Retirement Pay At Risk – Must Read!

Hi folks!  I apologize for the radio silence – I have the worst cold ever!  And there has been so much to report in the last few days.

The biggest thing is that Congress has hammered out an agreement that will seriously impact military retirees who are under the age of 62.  Under the Bipartisan Budget Act passed by the House of Representatives on Thursday, additional squestration-mandated automatic budget cuts would be avoided.  It would be paid for, in part, by reducing the Cost of Living Allowance (COLA) adjustments on working age military retirees.  Specifically, military retirees would have their retired pay COLA calculated at 1.0% less than the full COLA until they reach the age of 62.

There is some disagreement about how the math works out.  According to the Military Officer’s Association of America (MOAA),

an E-7 retiring this year with 20 years of service would see an average loss of over $3,700 per year by the time he or she reaches age 62.  For an O-5, the average annual loss would be over $6,200.

Others think that the impact would be smaller.  Kevin Brancato is a defense analyst at Bloomberg Government.  He projects that retirees would see a roughly 10 percent decrease in retirement pay by age 61 and the cumulative effect of the cost-of-living adjustment would decline even more over time.  “You’re talking about a small decrease in the total package for a retiree’s lifetime,” he said in a telephone interview. “It’s between four and five percent.”

I’ve done some serious Excel number crunching, using a variety of COLAs (from 1.5% to 5.0%), lengths of service, and ages at retirement.  I came up with numbers much closer to MOAA’s figures.  I’d love to see Mr. Brancato’s math and see how we came up with such different results.  The lowest numbers I could create produced a decrease in income in the 7% range, and that was for someone who served thirty years and therefore had fewer years of reduced COLA.

I’ve talked to a variety of people about this proposal, and the reactions are mixed.  I have been surprised at how many people are willing to sacrifice a portion of their retirement in order to support the overall good.  I’m a little more skeptical.  If I could ensure our government would use this money for positive purposes and not waste it on ridiculousness, I might feel more positively.

If you have an opinion on this issue, you can use the awesome MOAA-run emailing system to easily send a message to the President and your Senators.  This system allows you to write your own message or use their suggested message, and automatically figures out your Senators based upon your address.  It is super-simple.  Be sure to use the address where you are registered to vote to ensure that your message gets to the right people.

Regardless of how you feel about this particular proposal, the overall message is clear:  Military retirement pay is not protected.  This information may require you to change your long-range financial plans.  Be sure to keep up on this issue as it develops.


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.
  • Bill,retiredmilitary

    They always go after the military pay and the retired military pay for their cuts and the money we need to get equipment we need to protect our Nation.
    We’ll if it cuts you want let’s start with all Congressman, active and retired, Senators, active and retired.
    1. You have to serve longer than one term to receive your retired pay and it has to be based on how many years you served.
    2. The retired pay will not equal your yearly salary, like they get now but should be like they do the military, 50 percent for 20 years, 30 percent for 30 years.
    3. Their pay raises will be tied to the military and they received the same amount using the same percentage points.
    They can not vote on their own pay raise but built on the cola principal.
    4. To draw retirement pay, you have to serve at least 10 years in office and if you serve in some other capacity then you will be awarded points, just like the Reserves (military), and you draw your pay at age 60 and the amount will be based on so much per points timed the amount of points earned.
    5. If the Congressman and Senators bitch about that then tell them to pick up a rifle and join our troops in combat and put their life on the line, you can bet your bottom dollar at least 50 to 70 percent never even served in the military or in a combat zone.

    • Members of Congress are eligible for a pension at age 62 if they have completed at least five years of service. They are eligible for a pension at age 50 if they have completed 20 years of service, or at any age after completing 25 years of service. The amount of the pension depends on years of service and the average of the highest three years of salary. By law, the starting amount of a member’s retirement annuity may not exceed 80 percent of his or her final salary.

      • Jerry L johnson

        WHY I DID MY JOB

      • jenkin55

        Are you telling me that I have exceed pay.

      • Jerry L. johnson

        I need moor, and not looking for handout I pay with the time and years I gave them.

    • KateKashman

      Respectfully, I thiink you might have some incorrect facts about congressional retirement. You may want to read this article:… Thanks for your comment.

