In a move that will impact millions of veterans and military retirees, the U.S. government has announced a 2.5% Cost of Living Adjustment (COLA) for 2025.
This increase, while modest compared to recent years, will provide a welcome boost to the monthly paychecks of those who have served our nation.
Understanding the 2025 COLA
The 2.5% COLA for 2025 is based on the Consumer Price Index (CPI), a measure of inflation calculated by the Department of Labor. While this figure may seem lower than the 3.2% increase in 2024 or the substantial 8.7% bump in 2023, it remains close to the decade’s average of 2.6%.
Impact on Military Retirees
For military retirees, the 2.5% increase translates to an additional $25 for every $1,000 of monthly pension.
However, those who opted for the Career Status Bonus (CSB/Redux retirement plan) will see a slightly smaller increase of $15 per $1,000.
Changes for Disabled Veterans
Disabled veterans will also benefit from this COLA. The increase will result in an extra $4.28 per month for those with a 10% disability rating, while those with a 100% rating and no dependents will see their checks grow by $93.45.
Broader Impact of the 2025 COLA
The 2.5% increase isn’t limited to military retirees and disabled veterans. It will also affect:
- Survivors receiving Survivor Benefit Plan payments
- Civil Service retirees
- Social Security recipients
For Social Security beneficiaries, this translates to an average increase of about $50 per month.
Factors Influencing the 2025 COLA
The COLA is determined annually based on economic factors:
- Inflation: The primary driver of COLA increases
- Consumer Price Index: Used to measure the cost of goods and services
- Previous Year Comparison: The CPI is compared to the previous year to determine if an increase is warranted
It’s important to note that if there’s no increase in the CPI, there’s no COLA, but benefits don’t decrease.