Update: February 15, 2014
Veterans welcomed the repeal of the reduction of the cost-of-living-adjustment for retirees starting in 2016, but veterans’ advocate groups are disappointed the reduction will still apply to new troops.
The bill now awaiting President Obama’s signature grandfathers current retirees and troops as of Dec. 31, 2013, from COLA cuts that were created as a deficit reduction measure. However, troops entering service after that date will see smaller COLAs when they begin retiring in 2034.
By a vote of 332-94, the House passed a two-year budget deal Thursday, December 12th. The deal funds the government and temporarily ends the sequester, but comes at a huge financial cost to working-age military retirees under the age of 62.
If the same deal is also approved by the Senate Monday, December 16th and signed into law by the president, the provision will automatically subtract a full percentage point from annual COLA increases.
For an E-7 retiring today at age 40, the cumulative loss of retirement income could exceed $80,000 by age 62.
“We know the federal government needs to curb its spending, balance its budget, and put an end to the sequester, but penalizing military retirees is not the solution,” said VFW National Commander Bill Thien.
“The troops view the attacks on pay and allowances, retirement and healthcare systems as a breach of faith, and a complete lack of support, understanding and appreciation for what it is they do daily for the rest of America.”