Followers of MOAA’s COLA Watch are tracking a rising inflation trend line, but one that’s likely to end up at or near the lowest cost-of-living adjustment since the end of the COVID-19 pandemic.

Experts have predicted as much, pointing to a 2.6% raise in 2026 for military retirees, Social Security recipients, and others whose federal benefits are indexed to COLA calculations. It would be 0.1 percentage point higher than last year’s raise, which followed three years of above-average adjustments – 3.2%, 8.7%, and 5.9% – tied to post-pandemic inflation.

The Bureau of Labor Statistics (BLS) releases monthly updates on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which drives the formula to determine the annual COLA. The July inflation figures, set for an Aug. 12 release, will be the first of three monthly datapoints used to calculate COLA at the end of the fiscal year.

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Possible Late Spike?

Some analysts have raised their inflation projections for the rest of 2025 based primarily on potential effects of tariffs. Goldman Sachs predicts a 3% overall inflation figure before year’s end, for instance – slightly lower than Federal Reserve projections.

Why are these figures higher than the likely COLA? First, it’s unclear when BLS data will reflect any end-of-year inflation: A price spike in November, for example, would have no impact on COLA calculation.

Second, the overall CPI figure differs slightly from the CPI-W. What’s reported as a 3% “inflation rate” likely reflects the main CPI, which isn’t used in determining COLA.

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What MOAA Is Tracking

Knowing the COLA trends can help retired military members and their families make important financial decisions. But there’s more to the numbers than trend lines.

At its core, COLA represents the preservation of the value of military retirement pay. Without it, retirees would see their purchasing power drop sharply in the years after service. That’s why protecting this earned benefit has been a pillar of MOAA’s advocacy efforts for decades, including:

• Helping stop legislation that would’ve killed the military retiree COLA hike in the mid-1980s.
  
  
• Overturning “COLA minus 1 percent” legislation in the early 2010s.
  
  
• Ensuring plans to change how COLA is calculated that would weaken the benefit – including a long-standing Congressional Budget Office proposal that would cost COLA recipients more than $278 billion over 10 years – don’t move past the drawing board.

There are no current COLA threats on the legislative docket, but MOAA will continue its work to protect this service-earned benefit and others, especially in times of federal funding uncertainty. Keep up with the latest news on our COLA Watch page, and track all of MOAA’s ongoing advocacy priorities via our Legislative Action Center.