      • jerry l johnsonb

        Show me facts, I went two years without a pay R,what about that. Like I said I gave young life for this, when people of my age was run enjoying there life in college I was fighting for the USA.

  • Mike

    An average representative makes $187k a year. I got this from

  • Jerry l, Johnson

    I retire after 22 yrs of military serves and all I have to do is worry my retirement at risk, why I gave you my young years of my life that I could have done other thing with, but I PICK YOU, USA. You sit up in your position and you are suppose to be for the people. but what I see is that you are nothing but for your self, not us the people. If I would have new today what no now I would never did what I DID. I know there is only there type of people you want in the world, poor, reich and military, I hate all of you.

    What about us we live here too.

  • Jay Kinney

    There has got to be some other way to do scrap up more monies than mess with the retired military pay system. Us vets have paid enough!

  • Bill, the problem with your plan is that you are OK with congresscritters remaining in office for 20-30 years.

  • Tony


    Unless we get this so called congress out of office the military retirees will always be screwed! I retired as an E-6, and now they are going to take what little i get and place it in thier pockets.

    Military retirees need to stand up and fight. This country is going down the crapper. The one thing congress should be doing is voting to decrease their pay and after that look at other ways to cut spending. This is just one view lets cut military retiree pay, and raise Tricare rates to offset more spending…

  • NickCollide

    The number of active congressmen and senators that served in the military is no more than 5%. And amoung their children, I’ve only heard of one or two.
    How can you expect them to understand how different our lives are then there;s
    I always hoped Heinliens book “Starship Troopers” where only Veterans could vote and was a prime reason to serve. But alas, nojoy because veterans only voting would knock the hell out of Capital Hill. Nick USN-Ret

  • marcus

    I have just retired from the military after 22 years of service. Can someone or any Congress person please tell me.. Why is it every time that this nation hold its budget cuts, its OURS (veterans) that get hit the hardest. I am sick of you lying to the American people. the truth is the only thing that congress cares about is themselves. You make policy, to fit you and your goonies on capital hill and sh** on the ones that has put their lives on the line for this country and has truly paid a price for this country. Not like you, taking trips on my tax payer dollar. I was asked a question recently, would I allow one of my children to join the military? now I am a military minded kinda guy. But honestly HELL NO!!! to be away from your family for months, even years and still get no love. Now it may sounds like am just rambling, but there is no way that I would reenlist again. Its not worth the headache or the heartache. Here is my solution to this pay thing. No one that has retired from any military should pay taxes and give our active duty a 5 to 10% raise. instead of trying to kiss so much ass that your congress lips get chapped.

  • Lisa

    Oh great! :( My husband retired after 21 years after he was told to retire due to budget cuts. Now he got a civilian job and he let go after 2 years at a casino (Native American) he was not their kind and 5 others went that day. So now we are loosing some deserved COLA we don’t qualify for unemployment due to Military pension. He makes to much. He can’t find a job. Why not just get screwed in our life one more time! Thank you government enjoy your Holidays while you are sitting on your big fat check. We sure won’t with 2 young children that Christmas will not be that much fun.

  • Laura

    Since those of us who declined the Career Status Bonus were not supposed to have our COLA reduced–just the folks who took the $30K and agreed to the 1% cut, I wonder if we have basis for a lawsuit? Or, will the REDUX folks now see a 2% reduction in their COLA, each year?

    • KateKashman

      Great questions, Laura, and ones that I had not even considered. Let me do some poking around, and see what I can find. And what happens if COLA isn’t 2? Does that mean that the REDUX people will have a smaller reduction that they agreed to? Hmmmm…..

  • Erik

    I despise our Govt. I am in the military now and going to retire soon. How is it that our pay and benefits are ALWAYS on the table when it comes to cuts in the “budget”. Our Govt is as corrupt as the foriegn Govts we have helped build. Its all a scam. Eventually this great nation will fall because We… the People may finally get sick of all the BS on the “hill” and force some changes. Every time I see a political figure spewing their lies about how they are doing this or that I literally want to puke. What a joke our Govt has made of our once great nation.