WELFARE
What will COLA improved payments for veterans look like in 2025?
The Cost of Living Adjustment (COLA) for all benefits will be smaller than the last two years due to the slowing rate of inflation.
Veterans can expect a modest Cost of Living Adjustment (COLA) increase in their benefits for 2025, with projections indicating a rise of around 2.5%. This adjustment, which will be reflected in payments starting 1 January, 2025, is designed to help veterans maintain their purchasing power amid inflationary pressures.
In 2023, Congress passed the Veterans Compensation COLA Act, requiring the Department of Veterans Affairs to apply the same cost-of-living increase as the Social Security Administration.
This means that veterans receiving disability compensation will see their monthly payments adjusted to reflect the COLA increase. For instance, a veteran currently receiving $1,500 per month could expect an additional $38 per month, depending on the final COLA percentage. Survivor’s pensions and Dependency and Indemnity Compensation (DIC) will be adjusted in line with the COLA increase.
However, those who joined the military on or after 1 August, 1986 and chose the Career Status Bonus (CSB/Redux retirement plan) will see a smaller increase. This plan offered retirees a lump sum coupled with smaller monthly payments. These veterans will therefore see the COLA increase reduced by one percentage point.
Why the COLA adjustment will be smaller in 2025
The projected COLA increase for 2025 is lower than the 3.2% increase seen in 2024, reflecting a cooling in inflationary pressures. The final COLA percentage will be determined based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and announced in October 2024. This adjustment ensures that veterans’ benefits continue to align with the cost of living, albeit at a slower growth rate compared to recent years.