EAS 30 Dec 2022 and COLA

desert_tortoise

PEB Forum Regular Member
Registered Member
Hi everyone. I’m set to EAS under Chapter 61 retirement on 30 December of this year. I’ve searched around and can’t find anything definitive for disability retirees about COLA. Will I receive a prorated, or null COLA this year or will I receive the full COLA? Thank you in advance!
 
Hi everyone. I’m set to EAS under Chapter 61 retirement on 30 December of this year. I’ve searched around and can’t find anything definitive for disability retirees about COLA. Will I receive a prorated, or null COLA this year or will I receive the full COLA? Thank you in advance!
Hello @desert_tortoise

I interpret your remarks to mean that you will be discharged 29 December 2022 and enter into a retired status 30 December 2022.
I also assume you are speaking about retired pay and not VA compensation.

It is my understanding that the active duty increase will be 1 January 2023, so that does not impact the one day of pay due for December 2022.

Your retired pay will use the high three base (total of highest 36 months of pay divided by 36) multiplied by the higher of
—DoD disability percentage
or
—longevity multiplier (2.5% or 2% x active duty equivalent)

Any COLA adjustment for the retired pay base for Dec 2022 (if it is one of the 36 months used) would be minuscule at best.
Opinion: Since December is not a full month of pay, I suspect it will not be included as part of the High Three. Just a guess.

Ron
 
That’s correct assumption. My question does not pertain to the one day of retired pay for December, but if my monthly disability retirement pay for 2023 will be increased by the COLA percentage.
 
That’s correct assumption. My question does not pertain to the one day of retired pay for December, but if my monthly disability retirement pay for 2023 will be increased by the COLA percentage.
My thoughts.

The recently approved COLA increase is effective 1 December 2022. it increases existing retirement accounts. Obviously, you will not be retired on that date.

The computation for your retired pay that begins on or about 30 DEC 2022 will be as I described above. Your retired pay will not be increased by a COLA increase effective before you retired.

Ron
 
This is a great question. I’m facing the same dilemma. I just hit transproc and am in the process of picking my retirement date. I could use my accrued leave and retire the last few days of December. Or I could sell my leave and retire a few days before the end of November.

Secdef issues a COLA memo each year in mid-November setting the COLA increase for the coming year. This memo is called “Adjustment to Military Retired and Retainer Pay, Survivor Annuities and Premiums.” As Ron stated, the new COLA goes into effect December 1 of each year. However, in the memo itself, it states that retirement dates up through December 31 of the previous year get the COLA for the upcoming year.

Also, on DFAS’s website, it says “The first partial COLA under the Disability retirement plan is the same as for the Final Pay retirement plan.” And guess what? The Final Pay retirement plan gives almost the full COLA no matter when in the calendar you you retired.

So if my read is correct, those of us with retirement dates before December 31, should get the full COLA for 2023, which is going to be a whopper, north of 8%.

If instead someone needs to be retired effective before December 1 to receive the full COLA for 2023, then in my case, I can just sell my leave and retire at the end of this month. So I’m not 100% sure one way or the other, but I can adjust either way as necessary.

I plan to call DFAS Monday and see if I can get a definite answer and will post back.

In the meantime, pull the secdef COLA memo from last year and read the DFAS website (Retirement Cost of Living Adjustments) and let me know how you read those. It sure seems like all you have to do is retire by December 31. I hope so anyway.
 
Reference: “Secdef issues a COLA memo each year in mid-November setting the COLA increase for the coming year. This memo is called “Adjustment to Military Retired and Retainer Pay, Survivor Annuities and Premiums.” As Ron stated, the new COLA goes into effect December 1 of each year. However, in the memo itself, it states that retirement dates up through December 31 of the previous year get the COLA for the upcoming year.”

The December 31 of the previous year was 31 December 2021. Unless I have missed something, the discussion in this thread is related to a COLA increase effective 1 DEC 2022 which is NOT the previous year in the context of this discussion.

Ron
 
My explanation was very confusing, sorry. The reason I used the 2021 example was that is the most recent example we have to look at. The new COLA memo should be out in the next two weeks.

What the memo says, I think, is that retirement dates through December 31, 2021 get the 2022 COLA (if I’m reading that correctly). Assuming the new COLA memo follows the same pattern as last year’s, and the previous 25 years for that matter, it will say retirements effective by December 31, 2022 will get the 2023 COLA. That’s only for the Final Pay retires (high-36 retirees are prorated). but included in the Final Pay category are disability retirements. It’s not quite the full year COLA but close.

Presumably, the reason they treat disability retirees like the Final Pay retirees for first year partial COLA purposes is that we don’t really get to choose our retirement date unlike normal retirees, and so don’t get to “game” the system. We can adjust 30, maybe 60 days max by either using or selling leave, but unlike regular retirees, the service is in effect is choosing our retirement timing for us.

