MilitarySpot.com

Serving the U.S. Army, Navy, Air Force, Marines, Coast Guard and National Guard

Follow MilitarySpot:
 
  • Home
  • Enlist
    • Join The Army
    • Join The Navy
    • Join The Air Force
    • Join The Marines
    • Join The Coast Guard
    • Join The National Guard
    • ASVAB
    • Army Physical Fitness Test
    • Military Draft
    • Prior Service Army Enlistment
  • Career
    • Join the Military
    • Jobs for Military and Civilians
    • Career Center
    • Prior Service Army Enlistment
    • Criminal Justice
  • Education
    • Online Schools
    • Spouse Education Benefits
    • GI Bill
    • Military Schools
    • Criminal Justice
  • Benefits
    • Army Benefits
    • Navy Benefits
    • Air Force Benefits
    • Marine Corps Benefits
    • National Guard Benefits
    • Coast Guard Benefits
    • Veteran Benefits
    • Basic Pay Rates
    • Allowances
    • Special & Incentive Pay
    • Military Spouse Education Benefits
    • VA Education Benefits
    • GI Bill
  • News
    • Headline News
  • Finance
    • Debt Relief
    • Military Pay Rates
    • Military Personal Loans
    • VA Loans
    • Military Star Card
    • Military MyPay
  • Spouses
    • School Finder
    • Scholarships & Grants
    • PCS, DITY, & Moving
    • Pay Rates
    • MyCAA
    • Education Benefits
  • Community
    • Military Games
    • Military Reunions
    • Classifieds
    • Photo Gallery
    • Buddy Finder
    • MilitarySpot Pinups
    • Military Bases
  • Resources
    • Military Alphabet
    • Military Reunions
    • Military Acronyms
    • Currency Converter
    • Military Tools
    • Ranks
    • Military Time
    • Military Tactics
    • Military Discounts
    • Military Games
    • Military Videos
    • Photo Gallery
    • Infographics
    • How To
  • Travel

Cost of Living Allowance (COLA)

*Cost of Living Adjustment for 2012*

* COLA update for 2010 *
A decrease in the Consumer Price Index means military retirees and annuitants will not receive a Cost of Living Adjustment increase in 2010. Also, Survivor Benefit Plan premiums, will not increase. The CPI, published by the Department of Labor, normally increases as a result of inflation, leading to a COLA increase. This year, however, the CPI decreased resulting in no change to COLA.

Overseas COLA Overview
The Overseas Cost of Living Allowance is a supplement designed to equalize purchasing power between members overseas and their CONUS-based counterparts. The basic measurement is a comparison of CONUS shopping behavior and the aggregate shopping behavior at each overseas location. It is paid to over 250,000 members at approximately 600 locations overseas, including Alaska and Hawaii. The current cost is approximately. $1.7 billion annually.

Two overseas surveys are conducted to determine overseas costs:

  • Living pattern survey (LPS): once every three years; samples all members with command-sponsored dependents assigned to each location, asks which local (off-base) stores they use, and percentage of market basket items purchased from on-base and off-base facilities.
  • Market basket survey – Retail Price Schedule (RPS): annually at about 200 locations, collects prices for approximately 120 goods and services (normally 6-9 prices each) at sources identified in the LPS. Locations not surveyed get COLA based on reporting locations with similar purchasing advantages (similar time and distance from U.S. supported facilities).

CONUS surveys used to determine U.S. base prices:

  • Living pattern survey (LPS): conducted approximately every 3 years, randomly selected 5000 CONUS based members to send questionnaires.
  • Market basket price surveys:updates received quarterly from AAFES, DECA, Bureau of Labor Statistics (BLS), State Department and local market sources.
  • Weighting for U.S. prices: every two years; measures importance of each of the 120 items in service member’s family budget. BLS reports special tabulation of Service families who reported.
  • Consumer Expenditure Survey (CES): The CES details how members allocate their disposable income across all the COLA types of goods and services.

Computation of COLA index:

  • Weighted average cost of each market basket item is determined (off-base percentage times off-base price plus on-base percentage times on-base price). Same method is used to determine the CONUS weighted average cost. Overseas cost for each market basket item is compared to CONUS cost for the same item to produce an index for each item.
  • Indexes are weighted individually and aggregated and summarized for a final location COLA index (an index of 120 means overseas location is 20 percent more expensive than the average U.S. location).

