Recipients of social security and veterans benefits could expect a cost-of-living adjustment of less than three percent in 2025, according to an independent watchdog group. This would be the lowest level since before the Covid-19 pandemic.

Officials of the Senior Citizens League – an affiliate of TREA: The Enlisted Association – last week released their latest projections for Social Security COLA rates for next year, expecting the amount to be less than 2.6%.

In a statement, the group said this figure was “significantly lower” than the 3.2% adjustment implemented in early 2024. The cost-of-living adjustment rate had not fallen below 3% since early 2020, when it was 1.3%.

Social Security agencies typically release their cost-of-living calculations for the upcoming calendar year in early October.

In recent years, estimates released by the Senior Citizens League in late summer have been only one percentage point below the official adjustment mark.

RELATED

The Social Security announcement is of particular interest to veterans because Congress annually ties increases in veterans’ payments to the Social Security Administration’s calculations.

About 5 million veterans and 2 million military retirees receive benefits from the Department of Veterans Affairs each month. The COLA increase would apply to disability compensation payments, clothing allowances, care and compensation benefits, and some other Veterans Affairs assistance programs.

For a veteran receiving $1,500 a month in disability payments, a 2.6 percent cost-of-living adjustment would mean an additional $39 each month. In 2023, that number would rise to 8.7 percent, or about $130 a month for the same veteran.

Social Security officials calculate the annual cost-of-living adjustment based on the Consumer Price Index for urban wage earners and office workers. If these workers do not see an annual pay increase, federal planners may decide that no adjustment is necessary.

However, representatives of the Senior Citizens League said the government’s “failure to bring inflation back to pre-pandemic levels” has put additional pressure on seniors and veterans’ benefit recipients, making the size of the adjustment critical to the financial health of many households.