The recently passed Bipartisan Budget Act of 2013 is drawing heavy criticism and a strong response from legislators from both political parties due to COLA cuts for veterans. Under the Act, military retirees younger than 62 would face a reduction in their cost of living adjustments (COLA). This one percent reduction in COLA, set to go into effect in December 2015, would save the government $6.3 billion while costing a typical 20-year military retiree an estimated $82,982 in retirement benefits.
The most recent efforts to repeal the reductions to COLA for military retirees have been varied. Some proposed bills would repeal the reductions for all military retirees while others would only repeal reductions for service members who were forced to retire for medical reasons. Legislators are currently negotiating the omnibus spending bill, and many Washington insiders believe that a repeal to COLA cuts for disabled retirees will be addressed in the omnibus bill.
Many veterans advocacy groups are calling for a complete repudiation of COLA reductions for all military retirees. These groups point out that on average, only 17 percent of the military force stays in the service until retirement. They also point out that the government increased the percentage of base pay that retirees received in 2001 because they were facing problems with retention rates. A large number of veterans advocacy groups believe that the proposed reductions in COLA could have longstanding effects on military retention rates which could affect our nation’s military readiness.