Military retired pay rises 3.6% on December 1, the same cost-of-living adjustment Social Security announced this month. For a retiree with no VA compensation, the math is a one-liner: multiply by 1.036, round down to the dollar, see it on December 31. For the roughly half of military retirees who also receive VA disability compensation, the December statement is where four different rules collide, and every January we hear from retirees who think DFAS made a mistake.
Most of the time it didn't. Four rules are moving at once.
Rule one: retired pay rises automatically. VA compensation doesn't.
Retired pay is adjusted by permanent law, so the 3.6% is certain. VA compensation gets the same percentage only when Congress passes the annual Veterans' COLA Act, which it hadn't done as of this writing, with the House out until after the election. If the bill passes before December 1, both checks rise together. If it passes later, the VA raise typically comes through retroactive to December 1, which means a month or two where your retired pay has gone up and your VA check hasn't. That's not an error. It's a sequencing problem, and it reverses when the VA catches up.
Rule two: the waiver moves with VA compensation, not with retired pay
If you receive both, federal law requires you to waive retired pay dollar for dollar in the amount of your VA compensation. The waiver is why a retiree's gross retired pay and net retired pay are different numbers, and it's the part people forget when they do COLA math.
When your VA compensation rises 3.6%, the waiver rises by the same dollar amount. So on the retired-pay side, your gross goes up 3.6% and your waiver goes up 3.6% of a smaller number, and the net change depends on which of the next two rules applies to you.
Rule three: CRDP gives most of it back, but not for everyone
Concurrent Retirement and Disability Pay restores the waived retired pay for retirees with at least 20 years of service and a VA rating of 50% or higher. If that's you, the waiver is bookkeeping: the retired pay comes back through CRDP, the VA compensation arrives separately, and both grew 3.6%. Your combined income rises by the full COLA.
If you're under 50%, there's no CRDP. The waiver comes out of your check, and when VA compensation rises, your net retired pay falls by the same amount. Your total income still rises, because the VA check grew, but the retired-pay statement alone shows a decrease. That's the January phone call.
If you're a Chapter 61 medical retiree with fewer than 20 years, there's no CRDP either, which is
the whole Star Act fight. And if you're a Chapter 61 retiree with 20 or more years, CRDP restores only the longevity portion of your retired pay, not the disability portion, so your statement sits somewhere between the two cases above.
Rule four: CRSC is its own calculation
Combat-Related Special Compensation replaces waived retired pay attributable to combat-related disabilities, tax-free, and it's recalculated whenever either your retired pay or your VA compensation changes. A COLA is both. CRSC is capped at the lesser of the retired pay you waived and the VA compensation for the combat-related conditions, so when those two numbers move by different amounts, your CRSC can move by an amount that isn't 3.6% of anything. If your CRSC dropped in January and nothing else changed, the cap is usually the reason.
Two court rulings this year changed who qualifies and how far back, but not this arithmetic.
The tax effect nobody puts on the statement
VA compensation is tax-free. Retired pay isn't. Every dollar of the waiver converts taxable income into nontaxable income, which means a retiree under 50% whose net retired pay dropped in January may come out ahead in April. It's worth running before you decide the VA raise cost you money.
The SBP line
If you elected the Survivor Benefit Plan, your premium is a percentage of the base amount you chose, and the base amount gets the COLA too. The premium rises in December. So does the annuity your survivor would receive, which is the point. A retiree reading the statement line by line will see the premium go up and may not connect it to the raise.
What to do with the December statement
Open the DFAS retiree account statement in myPay the last week of December and check four lines against last year: gross retired pay (should be up 3.6%), VA waiver (should match your new VA rate once the COLA Act passes, or your old rate until it does), CRDP or CRSC (should track the waiver), and SBP premium (should be up 3.6%). If a line doesn't move the way the rules above say it should, that's a question for DFAS first. If the VA rate on the waiver line doesn't match the rate on your VA award letter, that's a question for the VA, and sometimes for us.
Where we come in
We're a veteran-led firm, and military pay and retirement questions, especially CRSC eligibility, Chapter 61 retirement status, and the records corrections underneath them, are part of what we do. If the statement doesn't match the rating, or the rating doesn't match the service,
reach out.
