an increase called a Cost of Living Adjustment (COLA).  This amount is calculated based upon statistics called the Consumer Price Index (CPI).  These statistics are compiled by the Bureau of Labor Statistics and include the costs of various goods and services.

The 2014 COLA for military retired pay, Survivor Benefit Plan (SBP) annuities, Social Security benefits, and Department of Veterans Affairs (VA) disability and survivor benefits will be 1.5%.  This change will be effective 1 December 2013 and it will first appear in the January checks, which will be paid on 31 December 2013.

There are two groups of retired military members who will not receive the full 1.5% increase:  members who retired in 2013, and servicemembers who selected the Career Status Bonus (CSB)/Redux retirement plan.

Retirees who retired in 2013 will receive a pro-rated COLA based upon the amount of inflation experienced in the calendar quarters since they retired.  Those who retired in January, February, or March will receive 1.5%; those who retired in April, May, or June will receive 0.9%, and those who retired in July, August, or September will receive 0.4%.   Those who have retired since 1 October 2013, or will retire before 31 December 2013, will not receive a COLA this year.  All members who retired during 2013 will receive full-year COLAs in future years.

Retirees who chose the CSB/Redux retirement plan agreed to accept reduced COLAs as part of their bonus package.    Redux retirees’ COLAs are 1% less than the regular COLA rate, so they’ll see a 0.5% COLA in their January 2014 paychecks.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
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    Many members of the military believe that they do not need to invest in TSP in order to save for retirement because they will receive a pension when they reach a minimum of twenty years of service.