The first of three inflation-related numbers that will determine the annual cost-of-living adjustment for uniformed services retirees, VA disability recipients, Social Security beneficiaries, and many others will be released later this month, and signs point to a smaller hike than last year.

Here’s a look at where the figures stand now, what adjustment you may expect in 2025, and why MOAA continues its COLA-tracking efforts. Keep up with all the latest on this topic at MOAA’s COLA Watch page.

The Figures So Far

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) – the inflation measure that determines the COLA amount – has been steady over the past three months, hovering around 2.3% above the 2024 base figure. The three-month average roughly matches last year’s numbers, but in 2023, they were on an upward trend, which continued through the final three months of the fiscal year and resulted in a 3.2% COLA boost.

This year, those figures have flattened out, with a small decrease from the May number to the June number, which was released last month.

The July figure, set for an Aug. 14 release, will be the first of three monthly data points used to calculate the COLA that will show up in checks beginning in January 2025. A quick math refresher: The average of these monthly numbers from last fiscal year is subtracted from this year’s average, and that figure is divided by last year’s average to determine the COLA amount.

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Predicting Your Raise

Should trends continue, retirees could see a COLA of less than 2.5%, which would be the lowest since a 1.3% hike that took effect at the start of 2021. One prediction puts the final figure at 2.63%, more than half a percentage point below the most recent increase and far short of increases at the start of 2023 (8.7%) and 2022 (5.9%).

The CPI-W measures “a representative basket” of goods and services using a slightly different formula than the standard CPI. Any manner of economic fluctuation could affect the price of materials in the basket, so there’s no guarantee the figures will remain on their current trajectory.

One sign pointing toward some stability, however, is the Federal Reserve, which announced July 31 that it does not plan an immediate adjustment in a key interest rate which could affect inflation calculations. And while a rate cut is expected in the near future, markets reportedly have factored that change into current borrowing plans. Barring an unexpected rate hike, it’s unlikely any Fed moves would have an immediate impact on inflation, which would leave the CPI-W on its current path.

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MOAA’s Role

With many uniformed services retirees and VA and Social Security beneficiaries among our 360,000 members, MOAA provides its monthly COLA updates as a financial planning tool.

But the adjustment, at least in its current form, is far from guaranteed – MOAA has fought to preserve the value of military retired pay for decades, whether from a recent Congressional Budget Office (CBO) report offering a cost-saving fix that would change the COLA calculation or decades of legislation that threatened some or all of the adjustment. In fact, a 1985 bill ending COLA increases for military retirees led to the formation of The Military Coalition, a powerful advocacy group that now represents nearly 5.5 million members of the wider uniformed services community.

While there are no threats to COLA in legislation now being considered, ongoing budget issues (and a new CBO report, which likely will greet the 119th Congress) could put the adjustment back on the table at any time. MOAA, with help from its expanding network of grassroots advocates, will be ready to answer the call.

Keep up with this issue and other MOAA priorities at MOAA’s Advocacy News page.