Military Retired Pay COLA 2027: 3.6%, REDUX 2.6%, First-Year Rates
Military retired pay's 2027 COLA is 3.6% (2.6% REDUX) under 10 U.S.C. 1401a, plus first-year rates by entitlement quarter for new retirees.
Military retired pay gets its annual increase without a vote. Every December 1, the Secretary of Defense raises retired pay by a formula written directly into the U.S. Code, and that formula produces the same percentage Social Security uses for its own cost-of-living adjustment — no separate hearing, no appropriations rider, nothing for Congress to approve or withhold along the way. That made the 2027 raise projectable well before it was official, using the same monthly CPI-W data finbarrow tracked for Social Security’s 2027 COLA, and it also means the REDUX retirement plan’s smaller COLA and the first-year rate for anyone who retired partway through 2026 can be worked out from the same published numbers.
The short answer: standard military retired pay rises 3.6% effective December 1, 2026, matching Social Security’s own 2027 COLA, which the Social Security Administration announced on October 14, 2026 (Federal Register document 2026-21796). REDUX retirees — those who took the Career Status Bonus — get one percentage point less, 2.6%. A retiree who is new to the rolls in 2026 gets a very different, much smaller number for their very first adjustment, because that first COLA is measured from the quarter they became entitled to retired pay rather than from a full year: roughly 2.6% for someone entitled in the spring of 2026, and as little as 0.4% for someone entitled in the summer, with 0% for anyone entitled in October or November 2026. On a $3,000 monthly pension, the difference between the standard and REDUX rates at 3.6%/2.6% is about $30 a month, or $360 a year. Before the announcement we had projected 3.4% and 2.4%.
The formula: 10 U.S.C. 1401a(b), no vote required
Military retired pay’s COLA is written into permanent law rather than granted year by year. Under 10 U.S.C. 1401a(b), “effective on December 1 of each year, the Secretary of Defense shall increase the retired pay of members and former members” by a percentage tied to the price index for the base quarter — July, August, and September — compared against the base index for the prior year, adjusted to the nearest one-tenth of one percent. That index is CPI-W, the Consumer Price Index for Urban Wage Earners and Clerical Workers, the exact same measurement the Social Security Administration uses to calculate its own annual COLA. Because both programs run the identical formula against the identical data, the standard military retired pay COLA and the Social Security COLA come out to the same number every year, including 2027.
The contrast worth noting is with VA disability compensation, which borrows the same percentage but needs its own act of Congress each year to actually take effect, even though the arithmetic behind it is identical to Social Security’s and military retired pay’s. Finbarrow covers that separate legislative step, and the 2027 projection for VA rates, on the VA disability COLA page. Military retired pay carries no such requirement: the statute itself compels the December 1 increase, so there’s no scenario where Congress declines to pass it.
REDUX and the blended retirement system: two different COLA rates
Not every military retiree gets the standard percentage. Section 1401a(b)(3) singles out a specific group: anyone who first became a member of the armed forces on or after August 1, 1986 and elected the bonus under 37 U.S.C. 322, as that provision read before the fiscal year 2008 defense authorization act, or under 37 U.S.C. 354, the Career Status Bonus — the mid-career cash payment retirees could take around the 15-year mark in exchange for a reduced retirement multiplier and a reduced COLA for the rest of their retirement. For anyone in that group, whenever the standard percentage exceeds one percent, the statute caps their increase at that percentage minus one percentage point. At the 3.6% standard COLA for 2027, that arithmetic produces a 2.6% REDUX COLA — the number is simply the standard figure with one point shaved off, not a separately calculated rate.
Retirees under the modernized blended retirement system, the plan that has applied to most people who entered service since 2018, are not subject to that reduction. Section 1401a(b)(5) gives them the full standard percentage, the same 3.6% as everyone else on the standard formula. The one-point REDUX reduction only touches the specific population that took the older Career Status Bonus deal under the legacy High-3 retirement system — a shrinking group, but one whose retired pay checks will keep running a point behind everyone else’s for as long as they’re retired.
