The 2027 COLA Is 3.6%: September CPI-W Closes the Formula for Retired Pay, SBP and VA Compensation

The Bureau of Labor Statistics published the September Consumer Price Index on October 14, 2026. That release closes the formula: July, August and September are the three months that set next year's cost of living adjustment for military retired pay, Survivor Benefit Plan annuities and VA compensation, and all three are now on the books. The September CPI-W came in at 330.654, and the third-quarter average measured against the 2025 base works out to 3.6%. The Social Security Administration announced the same 3.6% the same morning. The 2026 COLA was 2.8%.

How the COLA is actually set

Military retired pay is adjusted by statute, not by anyone's discretion. Under 10 U.S.C. § 1401a(b)(1) and (b)(2) the increase takes effect December 1 each year and equals the percentage by which the price index for the base quarter exceeds the base index, rounded to the nearest one tenth of one percent. Section 1401a(g)(2) defines the base quarter as the calendar quarter ending September 30, which is why July, August and September are the only three months that count. The index used is the CPI-W, the Consumer Price Index for Urban Wage Earners and Clerical Workers, BLS series CWUR0000SA0.

Two other payments ride on the same number. SBP annuities increase at the same time and by the same percentage under 10 U.S.C. § 1451(g)(1), and VA pension and Dependency and Indemnity Compensation are tied to the Social Security increase under 38 U.S.C. § 5312, which uses the same third-quarter comparison. VA disability compensation is the exception, covered further down.

The method is easy to check, because it reproduces the COLA being paid right now. The Q3 2025 CPI-W average was 317.265 against a Q3 2024 average of 308.729, a rise of 2.76%, which rounds to the 2.8% COLA effective December 1, 2025. Same formula, one year forward, with all three months published:

What September did

When this guide was first published on September 15, the ten-year range of August-to-September moves put the answer between 3.4% and 3.6%, centered on 3.5%. September rose 0.66% from August, a touch above the largest move of the previous ten years (+0.62% in 2017), and that pushed the unrounded figure to 3.619%, the top of the range. Had September merely matched August, the COLA would have been 3.4%. One month moved the answer by two tenths of a point, worth about $6.20 a month to a 20-year E-7 on the estimate below.

What it is worth, by retired grade

A percentage is not a plan, so here is the money. The rows below use the site's High-3 method, the same one behind the High-3 calculator: the 2026 basic pay table at the retiring grade, averaged across the final three years of service, times 2.5% per year served. Read it for scale, not as your own figure. A real high-3 averages your actual last 36 months, which for a 2026 retirement includes the 2024 and 2025 pay tables and comes out lower.

The gap between this year and next is real money: 3.6% is about 29% more than the 2.8% paid for 2026. For a 20-year E-7 that is $111.60 a month, or $1,339.20 over the year. If you are still serving, the BRS calculator applies COLA growth to the pension side of that comparison.

The VA side still needs a bill, and the bill has not moved

This is the part that gets reported as automatic and is not. VA pension and DIC follow the Social Security increase by permanent statute under 38 U.S.C. § 5312. VA disability compensation rates under 38 U.S.C. § 1114 do not: the automatic adjustment in 38 U.S.C. § 1104(a) covered fiscal years 1998 through 2013, and since then Congress has passed a separate Veterans' Compensation Cost-of-Living Adjustment Act nearly every year to carry the increase across.

For 2027 that bill exists in both chambers and neither version has passed. S. 4487 was introduced May 11, 2026, read twice and referred to the Senate Committee on Veterans' Affairs, with no action since; we re-read its record on Congress.gov on October 14, 2026. Its identical House companion, H.R. 8552, was forwarded by subcommittee to the full committee by voice vote on June 30, 2026, and has not moved since. Last year's version, S. 2392, became Public Law 119-42 on November 25, 2025, six days before the December 1 effective date it authorized.

Applying 3.6% to the rates now in effect for a veteran with no dependents (VA rates effective December 1, 2025): 100% goes from $3,938.58 to $4,080.37; 70% from $1,808.45 to $1,873.55; 50% from $1,132.90 to $1,173.68; 30% from $552.47 to $572.36. Every rating, alone and with a spouse, is in the 2027 VA disability rates guide, and the VA disability calculator computes dependents at current rates.

When the larger payment actually lands

The effective date is December 1, 2026, which means the December 2026 entitlement is the first one paid at the new rate. DFAS publishes the dates, and the two audiences do not get paid on the same day:

• Retirees: the December 2026 entitlement is scheduled for December 31, 2026. Retired pay is due the first of the month, and when the first is a weekend or holiday it moves to the last business day of the prior month. January 1, 2027 is a holiday.
• SBP annuitants: the same entitlement is scheduled for January 4, 2027, because annuitants move forward to the first business day instead.
• VA disability compensation: once authorized, the increase is effective December 1, 2026 and appears in the payment covering that month. Check your own annuity figure in the SBP calculator rather than from a projection.

One group gets a full point less

Members who entered service after July 31, 1986 and elected the CSB/REDUX career status bonus have their COLA reduced by one full percentage point under 10 U.S.C. § 1401a(b)(3). A 3.6% COLA pays them 2.6%. On the E-7 row above that is $80.60 a month instead of $111.60, and the gap compounds for the rest of the retirement. High-3 and Blended Retirement System retirees receive the full COLA at every age.

The bottom line

All three months that decide the 2027 COLA are published: July CPI-W at 327.104, August at 328.481 and September at 330.654, a third-quarter average of 328.746 against a 2025 base of 317.265. That is a 3.619% increase, rounded by statute to 3.6%, the same figure Social Security announced on October 14, 2026. It is worth $36.00 a month per $1,000.00 of gross retired pay, from $79.59 for a 20-year E-5 to $208.89 for a 26-year E-9, effective December 1 and paid to retirees on December 31, 2026. Retired pay and SBP adjust automatically by statute. VA disability compensation still needs a bill that has not moved since June. Rates cited are the FY2026 and calendar-2026 figures currently in effect; always verify with your finance office or the VA before making financial decisions.