After near-record raises in the early 2020s, the cost-of-living adjustment (COLA) received by military retirees, VA disability and Social Security recipients, and others receiving certain federal compensation is on track to continue a recent downward trend.

An early prediction estimates an increase of 2.1% for the 2026 calendar year – lower than the 2.5% increase for this year and well off the previous two annual adjustments (8.7% and 5.9%), which came in the wake of the COVID-19 pandemic.

Those figures represented the largest two-year increase in the formula used to calculate Social Security COLA since the early 1980s, when inflation led to double-digit increases. Military retiree COLA was calculated under a different formula at that time and did not reach those levels.

[RELATED: MOAA’s COLA Watch]

The calculation relies on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), but only data from the final three months of the fiscal year (July, August, and September) are used – to determine the upcoming increase and to set a baseline for the next year. While this measurement differs from the CPI often cited in media reports, projections for the U.S. inflation rate point to a final figure around 2% over several years.

Why MOAA Tracks COLA

Projected rates may help retirees plan their financial future, but MOAA’s main priority regarding COLA continues to be protecting the value of service-earned benefits. Without this annual increase, retiree pay (and VA disability benefits) would fall behind rising prices – and recipients wouldn’t be getting the value they deserve.

This isn’t a recent fight for MOAA: The Military Coalition (TMC), a group of advocacy organizations representing about 5.5 million members of the wider uniformed services community, was founded in response to COLA threats in the mid-1980s. More recently, MOAA and TMC successfully overturned the “COLA minus 1 percent” provision passed in a 2013 continuing resolution.

While no active legislation points to a COLA reduction, a Congressional Budget Office report on reducing the budget released every two years again suggested a new COLA calculation: Using “Chained CPI” would save the government $278 billion over 10 years, per the report … which doesn’t mention that the money would be taken out of the pockets of military retirees and Social Security recipients, among others.

MOAA will continue to monitor any movement on this budget option or other proposals which would result in a COLA reduction. Keep up with the latest on this and other key advocacy issues via The MOAA Newsletter or by visiting our advocacy news page.