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Military Retirement Pay Increase 2023: All You Need to Know

Written by Everett Bledsoe / Fact checked by Brain Bartell

military retirement pay increase 2023

Military retirees and disabled veterans will receive an 8.7% COLA increase and disability increase in 2023, the highest since 1981. This is great news for retirees to manage rising living costs.

Retirement pay is a key benefit of military service, where retired military personnel get yearly COLAs. These adjustments protect retirement income from inflation based on CPI changes.

Let’s look more closely at the military retirement pay increase 2023 to see what this means for veterans’ futures.

What is Military Retirement Pay?


Military retirement pay is a monthly pension paid to retired United States Armed Forces members. This pay is a well-deserved reward for their years of service to the country.

A veteran’s retirement benefit is calculated using several factors. These factors include years of service, rank, and pay grade.

If you are in the service, each of the elements mentioned plays a role in determining your military retirement pay raise. Knowing every relevant detail will help you to plan accordingly for your future.

Overview of the 2023 Military Retirement Pay Increase

Retired military and disabled veterans received an 8.7% increase in their monthly pensions this 2023. This is the biggest adjustment since 1981. The Social Security Administration announced that VA cost of living increases back in October last year.

1. Retired Military Pay Raise


Since January 2023, military retirees received a $87 increase per $1,000 monthly check. Meanwhile, military retirees who chose the CSB/Redux retirement plan after August 1, 1986, will receive a 1% reduction in COLA increases. Thus, they get a smaller increase of $77 per $1,000.

Survivors receiving SBP (Survivor Benefit Plan) payments will get the same pay increase as retirees. Those who retire in 2022 will receive a slightly lower COLA.

Note that the allocated amount may vary based on the entry date and chosen retirement plan.

2. VA Benefits Increase for Disabled Retirees

Since 2023 started, disabled veterans have received higher compensation payments. The VA assigns a disability rating between 0 and 100% to determine the benefit amount. The higher the rating, the better the benefit.

Meanwhile, surviving spouses of handicapped veterans are also now eligible for an 8.7 percent raise in Dependency and Indemnity Compensation (DIC) payments.

3. Impact on Different Types of Military Retirees

Military retirement pay increased significantly this 2023, marking the biggest increase in two decades.

Disabled veterans and retired military members received an $87 increase for every $1,000 of their monthly pension. However, the impact of the increase varies by military retiree type.


  • Long-serving retirees (more than 29 years of service) get the biggest monthly payment boost. As an example, a retiree with a $2,500 monthly pension will receive an extra $217.
  • Retirees with less than 20 years of service receive a smaller monthly payment increase. For example, if a retiree gets a $2,000 monthly pension, he will receive an extra $174.
  • Retirees on disability receive a bigger monthly payment increase. For example, a retiree with a $1,500 pension and $500 disability payment will get a $130 increase.

The 2023 veterans’ pay increase brings relief to struggling military retirees. The increase aims to ease the impact of inflation and support the well-being of retired military personnel.

Analysis of the 2023 Retired Military Pay Increase (Reasons and Why)

The goal of the increase is to assist military retirees and veterans in meeting the challenges posed by rising costs of living. The raise applies to all types of military retirement income, such as pensions, disability pay, and SBP annuities.

The following are some of the reasons for the 2023 rise in military retirement pay:

  • Inflation: The 8.6 percent jump in the CPI seen in May 2022 was the largest since 1981. The result has been a considerable increase in the cost of living over the past year.
  • Military pay has not increased at the same rate as the cost of living in recent years. This means that the purchasing power of retired military personnel and veterans has decreased.
  • A COLA increase helps military retirees sustain their lifestyles. The retired military pay raise helps veterans with rising living costs. It ensures a stable standard of living and prevents financial difficulties.

For military retirees and veterans, the retirement benefit hike in 2023 is welcome news. It’s a great way to assist them in keeping up with the rising cost of living due to inflation.

How the New Retired Military Pay Increase 2923 is Calculated


The following is the calculation used to determine the 2023 Military Retirement Pay Increase:

COLA = (CPI-W – CPI-W from 3 years ago) * 100


  • COLA is the Cost of Living Adjustment
  • CPI-W is Consumer Price Index for Urban Wage Earners and Clerical Workers
  • 100 is the scaling factor

CPI-W measures price changes for urban consumer goods and services. The Bureau of Labor Statistics (BLS) calculates CPI-W.

For 2023, COLA is 8.7%. Retired military and disabled veterans will receive an $87 increase for every $1,000 of their monthly pension.

Who is Eligible for the 2023 Retired Military Pay Increase?

The 2023 Military Retirement Pay Increase will benefit retired service members and disabled veterans. Retirement benefit increases are also passed along to beneficiaries of the Survivor Benefit Plan.

How to Apply for the 2023 Retired Military Pay Raise?

The 2023 Military Retirement Pay Raise is automatic and no action is required on your part. Your monthly retirement benefit will be increased by the new amount beginning in January 2023. The adjustment will automatically reflect on your pay.

Practical Resources for Military Retirees


1. Calculate Your Retirement Pay

Your retired pay is calculated by the Department of Defense based on your service term, disability percentage, service entering year, and retirement type.

  • Compute your Retired Pay

You can get an estimate of your retirement benefit by simply multiplying your pay base as a retired officer by a service percentage:

Retired Pay Base x Service Percent Multiplier = Gross Retired Pay

Where, Service Percent Multiplier is 2.5% x your active years of service. For example, 2.5 x 20 years of service is 50%.

Then, whatever result you get, that’s your gross retirement pay. You may then round the result to the closest dollar.

  • Get Your Retired Pay Base

RetiredPay Base depends on your retirement type, namely:

Final Pay: If you joined the military or the reserves before September 8, 1980, your retirement benefits will be calculated using your last basic pay.

High-3: If you enlisted after September 7, 1980, the average of your top three tears of basic pay will be your retired pay base.

Your retirement base pay will be equal to the mean of your monthly basic pay if your service is less than three years. For both instances, refer to these pay charts for easy reference.

Please note that the numbers provided by the DoD calculator are only an estimate. Retirement benefits are calculated using a complex formula that varies from case to case.

2. Tips for Maximizing Your Retirement Benefits

To get the most out of your military retirement, you should plan and study the retirement system. Please consider the following tips:

  • To be eligible for better retirement benefits, you must have served for at least 20 years.
  • To optimize your retirement savings, contribute to the Thrift Savings Plan (TSP).
  • Consider the Survivor Benefit Plan (SBP), which provides a monthly payout to your qualifying survivors in the event of your death.
  • Understand your alternatives for healthcare after retirement, including TRICARE benefits, the Continued Health Care Benefit Program (CHCBP), and employer-sponsored programs.
  • Consult a financial counselor or military personnel office for customized advice geared to your specific situation.


The military retirement pay raise for 2023 is truly significant. The increase allows veterans to keep pace with escalating living expenses.

In fact, the 8.7 percent military retirement pay increase 2023 adds $87.12 per month to a $1,000 pension. Veterans will be able to better afford higher expenses for necessities like food, housing, and healthcare.

The increase in compensation is not only a token of gratitude for their service. This is also an indication of the government’s dedication to the veterans’ welfare.

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