Military Retirement and VA Benefit Payments Won't Increase In 2016

Military retirees and many people receiving VA benefits will see no increase in their payments for 2016.

Military and federal worker retirement pay, VA disability compensation, VA pension benefits, and VA Dependents' Indemnity Compensation (DIC) benefits will all remain at the current level for the coming year mainly because of the large decrease in the price of a gallon of gas.

These benefits all have annual Cost-Of-Living or COLA adjustments that are tied to the Social Security cost-of-living adjustment. The Social Security benefit will also not change for 2016.

Social Security benefits are adjusted each year to take into account the rate of inflation, this is known as the Cost Of Living Adjustment or COLA. Social Security cost of living adjustments are tied, in turn, to the Consumer Price Index, which is measured by the Bureau of Labor Statistics.

The Consumer Price Index measures the price on a "representative market basket" of over 200 categories of consumer goods and services. This index measures what the average American consumer pays for thousands of everyday goods and services ranging from breakfast cereal to computer software. The Consumer Price Index actually declined 0.4% from September 2014 to September 2015, largely due to the decrease in gasoline prices which dropped 30% for the same time period.

While this is good news for consumers, it isn't good for retirees and many VA benefit recipients. If the prices on the "representative market basket" rise over the course of a year - benefits rise; if they stay more or less flat, so do benefits. If prices decrease, as they did last year, the government has regulations in place that prevent Social Security, and all benefits tied to it, from going down but there will be no increase.

This is only the third time in 40 years that the Social Security Administration has not increased its payments, the last time was in 2010.