The Pentagon has announced the annual cost of living adjustment to military retired pay for 2021, which will be a 1.3 percent increase for most retirees – reflected in pay starting December 31 2020. (This year’s increase was 1.6 percent.)
DoD said that survivors of members that died on active or inactive duty, or survivors of military retirees who participated in the Survivor Benefit Plan will also see a 1.3 percent increase to their annuities beginning in January – in most cases.
Survivors who are eligible for the Special Survivor Indemnity Allowance (SSIA) will also receive an increase to their SSIA payments that reflects this 1.3 percent adjustment (with a maximum pay of $327).
The retired pay computed under each retired pay plan is adjusted each year, effective December 1st, by the change in consumer prices. The COLA is determined by the percentage increase, if any, between the average 3rd quarter Consumer Price Index (CPI) of the current year over the average 3rd quarter (CPI) of the prior year. In the event of a decrease in the CPI, the COLA will not be negative, but will be zero. Additionally, the COLA for the next year will reach back to the 3rd quarter CPI to the last year in which there was a positive COLA increase.
Source: PDF Updates to Military Retired and Retainer Pay 2021