Here's what veterans will receive next year for a cost of living increase

Social Security officials on Thursday announced plans for a 2.5% cost-of-living increase for veterans next year, the lowest level of adjustment since the start of the COVID-19 pandemic.

The agency's decision, based on federal estimates of private sector wages, sets the rate of increase not only for Social Security recipients but also for military retirees and people receiving veterans' benefits. The increase will take effect in January.

Social Security Commissioner Martin O'Malley said in a statement that the cost of living increase will “help tens of millions of people keep up with their spending even as inflation begins to cool.”

But the 2.5% rate is well below what retirees and benefit recipients have enjoyed in recent years. In 2023 the mark was 3.2%, in 2022 it was 8.7% and in 2021 it was 5.9%.

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For a veteran receiving $1,500 per month in disability payments, a 2.6% cost of living adjustment would mean an additional $38 per month. In 2023, the increase meant an increase of about $48 per month for the same veteran.

Approximately 5 million veterans and 2 million military retirees receive benefit checks each month through the Department of Veterans Affairs. Last month, lawmakers passed a law tying increases in those benefits to the Social Security rate, an annual requirement that isn't typically controversial.

The cost of living increase would affect payouts for disability compensation, clothing allowances and nursing and compensation benefits, as well as some other VA assistance programs.

About 68 million Americans receive Social Security benefits. Agency officials said the average beneficiary will receive an increase of about $50 per month as part of the adjustment.

Social Security officials will begin notifying individuals by mail about changes to their benefits beginning in early December.