I’m confusing myself over all this so chances are I’m not getting this right. It would sure make a big difference in retirement pay starting in 2023. Hopefully DFAS can give me a definitive give answer next week.
 

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I just spent a few hours, mostly on hold, with DFAS. They had a couple supervisors research it while I held. And the final answer from DFAS is (drumroll) ... They don't know! They understood the question but could not definitively answer one way or the other, whether a disability retiree must be retired by December 1 or December 31 to receive next year's COLA.

I guess waiting until late December to retire comes down to "Do you feel lucky?" The final answer will come along with next January's retirement check.
 
I just spent a few hours, mostly on hold, with DFAS. They had a couple supervisors research it while I held. And the final answer from DFAS is (drumroll) ... They don't know! They understood the question but could not definitively answer one way or the other, whether a disability retiree must be retired by December 1 or December 31 to receive next year's COLA.

I guess waiting until late December to retire comes down to "Do you feel lucky?" The final answer will come along with next January's retirement check.
I know the answer. No COLA increase for those how retire in the 4th quarter of 2022. My wife is in the same boat. It sucks but that is the way it goes when you retire in the 4th quarter. You will see a COLA increase for 2024 but not 2023. Retire by year end though or you may not get full COLA increase for 2024 if you retire in 1st quarter 2023.

See #2 & #3 of that letter. It shows ZERO for retiring in 4th quarter so the only way you can do better is if you enlisted before September 8 1980 which 99% of people won't qualify be in that category.
 
OK, so it won't make any difference when I retire, end of this month or end of next month. I guess that makes it easy for me trying to choose between retiring at the end of Nov vs Dec. That does suck since my pay the last couple years sure as heck didn't increase anywhere close to inflation.

But one last sliver of hope ... What about the statement on the DFAS website that "The first partial COLA under the Disability retirement plan is the same as for the Final Pay retirement plan." That makes it sound like disability retirees are lumped in with Final Pay retirees for first partial COLA purposes. Final Pay retires are those who retired before September 8, 1980. Yes, our disability retirement pay is calculated according to the High 36, but strictly for first partial COLA purposes, it sounds like we disability retirees might be treated the same as Final Pay retirees and #1 in the memo applies to us.
 
OK, so it won't make any difference when I retire, end of this month or end of next month. I guess that makes it easy for me trying to choose between retiring at the end of Nov vs Dec. That does suck since my pay the last couple years sure as heck didn't increase anywhere close to inflation.

But one last sliver of hope ... What about the statement on the DFAS website that "The first partial COLA under the Disability retirement plan is the same as for the Final Pay retirement plan." That makes it sound like disability retirees are lumped in with Final Pay retirees for first partial COLA purposes. Final Pay retires are those who retired before September 8, 1980. Yes, our disability retirement pay is calculated according to the High 36, but strictly for first partial COLA purposes, it sounds like we disability retirees might be treated the same as Final Pay retirees and #1 in the memo applies to us.
I would just plan on not getting it and if we get lumped in to get COLA for 2023 great!
 
OK, so it won't make any difference when I retire, end of this month or end of next month. I guess that makes it easy for me trying to choose between retiring at the end of Nov vs Dec. That does suck since my pay the last couple years sure as heck didn't increase anywhere close to inflation.

But one last sliver of hope ... What about the statement on the DFAS website that "The first partial COLA under the Disability retirement plan is the same as for the Final Pay retirement plan." That makes it sound like disability retirees are lumped in with Final Pay retirees for first partial COLA purposes. Final Pay retires are those who retired before September 8, 1980. Yes, our disability retirement pay is calculated according to the High 36, but strictly for first partial COLA purposes, it sounds like we disability retirees might be treated the same as Final Pay retirees and #1 in the memo applies to us.
How did this end up turning out?

Great question and observation regarding your “first” partial COLA from the DFAS website. The interesting part is they state "The first partial COLA under the Disability retirement plan is the same as for the Final Pay retirement plan."

I agree with your interpretation of DFAS statement. Although, I can not find a regulation or policy to back it up.

It’s not a question if there is a “COLA Trap”. Air Force Col. Douglas Fowler’s War College paper does a great job explaining the pay inversion.

How to Avoid the Military 'COLA Trap' by Getting Smart About Your Retirement Date


There are so many other personal and logistical factors that play into a retirement date decision besides money….some of which are totally out of our control. Although it is interesting to think about how your first COLA is calculated, especially during a high inflationary period.
 
Just to follow up, after medically retiring in November 2022 I was indeed given ZERO COLA for 2023. Turns out (as several on this board speculated would be the case) DFAS strictly follows the quarterly partial COLA formulas just like for regular retirees. DFAS's website linked above is clearly wrong on this and ought to fixed so as to not put out misleading information.

