Spending for military retirement pay and survivors’ annuities will rise by more than 30 percent over the next decade, CBO projects. About two-thirds of that growth will occur because those benefits are adjusted annually for inflation. The remaining growth will stem from increases in the initial benefit for new retirees; that benefit depends on service members’ basic pay during their active service, which typically grows faster than inflation. In contrast, CBO projects that the number of military retirees and their survivors will remain essentially unchanged in the coming decade, so the number of people collecting benefits will not contribute to the growth of spending. (Annual spending amounts shown here have been adjusted to account for shifts in the timing of payments.)
For more detail on CBO’s most recent projections for the Military Retirement Trust Fund, see Military Retirement—February 2013 Baseline.
Matt Schmit is an analyst in CBO’s Budget Analysis Division.