COLA, or Cost of Living Adjustment, which is an annual inflation-based allowance will be determined by the government in preparation for the Fiscal Year 2022. The fiscal year ends on September 30th. COLA is based on the Consumer Price Index (CPI) which is measured by the Department of Labor. The Department of Labor measures the average change over time on the prices paid for certain categories, like select utility, automotive fuel, and food items as part of the CPI. The CPI is separated by geographic regions and done as one nation. Overall in 2021, the costs for goods and services have increased 5.4% in comparison to the previous year.
What does this mean for pay?
The CPI is used to determine federal employee retirement and social security pay. An increase in CPI means that military retirees and veterans who receive disability compensation will see an increase in their monthly amounts beginning in Fiscal Year 2022. The average monthly increase will be around $160 for military retirees and around $100 for veterans receiving disability compensation.
The increase is there to cover the increasing costs of living, but the increase can help cover healthcare costs as retirees pay for their healthcare.
How many military retirees and veterans receiving disability compensation are there?
Per the Department of Defense, there are 1.87 million military retirees and 5.1 million veterans who receive disability compensation.
When will the determination be made?
Since CPI is calculated using the entire previous year’s data, the completion of CPI calculations will not be completed until September 30th. Once the final calculation is completed with all 12 months of data, the final CPI will be released on the Department of Labor website. As of August 2021, the COLA was 5.4% and unless there is a drastic drop in costs, the CPI is expected to be around this number. The COLA for the fiscal year 2022 that runs from October 2021 to September 2022 will be released in early October 2021.
Stay tuned for any updates on pay here as well.