How the September reading settled it
The 2027 percentage was fixed by the July-August-September 2026 quarter. July 2026 CPI-W (BLS series CWUR0000SA0) came in at 327.104, August at 328.481, and September, published October 14, 2026, at 330.654, for a third-quarter average of 328.746. Against the base-quarter average of 317.265 that is a 3.62% increase, which rounds to 3.6%, and the REDUX rate is always exactly one point below whatever the standard rate turns out to be. Before September arrived, this page showed how each possible reading would translate:
| September 2026 CPI-W reading | Standard COLA | REDUX COLA |
|---|---|---|
| 327.143 | 3.3% | 2.3% |
| 328.095 | 3.4% | 2.4% |
| 328.481 (September equal to August) | 3.4% | 2.4% |
| 329.047 | 3.5% | 2.5% |
| 329.999 | 3.6% | 2.6% |
| 330.654 (actual) | 3.6% | 2.6% |
The table’s method was right, but the central estimate assumed September would land at or near August’s 328.481 reading, which meant 3.4% and 2.4%. The actual reading was 0.66% above August, above the top of every row we had expected, and our 2027 Social Security COLA tracker has the full month-by-month calculation and the same verdict for the Social Security side. The run of CPI-W data behind the calculation is: 316.349 in July 2025, 317.306 in August 2025, and 318.139 in September 2025, for a base-quarter average of 317.265; 317.414 in November 2025 and 317.014 in December 2025; then 317.942, 319.422, and 323.500 across January through March 2026, and 326.541, 328.829, and 327.075 across April through June 2026. One gap sits inside that run: the Bureau of Labor Statistics never published an October 2025 CPI-W reading, a casualty of that month’s government shutdown, which matters for a different calculation below.
First-year COLA for a new retiree: it’s not the standard rate
Anyone who retired during 2026 doesn’t get the full standard COLA on their very first adjustment, and the gap can be large. Under 10 U.S.C. 1401a(d), for a retiree whose retired pay is based on the High-3 formula — someone who entered service before August 1, 1986, or entered on or after that date without electing the Career Status Bonus — the first COLA after becoming entitled to retired pay is calculated differently from every COLA that follows. Instead of comparing the full base quarter against the prior year’s base quarter, it compares the July-August-September 2026 CPI-W average against the average for “the calendar quarter immediately before the calendar quarter during which the member became entitled to retired pay,” rounded to the nearest tenth of a percent. In plain terms: a retiree’s first COLA only captures the inflation that happened after they retired, not the inflation that happened all year.
Using the actual third-quarter average of 328.746, that produces sharply different first-year numbers depending on exactly when in 2026 retirement began:
- Entitled January–March 2026 (comparison quarter: Q4 2025): using the two CPI-W months that were actually published for that quarter, November and December 2025, the average is 317.214, which gives 3.6354% and rounds to 3.6%. If an October 2025 value somewhere between the September and November readings is assumed to fill the gap left by the shutdown, the Q4 2025 average shifts to somewhere between 317.281 and 317.522, giving between 3.6% and 3.5%. How the Defense Department will actually handle the missing October reading in this calculation isn’t publicly known, so this range should be read as exactly that — a range, not a confirmed figure.
- Entitled April–June 2026 (comparison quarter: Q1 2026, average 320.288): works out to 2.6407%, or 2.6%.
- Entitled July–September 2026 (comparison quarter: Q2 2026, average 327.482): works out to 0.386%, or 0.4%. CPI-W jumped unusually fast in the spring of 2026 — from 323.500 in March to 326.541 in April to 328.829 in May — which pulled the Q2 2026 average up close to where the Q3 2026 average landed, leaving little measured inflation between the two quarters.
- Entitled October or November 2026 (comparison quarter: Q3 2026 itself): the comparison quarter and the base quarter are the same quarter, so the computation yields 0% for the December 2026 payment. The first real COLA for this group arrives a year later, on the standard schedule.
Retirees who were already receiving retired pay before 2026 and got a COLA in December 2025 or earlier aren’t affected by any of this; they simply receive the full standard COLA — or the REDUX rate, if applicable — like everyone else already on the rolls.
