Military advocates are still outraged, because the vast majority of veterans will still lose some pension benefits.
"That's probably the most egregious part of a very egregious provision," said Army Col. Michael Barron, who retired four years ago, after 30 years of service. He was deployed to Iraq during both wars and also faces a cut.
"We want them to remove the entire provision, not just one teeny component of it," said Barron, who is also deputy director of government relations for the Military Officers Association of America.
Most military retirees are a lot younger than private sector retirees. They enlist in their 20's and retire in their 40's. Very few stay on until they reach 62 -- those who may be lucky enough to escape major injuries at war, or rose to higher echelons in the military system.
When compounded, the 1 percentage point cut could result in much more than a 20% reduction in retiree pensions over 20 years.
The average cut in pension payouts, including compounding interest, for a retiring Army Sergeant first class, would be about $3,700 each year, according to the Military Officers Association of America. Over 20 years, the total losses could balloon to more than $80,000.
Military retirees continue to lobby hard to reinstate cost-of-living increases for all. They have the support of a key group of eight Senate Republicans.
The lawmakers might be able to repeal the military cuts in exchange for a deal with Democrats on extending jobless benefits extended for the long-term unemployed. For now, negotiations continue.
-- CNN's Lisa Desjardins contributed to this report.