This is a $124,000 article.
Today, the House of Representatives voted to take $124,000 out of my husband’s future retirement pay. I’m pretty sure that is the same amount it will cost us to send our two children to college. Since my husband recently hit the 20-year mark, we’ve been actively planning for the next phase of our lives. I can assure you that we’ve accounted for every penny in retirement. This is a major blow to our future.
Oh, don’t think it’s just my husband. Oh no, it’s your active duty spouse, too. It also affects those who have recently retired and all retired veterans under the age of 62. That pretty much covers most of the people I know. The House of Representatives voted today not to pay your family anywhere from $84,000 to $124,000 of retirement income that they promised you.
The Bipartisan Budget Control Act of 2013 offered up retirement pay of those currently serving and all retirees under age requirement. They are tinkering with cost of living allowance (COLA) that is built into your military members retirement pay.
A COLA is offered to retirees as a measure to keep up with inflation. Military retirees, like those living solely on Social Security, rely on a fixed income from their retirement. If the cost of living increases over twenty years, their fixed income stays the same.
For example, the average cost for gas in 1993 was $1.11 per gallon. Today, gas averages $3.74 per gallon. If you’re on a fixed income, this increase over a period of time eats away at a retiree’s ability to be self-supported. A retiree actually has less money in their pockets as time passes, when they need it the most. A COLA is a common formula put into place to allow retirees to keep up with the rise of inflation. It usually is a percentage matching the national inflation numbers.
Instead of the promised percentage rate for COLA, Congress wants to drop it by one percent. When I say promised, I mean they promised this cost of living allowance to your service member when they joined.
One percent doesn’t sound apocalyptic at first glace, but look closely at the numbers. According to Military Officers Association of America (MOAA), this cut affects all of service members and retiree’s today.
“The cuts will have a devastating and long-lasting impact. By age 62, retirees who serve a 20-year career would lose nearly 20 percent of their retired pay. An E-7 retiring at age 40 today would experience a loss of $83,000 in purchasing power – an O-5 would lose $124,000.