Cost-of-living or COLA is extremely important for veterans to ensure their compensation keeps up with the pace of inflation. The percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers determines COLA. When the cost of living rises, COLA reflects these changes. The Social Security Administration typically announces the COLA for the next year in October. In this blog, we will be going over the predicted 2025 COLA adjustment and how veterans can be sure to maximize their VA benefits by understanding how they may change.
The 2025 Cost-of-Living Adjustment (COLA) Prediction
The 2025 COLA will be calculated using data from July, August, and September of 2024. For 2024, the COLA increase was 3.2%. Based on expert opinions, right now it is predicted that the 2025 increase will be somewhere around 2.5%, depending on the state of the economy in Septemeber. Keep in mind that this is just a prediction and may not be spot on.
Key Benefits Affected by COLA
The Cost-of-Living Adjustment (COLA) affects several key VA benefits. COLA can increase benefit payments to help veterans keep up with inflation. Here are some of the key benefits that are affected by COLA:
- Disability Compensation: Veterans with service-connected disabilities are eligible for this benefit. A COLA increase means veterans will see a rise in their monthly disability payments.
- Dependency and Indemnity Compensation (DIC): DIC is a benefit for surviving spouses, children, or parents of service members who died in the line of duty or from a service-related condition. A COLA adjustment will increase these payments.
- Special Monthly Compensation (SMC): SMC is an additional benefit for veterans with severe disabilities or the need for special care The COLA increase will also apply here, by increasing their total monthly compensation.
- VA Pension Benefits: These benefits are for low-income wartime veterans who are permanently disabled or aged 65 or older. The COLA adjustment will raise these pension payments.
Planning for Your Financial Future
The COLA adjustment can significantly increase your monthly income, so it is important to plan your finances accordingly. Here are some tips to manage your benefits and finances with the COLA adjustment:
- Coordinate with Other Income: Align your VA benefits with other sources of income, such as Social Security. Be aware of how the COLA adjustment might change your overall income.
- Manage Overlapping Benefits: If you receive benefits from multiple sources, understand how they interact and any potential tax implications. Consider consulting a financial advisor to optimize your benefits.
- Budget Effectively: Take the time to review your budget during this time, With the increase in benefits, plan how to use these funds to improve your financial situation.
Maximize Your VA Benefits
It is important for veterans to be aware of the COLA adjustment for 2025 so they can plan their finances accordingly. With COLA affecting many different forms of benefits, it is crucial to be aware of how it will impact your financial situation. Being proactive and reviewing the benefits you are receiving and potentially applying for more will help you maximize your benefits. Reach out to Veterans Law Attorneys for a consultation to help review your current benefits, file claims, and understand how to make the most of the 2025 COLA adjustment.
