Military retirement COLA 2027: Social Security’s 3.6% and the December 1 raise

The formula in 10 U.S.C. 1401a

1. The index. The statute uses the Consumer Price Index published by the Bureau of Labor Statistics (BLS). The Department of Defense (DoD) pay site, militarypay.defense.gov, names the version: the CPI for Urban Wage Earners and Clerical Workers (CPI-W). That is the same index Social Security uses for its COLA.
2. The base quarter. A quarter’s index is the average of its three months. The base quarter is the one ending September 30, so July, August and September.
3. The comparison. This year’s base quarter is compared with the base quarter used for the last adjustment (the “base index”), normally the previous July–September.
4. The percentage. The increase is rounded to the nearest 0.1% and takes effect on December 1. If the index didn’t rise, there is nothing to apply.
5. Rounding the pay. DoD’s Financial Management Regulation (FMR, Volume 7B, chapter 3, 2.9.1) rounds retired pay down to the whole dollar after each COLA, just as it does when retired pay is first computed.

The Defense Finance and Accounting Service (DFAS) applies the result. For December 1, 2025, its retiree newsletter announced a 2.8% COLA (the newsletter titles it the 2026 COLA) for most retired pay and Survivor Benefit Plan (SBP) annuities. Retirees saw it in their December 31, 2025 payment and SBP annuitants in their January 2, 2026 payment.

Who gets the full percentage

DoD’s militarypay page adds that REDUX retirees get a one-time readjustment at 62 that restores the COLA difference, after which the lower COLA resumes.

The first COLA after you retire can be partial. For High-3 and BRS retirees, 1401a(d) bases the first increase only on the price rise since the calendar quarter before the one in which you became entitled to retired pay. So when prices are rising, someone whose retired pay starts in the summer usually gets a smaller first COLA than someone who was retired all year. Section 1401a(f)(3) also says that first increase can’t be larger than the full COLA that year. From the second December on, you get the full percentage.

Worked example: 2.8% in dollars

Take the examples from the High-3 vs BRS guide, an E-7 retiring at 20. Suppose each had been drawing that pay for a full year before December 1, 2025, so the full 2.8% applies:

The rounding is why a COLA can come out a few cents to almost a dollar short of the percentage. The gap between the two plans also widens slightly, from $612 to $629, because the same percentage applies to a larger amount under High-3.

Check the change on your own pay

1. Find your gross monthly retired pay before December 1. Use the gross amount, before deductions such as Survivor Benefit Plan premiums or tax withholding.
2. Multiply it by 1 plus the announced percentage (1.028 for December 1, 2025).
3. Drop the cents. Retired pay is rounded down to the whole dollar after every COLA.
4. Compare the result with the gross amount on the end-of-December payment. If you retired during the year, expect a smaller first increase (1401a(d), above).
5. If the numbers don’t match and the partial first COLA doesn’t explain it, DFAS is the place to ask; it keeps your retired pay account.

This is the statute’s arithmetic on one year’s percentage, not a forecast. Our calculator shows retired pay in today’s dollars. If you want to see future years, you type your own COLA assumption, and the result is labeled that way.

The 2027 COLA (December 1, 2026): what is known on October 16, 2026

Social Security’s number is out: 3.6%. The Social Security Administration (SSA) announced a 3.6% COLA for 2027 on October 14, 2026, beginning with December 2026 benefits. SSA’s actuaries show the arithmetic: the CPI-W averaged 317.265 in July–September 2025 and 328.746 in July–September 2026, a rise of 3.6% after rounding to 0.1%.

The retired-pay percentage hasn’t been announced. As of October 16, 2026, DoD’s militarypay site showed no COLA memo for December 1, 2026, and the newest issue in DFAS’s retiree newsletter index was September 2026, with no COLA among its headlines. Section 1401a works from a July–September quarter rounded to 0.1%, and DoD’s militarypay page says the COLA is set from the CPI-W, the same index behind SSA’s 3.6%. For December 1, 2025, SSA’s COLA and the retired-pay COLA were both 2.8%. Still, 3.6% is SSA’s figure until DoD and DFAS publish theirs.

What is settled:

DFAS’s schedule, updated September 16, 2026, explains the dates: retired and annuitant pay is due on the first of the month, and when the first falls on a weekend or holiday, retirees are paid on the last business day of the month and annuitants on the first business day of the next. That is why it lists December 2026 retired pay for December 31, 2026 and the annuity for January 4, 2027.

We add the retired-pay percentage to our calculator and our change log once DoD or DFAS publishes it. What the same announcement means for VA compensation, which needs a new Act of Congress, is in the 3.6% COLA guide for VA and retired pay.

Recent COLAs

Social Security’s history of automatic COLAs lists these for recent years, by the year each was determined (each figured from the CPI-W, third quarter to third quarter):

This is SSA’s series, not a DoD table; its 2026 row is the COLA effective with December 2026 benefits. Military retired pay uses the same index and quarters, and for December 1, 2025 both came out at 2.8%. For the exact percentage applied to retired pay in any year, DFAS’s retiree newsletters and DoD’s COLA memos are the record.

COLA, the BRS lump sum and VA

BRS lump sum. If you take the lump sum, your reduced pay is your retired pay until Social Security full retirement age. At that point, the full amount returns as if every COLA since retirement had been applied. The discount rate DoD uses has inflation taken out, so no separate COLA projection goes into the lump sum. The lump-sum guide has the details.

VA disability compensation runs on a different track. It isn’t covered by 1401a. Congress passes a separate act each year. The Veterans’ Compensation Cost-of-Living Adjustment Act of 2025 (Public Law 119-42, approved November 25, 2025) raised VA rates from December 1, 2025 by the same percentage as Social Security benefits. For December 1, 2026, the bills (H.R. 8552 and S. 4487) hadn’t passed as of October 16, 2026, so VA’s new rates are pending; the VA rates guide tracks them.

Questions about your own retired pay account go to DFAS Retired and Annuitant Pay. For planning, the personal financial counselor on your installation helps at no cost.

Next step

Run your retired pay in the military retirement calculator. It applies the latest COLA rule and rounding, and shows any future years only with a COLA assumption you enter yourself.