The same pattern held across the other scenarios we tracked before September, shown here with the actual reading added as the last row:
| September CPI-W | Jan–Mar 2026 entitlement | Apr–Jun 2026 entitlement | Jul–Sep 2026 entitlement |
|---|---|---|---|
| 327.143 | 3.3% (3.2% with an assumed October value) | 2.3% | 0.0% |
| 328.095 | 3.4% (3.3%) | 2.4% | 0.1% |
| 328.481 (Sept = Aug) | 3.4% (3.3%–3.4%) | 2.4% | 0.2% |
| 329.047 | 3.5% (3.4%) | 2.5% | 0.2% |
| 329.999 | 3.6% (3.5%) | 2.6% | 0.3% |
| 330.654 (actual) | 3.6% (3.5%) | 2.6% | 0.4% |
The pattern across every row is the same: the later in 2026 someone’s retired pay started, the smaller their first COLA, because there’s simply been less time for inflation to accumulate since their base quarter. A retiree entitled in July 2026 isn’t missing out on the COLA — they’re getting exactly the inflation that occurred between their entitlement and the following September, which in 2026’s case happens to be very little.
REDUX’s first-year rule adds another layer
For a REDUX retiree who also became entitled to retired pay during 2026, the first-year calculation stacks a second reduction on top of the one described above. Under 10 U.S.C. 1401a(e), the first COLA for a REDUX retiree is the same quarter-based percentage described in the previous section, minus one-fourth of one percentage point for every calendar quarter that elapsed between the quarter before entitlement and the base quarter used in the calculation. If subtracting that amount would push the result below zero, the increase is zero rather than negative. This page doesn’t attempt to compute specific first-year REDUX percentages for 2026 retirees, since doing that correctly requires counting the exact number of elapsed quarters for each entitlement date, a detail not verified here — retirees in this situation should treat the standard first-year figures above as an upper bound and expect their actual REDUX first COLA to come in lower.
Final-pay retirees have their own rule too
A smaller group — those who entered service before September 8, 1980, whose retired pay base is calculated under 10 U.S.C. 1406 rather than the High-3 average — falls under yet another first-COLA provision, 1401a(c), which ties their initial adjustment to the date of the basic pay table their retired pay was computed from rather than to a calendar quarter. This page doesn’t work through specific numbers for that group; anyone in it should confirm their own first-year figure directly rather than applying the High-3 table above.
What it looks like in dollars
None of these percentages mean much without a dollar figure attached, so here’s how the official 3.6%/2.6% plays out on a representative pension. These are illustrative amounts only — the actual rounding of a real retired pay check follows Defense Department regulations, so treat every figure below as “about,” not exact.
| Situation | 2026 monthly pay | COLA applied | About 2027 monthly pay | About the increase |
|---|---|---|---|---|
| Standard (High-3), retired before 2026 | $3,000 | 3.6% | $3,108 | +$108/month |
| REDUX, retired before 2026 | $3,000 | 2.6% | $3,078 | +$78/month |
| New retiree, entitled July 1, 2026 | $3,000 | 0.4% (first-year) | $3,012 | +$12/month |
The gap between the standard and REDUX rows is the REDUX trade-off showing up directly in the checkbook: on a $3,000 pension, it’s about $30 a month, or roughly $360 a year, and that gap compounds every year going forward since each future COLA is also calculated one point lower. The new-retiree row shows the other side of the picture — someone who only recently started drawing retired pay in the middle of 2026 sees almost nothing from this particular December’s adjustment, not because anything is wrong with their pay, but because there’s been almost no time for CPI-W to move since their retired pay began.
When it actually lands
The COLA is effective December 1, 2026, which means it’s the December 2026 retired pay payment — not a November or January payment — that carries the new rate for the first time. Military retired pay is paid in arrears, so the payment covering December shows up at the start of January 2027. This page doesn’t specify an exact calendar date for that payment, since Defense Finance and Accounting Service payment scheduling isn’t covered by the sources behind this projection.