Changes in exchange rates (where appropriate) are applied to that portion of COLA index that reflects:

  • local currency purchases.
  • Exchange rates are reviewed at least twice per month

Payment of COLA is based on the member’s Regular Military Compensation (RMC) and their spendable income:

  • RMC includes basic pay, BAS, an average BAH, and the tax advantage updated with each military pay raise.
  • Estimate of income calculated by number of years of service and dependency status; updated with each pay increase.
  • Spendable income is derived from the BLS Consumer Expenditure Survey and represents the aggregate spending pattern of CONUS families varying by income level and family size.

Spending for food consumed at home, food consumed away from home, clothing, personal care, tobacco and alcohol, car purchase, personal care, household operations, transportation, recreation, medical care, and telephone are included in COLA.

Spending for Federal income taxes, shelter expenses, gifts and contributions, life insurance, and savings are not part of COLA.

Data derived from the BLS data provides the aggregate amount families spend on COLA goods and services varying by income level and family size.

COLA is paid as percentage of spendable income. An index of 110 would result in an annual COLA of 10 percent of the spendable income corresponding to the member’s grade, years of service, and family size.

Current spendable income table updated October 2006, effective 1 January 2007 using BLS and CES data released in 2006.

Factors that affect COLA:

  • The COLA index is highly dependent on the proportion of shopping done in on-base facilities. In general, the higher the proportion of on-base shopping, the lower the index.
  • COLA is not intended to measure all of the differences in living overseas and living in CONUS. Cultural differences, climate differences, and inconvenience factors are more properly addressed through Hardship Duty Pay, Location.

Comments

Filed Under: Finance

  • News
  • Enlist
  • Education
  • Career
  • Finance

Barque Eagle to Visit Los Angeles, Aug. 1-3

JULY 30, 2025 — U.S. Coast Guard Barque Eagle (WIX 327) will visit Los Angeles, Aug. 1-3, 2025 and be open for public tours. Eagle will be moored at Berth 50/51 in San Pedro’s Outer Harbor, near 3600 Miner Street, San Pedro, CA, and will offer free public tours during the following dates and times: […]

Air National Guard Unveils New Bonus Program

MARCH 11, 2023 – On March 1st, the Air National Guard (ANG) launched a new bonus program to attract and retain personnel in critical specialties. The initiative offers significant financial rewards, with bonuses of up to $90,000 for eligible members, depending on their Air Force Specialty Codes (AFSCs). This strategic move aims to strengthen the […]

Education Benefits Make Stronger Service Members

APRIL 3, 2025 – Within the armed forces, a variety of educational benefits are available that allow service members to both improve themselves and make themselves more valuable to their service branch. One example is the Military Tuition Assistance Program. The program is available to enlisted personnel, officers and warrant officers in the Army, Navy, […]

Former Soldier Navigates Job Hunt

NOVEMBER 19, 2024 — In early 2017, Michael Quinn endured what he called the worst day in the worst year of his life. Quinn, then a sergeant major and 24-year Army Soldier, had weathered deployments in Iraq, Afghanistan and the Philippines. As an Army counter-intelligence agent, he said he learned to operate under grave circumstances […]

Financial Planning for Military Families

JUNE 25, 2025 – Have you ever wondered how military families manage their finances while dealing with deployments, relocations, and changing pay structures? Financial planning is a vital part of life for families who serve. With unique benefits, challenges, and lifestyle changes, military families must make smart financial decisions that protect their future and help […]

Recent Posts

  • Barque Eagle to Visit Los Angeles, Aug. 1-3
  • Navy STEM Camp Discovers Future Engineers
  • Coast Guard Joins Seattle’s Seafair and Fleet Week
  • USO Opens First Ship-Based Center
  • Navy and Marine Corps Kickoff Largest Global Training Event
MAINMENU



Powered by pixfuture


SITESEARCH
Can't find something? Try using our site search to dig through our entire site.



Still having trouble? Try the Advanced Search to refine your searches.
NEWSLETTERSUBSCRIBE
Sign Up To Receive Information, Updates and Special Officers from MilitarySpot.com.



Don't miss an issue! Jump in the Newsletter Archives to catch up on previous issues.
FOLLOWMILITARY SPOT

Follow us on Facebook, Twitter & StumbleUpon and more. Keep up with MilitarySpot.com news & updates. We also have an RSS Feed.

Advertise | About | Contact | Feedback | Unsubscribe | DMCA | Privacy Policy | Terms of Use
 
Copyright 2004-2025 Sun Key Publishing. All Rights Reserved.



 
This is not the official recruiting website of the U.S. Military. The site you are on is run by Sun Key Publishing, a private company, and is not endorsed by or affiliated with the U.S. Military.