After a slow start to the fiscal year, the index which will set the cost-of-living adjustment (COLA) for military retirees, Social Security recipients, and others has risen sharply in recent months, and now outpaces last year’s inflation track.

[RELATED: MOAA’s COLA Watch]

Should this trend continue, retirees could expect a higher adjustment than the 3.2% received in 2024. However, one recent estimate puts the 2025 figure at 2.6%, well short of the last three adjustments – 3.2%, 8.7%, and 5.9% – but not far from the average adjustment over the last 10 years (2.75%).

MOAA tracks these figures to offer a glimpse of future finances for members, many of whom are COLA recipients from a variety of sources (DoD, VA, and Social Security benefits all track with the increase, although VA benefits are not covered automatically). We also watch beyond the index and into the halls of Congress, where these increases have faced threats in past years.

COLA Concerns

This 2021 piece at MOAA.org offers background on some of the proposals Congress has made or considered that would reduce or eliminate COLA from military retiree benefits. There are no similar proposals in the works at present, but rising debt and tightening budgets may lead some legislators to seek new funding sources.

These could come in the form of legislative changes affecting retiree pay – some examples from past years are here – or in plans to change how the benefit is calculated: For instance, a Congressional Budget Office report offering deficit-reduction options includes a change to the Consumer Price Index used to determine COLA that would lead to more than $250 billion in savings over a decade.

It’s a big number, but it would come at the expense of all who receive the annual COLA adjustment – to include military retirees and VA disability recipients on fixed incomes.

[RELATED: MOAA.org/Finance]

MOAA has monitored these proposals for decades, forming coalitions with fellow advocacy and veterans groups to ensure your benefits remain safe from all threats, including both inflation and legislative interference. We work to ensure lawmakers realize the sacrifices made by those who’ve earned these benefits – and how COLA changes, even seemingly minor ones, can have major impacts on individual budgets that compound over the years and decades.

You can keep up with all of MOAA’s work on this topic by visiting our COLA Watch page, and learn how you can take part in ongoing advocacy efforts by registering for our Legislative Action Center.