The official number: October 14, 2026
The Social Security Administration announced the 2027 COLA on October 14, 2026, the same day the Bureau of Labor Statistics released the September CPI-W reading the formula requires, and the formal determination is Federal Register document 2026-21796. Because 10 U.S.C. 1401a(b) uses the identical index and the identical base-quarter comparison, the standard military retired pay percentage, 3.6%, and the REDUX percentage, 2.6%, follow mechanically from that same CPI-W figure. The dollar amounts in the table above remain illustrative, since the actual rounding of a retired pay check follows Defense Department regulations. For federal civilian retirees under FERS and CSRS, whose COLA formula runs on a different set of CPI-W comparisons, see finbarrow’s FERS and CSRS 2027 COLA; for how far the increase actually stretches once Medicare Part B premiums are subtracted from it, a question that applies to military retirees drawing Social Security or Medicare alongside their retired pay, see the 2027 COLA’s net increase after Medicare.
Sources
- SSA, “Cost-of-Living Increase and Other Determinations for 2027,” Federal Register document 2026-21796 — federalregister.gov/d/2026-21796
- SSA press release, “Social Security Announces 3.6 Percent Benefit Increase for 2027,” October 14, 2026 — ssa.gov/news/en/press/releases/2026-10-14.html
- 10 U.S.C. § 1401a — law.cornell.edu/uscode/text/10/1401a
- 10 U.S.C. § 1407 — law.cornell.edu/uscode/text/10/1407
- BLS CPI-W series CWUR0000SA0 — data.bls.gov/timeseries/CWUR0000SA0
- finbarrow, 2027 Social Security COLA tracker — companion page for the CPI-W data behind the COLA
Quick answers
What is the military retired pay COLA for 2027?
Standard military retired pay rises 3.6% effective December 1, 2026. That figure comes straight from 10 U.S.C. 1401a(b), which ties the raise to the same CPI-W measurement Social Security uses, so the military retired pay COLA and the Social Security COLA are the same number; the Social Security Administration announced 3.6% on October 14, 2026. Retirees under the REDUX plan get a smaller increase, 2.6%, one point below the standard figure. Our earlier projection was 3.4% and 2.4%, so the official rates came in 0.2 points higher.
Why is the REDUX COLA lower than the standard COLA?
Under 10 U.S.C. 1401a(b)(3), a retiree who first became a member on or after August 1, 1986 and elected the Career Status Bonus gets the standard COLA percentage minus one percentage point, whenever that percentage exceeds one percent. At the 3.6% standard COLA, that works out to 2.6% for REDUX retirees. The one-point reduction was written into the bonus program itself: taking the mid-career cash payment traded away part of every future COLA in exchange for the upfront money. Members under the modernized blended retirement system are not affected by this reduction and receive the full standard percentage under a separate provision, 1401a(b)(5).
What COLA will a retiree who just retired in 2026 get in their first year?
It depends heavily on when in 2026 retired pay began, because a new retiree's first adjustment compares CPI-W only from the quarter before entitlement started, not a full year. At the 3.6% standard COLA: a retiree entitled January through March 2026 gets about 3.6%, one entitled April through June gets about 2.6%, and one entitled July through September gets only about 0.4%, since CPI-W jumped sharply in the spring of 2026. A retiree entitled in October or November 2026 gets 0% in December 2026 because the comparison quarter and the base quarter are the same one; their first real increase arrives a year later.
When does the 2027 COLA take effect for military retired pay?
The increase is effective December 1, 2026, under 10 U.S.C. 1401a(b), which requires the Secretary of Defense to raise retired pay on that date every year using the CPI-W percentage from the third quarter. Because it is effective in December, it first shows up in the retired pay payment covering that month, which is paid at the start of January 2027. The percentage became official when the Bureau of Labor Statistics published the September 2026 CPI-W reading and the Social Security Administration announced the COLA, both on October 14, 2026.
Does military retired pay COLA work the same as VA disability COLA?
They normally land on the same percentage, but the legal mechanism is different. Military retired pay's COLA is permanent law: 10 U.S.C. 1401a(b) requires the Secretary of Defense to apply the CPI-W-based percentage every December 1, with no additional step needed. VA disability compensation, by contrast, needs a separate act of Congress each year to apply the same COLA percentage; for 2027 the House passed that bill, H.R. 8552, on November 9, 2026, and it still needed the Senate and a signature as of November 11. Retired pay's increase is automatic under standing law, while VA compensation's depends on Congress acting.
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