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Greatest Risk to Military Retirements: Changing the Rules After the Game Begins

Despite discussions in military circles of fundamental changes to the military retirement system, the Senate is actually working towards changing the way the government adjusts retirement pay to account for inflation. Currently the government uses a pre-defined basket of commodities to gauge the growth of inflation. This basket is called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), and has been in use in the United States since 1975. Instead of sticking with the current CPI-W adjustment, the Senate has endorsed a plan to use a new method, called the “chained-CPI.” This method uses economic theory that says that consumers will change their buying behavior to find substitutes for higher priced products, thus reducing demand for other more expensive alternatives. The index adjusts to account for this change in behavior instead of remaining tied to the fixed basket.

By using this method, Military Times reporter Stephen Losey reports that the military retirees COLA will go down by about a quarter-percent annually, which will result in thousands of dollars less over the life of the retiree and his or her spouse if they elect to receive the Survivor Benefit Plan.

The issue, as always, is fairness and a commitment by the United States to stand by the agreements that they made with military members who served proudly for more than twenty years. We have paid our income taxes along the way, and will continue to do so, but the government should consider paying its debts to its military service members before paying foreign nations that we may one day be forced to engage in combat.

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