NOVEMBER 8, 2024 – As Veterans Day approaches, it’s an excellent time for veterans and their families to take a close look at their finances. Two important financial events are on the horizon: the holiday spending season and the 2025 Cost-of-Living Adjustment (COLA) changes. Like any important task, proper planning is key to success.
Holiday Season Spending: Creating a Solid Budget Strategy
The holiday season can be financially challenging if you’re not prepared. Here’s a plan to help you navigate this time:
First, conduct a thorough review of your finances. You can do this on your own or with the help of a financial advisor if you prefer professional guidance.
Next, establish a clear spending limit. Set a firm budget and commit to sticking to it. This will help you avoid overspending and potential financial stress in the new year.
It’s also important to reassess your holiday budget in light of post-pandemic changes. When COVID prevented travel during the holidays, you may have put that money toward gifts for loved ones. Now that travel costs have re-entered the equation, you should adjust your gift budget accordingly.
Remember to prioritize your financial stability. While it’s tempting to be generous during the holidays, it’s crucial not to compromise your long-term financial health.
COLA Changes: Understanding and Preparing for the 2.5% Increase
The government has announced that the COLA increase will be 2.5% for 2025. This means that military retirees, veterans receiving disability pay, survivors receiving an annuity or compensation, and social security recipients will see a 2.5% larger payment starting in January 2025.
While this may seem small compared to recent years (3.2% in 2024, 8.7% in 2023, and 5.9% in 2022), it reflects a positive shift in the overall economy as inflation had declined.
Here’s how you can make the most of this increase:
Start by reviewing your budget. Identify areas where you can adjust your spending or saving to fully benefit from the increased benefits.
Consider strengthening your emergency fund. As living costs may increase alongside COLA, having a robust emergency fund can provide a cushion against unexpected expenses and help you avoid borrowing money for ordinary expenses.
Think about your investment strategy. You might want to explore investment options that could potentially outpace inflation, based on your personal risk tolerance and financial goals.
If you feel overwhelmed or unsure, don’t hesitate to seek expert support. A financial advisor with experience in military and veterans’ benefits can provide personalized strategies to help you achieve your financial objectives.
Lastly, use this opportunity to protect your family for the future. Consider options like life insurance, long-term care insurance, or a life insurance policy with a long-term care settlement option to prepare for potential health challenges down the road.
Key Actions for Veterans:
- Take time to review and adjust your budget carefully.
- Stick to your budget during the holidays to prioritize your financial stability.
- Build up your emergency fund for added financial security.
- Look into investment strategies that align with your long-term financial goals.
- Think about consulting with a financial advisor who understands veteran benefits.
- Evaluate your options for insurance and long-term care as part of your future planning.
While holiday spending and COLA changes happen every year, they can still create financial difficulties if not managed properly. By taking the time now to plan your finances, you can enjoy the holiday season and start the new year in a strong financial position.
Remember, being financially prepared is just as important as being prepared in other areas of life. By staying informed and planning, you can secure a more stable financial future for yourself and your loved ones.
By BG Michael Meese, USA, Ret., PhD, President of American Armed Forces Mutual Aid Association