News reports describing ongoing inflation rarely provide more than a percentage or two to coincide with stock images of gas stations. For military retirees, disabled veterans, Social Security recipients, and others whose future buying power depends on a cost-of-living adjustment (COLA), this issue requires a deeper dig.
MOAA provides the raw material for members to keep track of potential COLA levels via its COLA Watch page, updated monthly. For those who don’t track with the figures, here’s a brief look at where the numbers are, how they compare to historic levels, and what they could mean for your 2023 income.
[FROM 2021: Could Congress Come for Your COLA?]
Back to the ’80s
The key figure for COLA-trackers is the CPI-W, a version of the Consumer Price Index designed to reflect costs faced by urban wage earners and clerical workers. That figure reached 288.022 in the May update, released June 10; it represents a 9.3% year-over-year increase, but more important for military retirees and others, it’s 7.3% above the FY 2022 COLA baseline.
The baseline is set by averaging the final three monthly CPI-W figures of the previous fiscal year (July-September). The year-over-year rise in that three-month average results in the annual COLA adjustment.
While the May figures don’t directly affect that calculation, they can indicate where the adjustment could be heading. The 7.3% rise from the baseline is the fourth-largest jump for the CPI-related index since 1974 and the largest since a 7.63% increase in 1980.
If the CPI-W continues to increase at the same month-over-month rate it did from April to May, military retirees would see a double-digit COLA increase, edging past 11%. But predicting future price hikes can be complicated.
Need proof? A Social Security Administration (SSA) annual report released June 2 put the mid-level COLA estimate for FY 2022 at 3.8%, a figure far surpassed by recent increases. That estimate came from data available in mid-February; the new number figures to be around 8%, the SSA’s chief actuary, Stephen Goss, reportedly said during a Bipartisan Policy Center briefing on the report.
The Senior Citizens League, a nonprofit advocacy group, predicted an 8.6% COLA hike last week after the monthly inflation numbers were released, a figure unchanged from the group’s May forecast.
MOAA provides these updates not just for financial planning purposes, but as part of a longstanding commitment to protect the value of military retirement pay. Forty years ago, when faced with skyrocketing inflation, Congress passed multiple pieces of legislation weakening the value of that pay, including the removal of military retirees from the COLA system entirely. Get a recap of the advocacy work that ensued to reverse that policy, including the formation of The Military Coalition, at this link.
Follow the latest COLA updates at MOAA’s COLA Watch page, and keep up with news about all of your earned benefits via The MOAA Newsletter and MOAA.org.
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