Military Retirees to Get 3.6% Raise
PHOTO CAPTION: Sgt. Maj. Troy E. Black receives a folded American flag during his retirement ceremony at Marine Barracks Washington on June 20, 2025. Military retirees eligible for the standard adjustment are set to receive a 3.6% cost-of-living increase for 2027. (U.S. Marine Corps photo by Cpl. Christopher Prelle)
Military retirees are set to receive a 3.6% cost-of-living adjustment in 2027 after new federal inflation figures released Wednesday established the annual increase used to calculate military retirement benefits.
The Bureau of Labor Statistics released its September Consumer Price Index report on October 14, completing the three-month inflation measurement used to determine annual adjustments to military retired pay and Social Security benefits.
The 3.6% increase is larger than the 2.8% adjustment for 2026 and will affect the monthly retirement income of eligible former service members across the armed forces.
A corresponding increase is also expected for VA disability compensation, although congressional authorization is still pending.
How the Government Arrived at 3.6%
The annual adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W.
Federal officials compare the average CPI-W from July, August and September against the same three-month period in the preceding year.
The latest report showed the following CPI-W readings for 2026:
July: 327.104
August: 328.481
September: 330.654
The three-month average was approximately 328.746, compared with 317.265 during the third quarter of 2025.
That represents an increase of approximately 3.62%, which rounds to 3.6% under the federal cost-of-living formula.
The Social Security Administration separately confirmed the 3.6% adjustment Wednesday.
What It Means for Military Retirees
For a military retiree currently receiving $2,000 per month in eligible retired pay, a full 3.6% adjustment would add approximately $72 monthly, or $864 annually, before deductions.
Someone receiving $3,000 monthly would see an increase of approximately $108 per month, or $1,296 annually.
Military retired-pay adjustments take effect December 1, with the increase reflected in the payment for that month, normally received around the beginning of January.
According to the Defense Finance and Accounting Service's published payment schedule, retired pay for December 2026 is scheduled to be deposited December 31.
Most retirees covered by the Final Pay, High-36 and Blended Retirement System plans qualify for the standard adjustment.
However, retirees under the older REDUX system generally receive an adjustment one percentage point lower, or approximately 2.6% for 2027. Newly retired service members may also receive a different first-year adjustment.
Survivor Benefit Plan annuities generally receive corresponding cost-of-living increases, subject to applicable program rules.
What About VA Disability Compensation?
The same 3.6% inflation adjustment is expected to determine the next increase in VA disability compensation and Dependency and Indemnity Compensation benefits.
However, unlike Social Security's automatic annual adjustment, increases to these VA compensation programs generally require congressional legislation.
The Veterans' Compensation Cost-of-Living Adjustment Act of 2026 would authorize an increase matching the Social Security adjustment, effective December 1, 2026.
As of October 14, the legislation had not completed the congressional process.
House bill H.R. 8552 had advanced from a Veterans' Affairs subcommittee, while Senate bill S. 4487 remained pending in the Senate Veterans' Affairs Committee.
Veterans receiving VA disability compensation should therefore distinguish between the confirmed inflation figure and the final legal authorization for their benefit increase.
Higher Benefits as Inflation Persists
The larger adjustment follows renewed inflation pressure across the U.S. economy.
Wednesday's report showed overall consumer prices increased 3.7% over the preceding 12 months, while the CPI-W rose 3.9% over the same period.
The annual COLA is slightly lower because it compares three-month averages rather than a single month's year-over-year inflation reading.
The purpose of the adjustment is to help retirement and disability benefits maintain purchasing power as consumer prices increase.
For military retirees, the newly established 3.6% figure provides a clearer picture of what their retirement income will look like heading into 2027.
For veterans receiving disability compensation, the same figure offers an indication of the expected increase while Congress completes the necessary legislation.
(Source: OAF Nation)
