Next year, veterans and people who get Social Security may see a small raise in their payments. It might be a letdown after bigger gains in the past few years.
In 2025, people who get direct deposits from Social Security or veterans’ benefits may not see a cost-of-living increase (COLA) of more than 3%. An independent watchdog group says this would be the lowest rise since before the COVID-19 pandemic.
Veterans will still get more money
The Senior Citizens League, which is part of TREA: The Enlisted Association, released their most recent prediction for the next year’s Social Security COLA rates last week. They think the change will be less than 2.6%.
The group made it clear in their release that this number is “substantially lower” than the 3.2% change that took effect at the beginning of 2024. Since early 2020, when it was only 1.3%, the cost-of-living increase rate has never been less than 3%.
Based on these predictions, the next year’s adjustment may not be enough for many receivers to keep up with rising costs.
Early in October of every year, Social Security officials announce their cost-of-living changes for the next year. A lot of people are looking forward to this news because it will have a direct effect on their finances.
Estimations by the Senior Citizens League
In the past few years, the Senior Citizens League’s estimates revealed in late summer have been very close to the official adjustment numbers, often within a percentage point. This level of clarity gives us a good idea of what to expect.
Impact on Veterans
The yearly Social Security report is especially important for veterans. This is because Congress depends on the Social Security Administration to figure out how much to raise veterans’ benefits.
Who Benefits?
The Department of Veterans Affairs sends monthly checks to about 5 million veterans and 2 million service retirees. The cost-of-living adjustment (COLA) raise affects a number of payments, such as
- Disability compensation
- Clothing allowances
- Dependency and indemnity benefits
- Other Veterans Affairs assistance programs
People who depend on these benefits need to understand these changes because they have a direct effect on their financial plans and stability.
A cost-of-living adjustment of 2.6% would mean an extra $39 a month for a soldier who gets $1,500 a month in disability payments. In 2023, though, that number went up to 8.7%, which is about $130 a month for that same soldier.
Understanding Cost-of-Living Adjustments
The Consumer Price Index for Urban Wage Earners and Clerical Workers is used by Social Security officials to figure out the annual cost-of-living increase. If those workers don’t see an increase in their yearly pay, government planners can decide that nothing needs to be changed.
The Impact on Veterans and Seniors
But Senior Citizens League officials have pointed out that the government’s “failure to return inflation to pre-pandemic levels” has made things harder for seniors and soldiers who get benefits. Because of this, the size of the change is very important for many families’ financial health.
- Veterans: The increased adjustment helps veterans cope with rising living costs.
- Seniors: Many seniors rely heavily on these adjustments for their monthly budgets.