Each year military retirement pay is adjusted to meet the increased cost of living. This Cost-of-Living-Adjustment (COLA) varies from year to year based on the previous year's Consumer Price Index (CPI).
2010 Update: The CPI dipped below 4 percent in the first two quarters of FY2009 and was still in negative numbers at the end of the fiscal year. Due to the negative CPI in FY2009 there will be no COLA increase for retirees in 2010.
Note: The annual Cost-of-Living-Adjustment is NOT in anyway related to the annual military pay raise for active duty and reserve servicemembers.
Source: The Defense Finance and Accounting Service DFAS
