Vietnam War Army Veterans during the Milwaukee Veterans Day Parade, 2023. (DVIDS)
The recent announcement of a 2.5% cost-of-living adjustment (COLA) for 2025 is set to bring modest increases in monthly payments for millions of Americans, including military retirees, disabled veterans, and federal retirees.
This, however, marks the lowest COLA since before the COVID-19 pandemic, a reflection of cooling inflation after several years of higher adjustments.
While not as generous as last year’s 3.2% or the whopping 8.7% boost in 2022, the 2.5% adjustment still aligns closely with the long-term average, which has hovered around 2.6% over the past decade.
Let’s break down what this means and how it will impact beneficiaries.
Understanding the 2025 COLA: What’s Changing?
The 2.5% adjustment announced by the Social Security Administration affects not just Social Security recipients but also military retirees, veterans receiving disability benefits, and other federal retirees.
The adjustment is based on the Consumer Price Index (CPI), which measures the cost of living by tracking the prices of goods and services like rent, groceries, and utilities.
If the CPI shows an increase, COLA follows suit to help benefits keep pace with inflation. While 2.5% may not seem like much compared to the last few years, it’s a reminder that inflation has cooled down somewhat, though everyday expenses continue to put a heavy strain on many.
For retired military members, the COLA translates to an extra $25 for every $1,000 in monthly pension payments. Survivors receiving benefits through programs like the Survivor Benefit Plan will see the same 2.5% increase.
The recent announcement of a 2.5% cost-of-living adjustment (COLA) for 2025 is set to bring modest increases in monthly payments for millions of Americans, including military retirees, disabled veterans, and federal retirees.
This, however, marks the lowest COLA since before the COVID-19 pandemic, a reflection of cooling inflation after several years of higher adjustments.
While not as generous as last year’s 3.2% or the whopping 8.7% boost in 2022, the 2.5% adjustment still aligns closely with the long-term average, which has hovered around 2.6% over the past decade.
Let’s break down what this means and how it will impact beneficiaries.
Understanding the 2025 COLA: What’s Changing?
The 2.5% adjustment announced by the Social Security Administration affects not just Social Security recipients but also military retirees, veterans receiving disability benefits, and other federal retirees.
The adjustment is based on the Consumer Price Index (CPI), which measures the cost of living by tracking the prices of goods and services like rent, groceries, and utilities.
If the CPI shows an increase, COLA follows suit to help benefits keep pace with inflation. While 2.5% may not seem like much compared to the last few years, it’s a reminder that inflation has cooled down somewhat, though everyday expenses continue to put a heavy strain on many.
For retired military members, the COLA translates to an extra $25 for every $1,000 in monthly pension payments. Survivors receiving benefits through programs like the Survivor Benefit Plan will see the same 2.5% increase.
However, not everyone’s increase will look the same.
Retirees who opted for the Career Status Bonus (CSB/Redux) plan will see a slightly reduced increase, amounting to about $15 for every $1,000 in benefits due to the program’s adjusted COLA formula.
Additionally, those who retired in 2024 will have a prorated COLA based on when they retired during the year.
Military retirees and disabled veterans will see a 2.5% increase in their monthly payments for 2025, as a result of the annual Cost of Living Adjustment (COLA) linked to inflation.
— National Veterans Memorial and Museum (@NationalVMM) October 16, 2024
A Different Story for Active-Duty Personnel
While retirees and veterans see their COLA tied to inflation, active-duty military personnel have a different pay adjustment process.
For 2025, service members are set to receive at least a 4.5% pay increase, as proposed in President Biden’s defense budget. This increase is part of the annual budget cycle rather than being linked directly to inflation rates.
It’s a welcome boost for those in uniform, with additional negotiations potentially raising the pay for lower enlisted ranks even higher.
For instance, proposals on the table could mean increases up to 19.5% for troops in the E-4 rank and below, depending on final decisions by Congress.
Veterans’ Benefits: A Closer Look at the Annual Approval
When it comes to benefits for veterans, there’s an annual step that might seem routine but is crucial: Congress must approve the inflation-based adjustments each year to ensure that payouts for disability, dependency benefits, and other veteran-related assistance keep up with rising costs.
Last month, lawmakers did just that, clearing the way for the 2025 COLA to apply to veteran benefits.
The adjustment will affect disability compensation, clothing allowances, and Dependency and Indemnity Compensation (DIC) for survivors.
For example, a veteran with a 10% disability rating will see an increase of around $4.28 per month, while those rated at 100% could see an extra $93.45 in their monthly checks.
The Timing: When Will Beneficiaries See the Change?
For most recipients, the updated benefits will kick in starting January 2025, with some seeing the increase as early as their December payments.
Notifications about the changes will start arriving in mailboxes around early December, giving people time to plan for the adjustments.
The 2.5% bump may seem modest, but every little bit counts for the roughly 5 million veterans and 2 million military retirees who receive monthly benefits, not to mention the 68 million Americans on Social Security.
The increase aims to help them keep up with everyday expenses, though it may not fully cover rising costs, particularly in areas like healthcare and housing.
What Does This Mean for Beneficiaries?
For retirees and veterans, the COLA serves as a way to help their benefits maintain purchasing power in the face of inflation.
While it’s not a “raise” in the traditional sense—since it’s only meant to offset the higher cost of living—it still provides some financial relief.
However, it’s worth noting that the CPI used to determine the COLA may not perfectly capture the expenses older Americans face, especially with healthcare costs continuing to climb.
In fact, some advocates have argued for a different measure, the Consumer Price Index for the Elderly, which tends to run higher than the standard index used.
An automatic Social Security Cost-of-Living Adjustment of 2.5% was just announced.
You don’t have to do anything for it to take effect, so please be aware of any communications claiming otherwise.
Nonetheless, the COLA increase does bring some reassurance to beneficiaries. It’s a signal that benefits will continue to adapt, even if gradually, to economic realities.
And while the adjustment for military retirees and veterans is the same as for Social Security recipients, it’s backed by a separate annual approval process, ensuring that those who served the country are not left behind.
A Final Word
The 2.5% cost-of-living adjustment for 2025 may not be as eye-popping as the increases we’ve seen in recent years, but it’s a reflection of easing inflation and a reminder of the balancing act required to keep benefits in line with the economy.
With active-duty personnel looking forward to a more substantial raise and ongoing support for veterans and retirees, there is still reason to be optimistic.
The key takeaway is that while the COLA won’t make anyone rich, it’s an important tool for keeping pace with inflation and supporting those who’ve earned these benefits through years of service.
As we move into 2025, the slight increase may not solve every financial challenge, but it serves as a small acknowledgment of the sacrifices made by veterans and military retirees.
The path forward will likely involve continuing to refine how these adjustments are calculated, ensuring that those who’ve served get the support they need to keep up with the cost of living.
As someone who’s seen what happens when the truth is distorted, I know how unfair it feels when those who’ve sacrificed the most lose their voice. At SOFREP, our veteran journalists, who once fought for freedom, now fight to bring you unfiltered, real-world intel. But without your support, we risk losing this vital source of truth. By subscribing, you’re not just leveling the playing field—you’re standing with those who’ve already given so much, ensuring they continue to serve by delivering stories that matter. Every subscription means we can hire more veterans and keep their hard-earned knowledge in the fight. Don’t let their voices be silenced. Please consider subscribing now.
One team, one fight,
Brandon Webb former Navy SEAL, Bestselling Author and Editor-in-Chief
COMMENTS
There are
You must become a subscriber or login to view or post comments on this article.