Military Overseas Cost of Living Allowance (COLA)
When considering military service, one realization you much be aware of is that you could be stationed anywhere on the planet to support the mission of the Department of Defense. No military deployment or overseas duty station is permanent, in fact, no duty station is permanent for the military member. The higher cost of living and remoteness or hardship that can sometimes accompany a military member is measured monetarily each month through the Cost of Living Allowance. This is a different pay/allowance than Basic Allowance for Housing which accounts for a significant part of the rent of mortgage of the military member when at a permanent duty station - which also varies from city to city.
In addition to salary, pays, and bonuses, the military provides several allowances to offset the cost of living, housing, For instance, soldiers who live on an Army base in the barracks receive military housing and meals for free. However, if your duty station/situation requires for you to live off base, the military provides allowances for your housing and meals, clothing, travel, moving, and family separation in some locations and the cost of living in regions around the world.
Cost of Living Allowance
The Cost of Living Allowance is the military's answer to its members being stationed in various places throughout the world where the cost of living is higher. To adjust for higher costs on living within the Continental United States and aboard the Department of Defense has a system based on average pay and costs of housing for the local population. This is known as COLA - Cost of Living Allowance.
Depending upon where you are stationed, how many years of service, rank, and if you have dependents or not, the COLA will vary greatly. Here is the DoD Cola Calculator Link.
The Overseas Cost of Living Allowance (OCOLA) is a non-taxable supplement designed to offset the higher overseas prices of non-housing goods and services. The average supplement is $300 per month. The basic measurement is a comparison of CONUS shopping behavior and the aggregate shopping behavior at each overseas location. Military members are stationed at over 600 different locations overseas and this variable cost of living allowance helps monetarily when the military member/family has to live among the population where the military presence is located.
(including Alaska and Hawaii).
Overseas COLA is calculated by a complex economic database and spending habits of Americans at home with comparisons of prices of goods and services overseas with the prices for similar goods and services in abroad. The result of this comparison is an index that reflects a cost of living. The amount of money reflects the average price of goods and services at both home and abroad. If the prices of either fluctuate, it will affect the cost of living allowance depending on the fluctuation. Therefore, the COLA is not a fixed amount.
Currency values can also affect the cost of living allowance. As the dollar strengthens or weakens worldwide compared to the currency of the military member's duty station, the COLA can also change. These COLA adjustments are either immediate or made incrementally, depending on whether the payment will increase or decrease. For COLA changes based on data, increases are made immediately, but COLA reductions based on data are phased per month to help minimize the impact. COLA changes based on currency are effective immediately for both increases and decreases to COLA.
The Cost of Living Allowance does not reimburse expenses but rather increases the paycheck of the military members every two weeks and this will offset higher overseas prices of goods and services. It does not compensate for remoteness, hardship, or non-availability of goods and services as some duty stations remote and without many of the more common goods and services an American service member is accustomed to.
For current COLA rates at any given overseas location, see the Department of Defense's Overseas COLA Calculator.
Other Military Pays and Allowances
Some other pays and allowances received by the military member:
- The Basic Allowance for Subsistence is used to pay for food typically a few hundred dollars a month.
- The Basic Allowance for Housing offsets the cost of housing when members live off base varies from city to city.
- A Clothing Allowance pays for replacement of uniforms and uniform decorations. For jobs that require civilian clothes, the military provides a civilian clothing allowance.
- The Moving Allowance pays for the transportation of household goods during a permanent change-of-station (PCS) move.
- Temporary Lodging Allowance covers the cost of temporary housing during a PCS move.
- Soldiers assigned or deployed to locations where the military will not move families receive a Family Separation Allowance.