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Retired military service members, it’s time to talk about your well-deserved 2025 military retiree pay raise!
Every year, the government adjusts retirement benefits to help you keep up with the rising costs of living, ensuring that you and your family are taken care of after serving our nation.
Whether you’re planning your budget or just curious about how this affects you, I’ve got you covered with the latest insights on what to expect for 2025.
Table of Contents
Summary of Key Points
- 2025 Military Retiree Pay Raise Expected at 2.5%: The 2025 military retiree pay raise is projected to be 2.5%, based on the Cost-of-Living Adjustment (COLA). However, this figure may change, as inflation is expected to slow, and the final COLA will be announced in mid-October 2024.
- COLA is Tied to the Consumer Price Index (CPI-W): The retiree pay raise is calculated annually based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index tracks inflation, so when prices increase, your retirement pay adjusts to ensure your purchasing power stays strong.
- Eligibility for the 2025 Military Retiree Pay Raise: All military retirees receiving retired pay, whether from active duty, the Reserves, or the National Guard, will benefit from the raise. Additionally, survivors receiving Survivor Benefit Plan (SBP) payments will also see an increase.
- VA Disability and Retired Military Pay: The COLA increase affects both military retired pay and VA disability compensation, with VA disability compensation being tax-free. This ensures that veterans receiving Concurrent Retirement and Disability Pay (CRDP) or Combat-Related Special Compensation (CRSC) will see the raise reflected in their overall compensation.
Will There Be a 2025 Military Retiree Pay Raise?
The latest 2025 COLA estimate that affects military retirement pay is 2.5%, but with inflation slowing faster than expected, with one month to go, the final adjustment could be even lower.
In mid-October 2024, the Social Security Administration (SSA) will announce the official 2025 Cost of Living Adjustment.
If inflationary pressures continue to ease in the U.S. economy, it’s possible that the 2025 COLA will be less than 2.5%.
How is the 2025 Military Retiree Pay Raise Calculated?
Each year, the military retiree pay raise is based on the Cost-of-Living Adjustment (COLA), which is tied directly to the Consumer Price Index (CPI-W).
The CPI for Urban Wage Earners and Clerical Workers (CPI-W) measures inflation and reflects changes in the prices of goods and services.
Simply put when prices go up, your retirement pay goes up too!
The formula also works in the opposite direction.
For 2025, the COLA increase is expected to reflect the recent trends in inflation, ensuring that your buying power remains strong.
The exact percentage of the raise will be determined in mid-October 2024, but current estimates are projecting a COLA increase of 2.5% for 2025.
This isn’t great news, but it’s better than nothing.
Who is Eligible for the 2025 Military Retirement Pay Increase?
The 2025 military retiree pay raise applies to those receiving military retired pay, including service members who retired from active duty, the reserves, or the National Guard.
Additionally, survivors receiving Survivor Benefit Plan (SBP) payments will also benefit from the increase.
Whether you retired under the Final Pay, High-3, or Blended Retirement System (BRS), this COLA adjustment applies across the board.
How Will This Impact VA Disability and Retired Military Pay?
If you receive both military retired pay and VA disability compensation, it’s important to note that the COLA increase also affects your VA disability pay.
Retired military members with a VA disability rating of 50% or higher are eligible to receive both military retirement pay, and VA disability compensation pay.
The good news?
VA disability compensation is tax-free, meaning the full amount of the increase goes directly into your wallet without Uncle Sam taking a cut.
For retirees affected by Concurrent Retirement and Disability Pay (CRDP) or Combat-Related Special Compensation (CRSC), the pay raise will still be factored into your total compensation.
Keep an eye on your January 2025 payment to see how the adjustments play out in your specific situation.
When Will You See the Increase?
Your 2025 retiree pay raise is effective December 1, 2024, and payable effective January 1, 2025.
However, due to the New Year’s holiday, your deposit may show up a day or two earlier, especially for those banking with Navy Federal Credit Union or USAA.
Click here for the 2025 VA disability pay dates calendar.
Conclusion & Wrap-Up
The 2025 military retiree pay raise is a well-earned adjustment to ensure that your retirement benefits keep up with inflation.
You’ve dedicated your life to serving our nation, and it’s only right that your retirement reflects the sacrifices you’ve made.
This upcoming raise is a positive step in helping you and your family maintain financial stability and peace of mind.
Stay informed, keep an eye out for the official COLA announcement coming in mid-October 2024, and don’t hesitate to reach out if you need any guidance on how this raise impacts your retirement or VA benefits.
About the Author
Brian Reese
Brian Reese is a world-renowned VA disability benefits expert and the #1 bestselling author of VA Claim Secrets and You Deserve It. Motivated by his own frustration with the VA claim process, Brian founded VA Claims Insider to help disabled veterans secure their VA disability compensation faster, regardless of their past struggles with the VA. Since 2013, he has positively impacted the lives of over 10 million military, veterans, and their families.
A former active-duty Air Force officer, Brian has extensive experience leading diverse teams in challenging international environments, including a combat tour in Afghanistan in 2011 supporting Operation ENDURING FREEDOM.
Brian is a Distinguished Graduate of Management from the United States Air Force Academy and earned his MBA from Oklahoma State University’s Spears School of Business, where he was a National Honor Scholar, ranking in the top 1% of his class.