Those of us who retired in 2022, especially the 4th quarter, got royally screwed. We didn't get any of the big COLA for 2023 but we also didn't get any of the big pay raises starting this year either. Ironically, the stated reason for partial COLAs is to prevent servicemembers from getting the double benefit of big inflation-adjusted pay raises their last year in service and then also getting a COLA on top of that. That made sense back in 1982 when the rules were put in place, especially since retirements were based on Final Pay, not just High-3. But it doesn't make sense now.

Application of that rule, especially to those of us who retired in late 2022, actually results in the servicemember getting NEITHER the benefit of the COLA NOR the benefit of the large milpay raises that started this year. Funny how it always seems to result that benefits the government not having to pay as much. But that's the reality.

It would be great if those in charge realized the injustice and enacted new rules to address this injustice and retroactively awarded the 2023 COLA to those of us who retired in 2022, but I won't hold my breath.

I'm just glad to be out after 22+ mostly enjoyable years in the Army. It's been an adjustment to being just a regular schmo civilian, but I wouldn't want to go back. Time to move on to new adventures. Good luck to all on this forum.
 
Just to follow up, after medically retiring in November 2022 I was indeed given ZERO COLA for 2023. Turns out (as several on this board speculated would be the case) DFAS strictly follows the quarterly partial COLA formulas just like for regular retirees. DFAS's website linked above is clearly wrong on this and ought to fixed so as to not put out misleading information.

Those of us who retired in 2022, especially the 4th quarter, got royally screwed. We didn't get any of the big COLA for 2023 but we also didn't get any of the big pay raises starting this year either. Ironically, the stated reason for partial COLAs is to prevent servicemembers from getting the double benefit of big inflation-adjusted pay raises their last year in service and then also getting a COLA on top of that. That made sense back in 1982 when the rules were put in place, especially since retirements were based on Final Pay, not just High-3. But it doesn't make sense now.

Application of that rule, especially to those of us who retired in late 2022, actually results in the servicemember getting NEITHER the benefit of the COLA NOR the benefit of the large milpay raises that started this year. Funny how it always seems to result that benefits the government not having to pay as much. But that's the reality.

It would be great if those in charge realized the injustice and enacted new rules to address this injustice and retroactively awarded the 2023 COLA to those of us who retired in 2022, but I won't hold my breath.

I'm just glad to be out after 22+ mostly enjoyable years in the Army. It's been an adjustment to being just a regular schmo civilian, but I wouldn't want to go back. Time to move on to new adventures. Good luck to all on this forum.
Yep same for my wife. If she had medically retired the last day of September or earlier she would have gotten a nice bump the next year but since she didn't she too got nothing for COLA increase for 2023. Actually there is a carve out for partial COLA's so that it doesn't follow the regular retirees for quarters 1-3 but what you state still holds true for those of us who were medically retired in the 4th quarter. See explanation and evidence in the post below.
 
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Just to follow up, after medically retiring in November 2022 I was indeed given ZERO COLA for 2023. Turns out (as several on this board speculated would be the case) DFAS strictly follows the quarterly partial COLA formulas just like for regular retirees. DFAS's website linked above is clearly wrong on this and ought to fixed so as to not put out misleading information.

Those of us who retired in 2022, especially the 4th quarter, got royally screwed. We didn't get any of the big COLA for 2023 but we also didn't get any of the big pay raises starting this year either. Ironically, the stated reason for partial COLAs is to prevent servicemembers from getting the double benefit of big inflation-adjusted pay raises their last year in service and then also getting a COLA on top of that. That made sense back in 1982 when the rules were put in place, especially since retirements were based on Final Pay, not just High-3. But it doesn't make sense now.

Application of that rule, especially to those of us who retired in late 2022, actually results in the servicemember getting NEITHER the benefit of the COLA NOR the benefit of the large milpay raises that started this year. Funny how it always seems to result that benefits the government not having to pay as much. But that's the reality.

It would be great if those in charge realized the injustice and enacted new rules to address this injustice and retroactively awarded the 2023 COLA to those of us who retired in 2022, but I won't hold my breath.

I'm just glad to be out after 22+ mostly enjoyable years in the Army. It's been an adjustment to being just a regular schmo civilian, but I wouldn't want to go back. Time to move on to new adventures. Good luck to all on this forum.
There is a medical retirement exception for those who retire in 1st quarter - 3rd quarter. They get final pay which would have been 7%. See DFAS website here: Retirement Cost of Living Adjustments

Quoted here: "The amount of this first "partial COLA" is calculated differently for the Final Pay and High-36 retirement plans. The partial COLA for REDUX plan retirees is based on the High-36, with a further prorated deduction. The first partial COLA under the Disability retirement plan is the same as for the Final Pay retirement plan."

Link to COLA Memo here: https://militarypay.defense.gov/Por... Memo Signed.pdf?ver=oczFRe1_mvwm1j-RqRCUnA==
 
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