- Disappointing Increase: The projected Social Security cost-of-living adjustment (COLA) for 2026 is expected to be a meager 2.7% to 2.8%, adding only about $54 to the average retiree’s monthly check.
- Retirees Struggle: Many of the nearly 75 million beneficiaries report this minor increase is not enough to keep pace with the surging costs of essentials like healthcare, housing, and food.
- Flawed Calculation: There is a growing debate over the accuracy of the formula used to calculate the COLA, with many experts arguing it fails to reflect the actual expenses faced by seniors.
- Announcement Delayed: The official COLA announcement, originally scheduled for October 15, has been postponed to October 24 due to the ongoing federal government shutdown.
Retirees Brace for Underwhelming 2026 COLA
As nearly 75 million Social Security and Supplemental Security Income beneficiaries await the delayed announcement of their 2026 cost-of-living adjustment (COLA), experts are forecasting a modest increase that many fear will be inadequate. Projections place the adjustment in the range of 2.7% to 2.8%, a figure that, while in line with long-term averages, falls painfully short of covering the rising expenses plaguing older Americans.
This potential increase would translate to an extra $54 per month for the average retiree, an amount that many say will barely make a dent in their budgets.
The Reality of Rising Costs
“I just wish it would be more,” said Kathryn Bailey, a 74-year-old retired oncology researcher from Washington, D.C. She recalls the significant 8.7% COLA in 2023, a four-decade high that helped temporarily, but was quickly absorbed by inflation. “The projected increase for 2026 ‘won’t do anything,'” she stated, pointing to relentlessly high healthcare, rent, and food costs.
Her sentiment is backed by data. Research from Goldman Sachs Asset Management shows that from 2000 to 2023, retiree spending increased at a 3.6% annual rate, outpacing the 2.6% increase in the consumer price index. Even as overall inflation has cooled from post-pandemic highs, specific costs crucial to seniors, such as motor vehicle insurance and household energy, continue to climb.
A Debate Over a Broken Formula
The core of the issue for many advocates lies in how the COLA is calculated. The adjustment is currently based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a metric that critics argue doesn’t accurately represent the spending habits of retirees.
Proposed Alternatives and Their Consequences
Advocacy groups like The Senior Citizens League are pushing for a switch to the Consumer Price Index for the Elderly (CPI-E), which gives more weight to expenses like medical care and housing. Adopting the CPI-E could increase future COLAs by about 0.2 percentage points annually.
Conversely, other proposals suggest using the Chained CPI, which would likely reduce future COLAs by accounting for consumer substitutions (e.g., buying chicken when beef is expensive). While this could help shore up Social Security’s finances, it would further squeeze beneficiaries.
Protecting Benefits vs. Ensuring Solvency
Experts acknowledge that Social Security’s inflation protection is a rare and valuable feature not found in most private pensions. David Freitag, a financial planning consultant at MassMutual, called the recent adjustments “significant increases that make a difference in people’s lives.”
However, any changes to the COLA calculation carry significant weight for the program’s long-term health. With Social Security’s trust funds projected to be depleted by 2034, lawmakers face a difficult balancing act between providing adequate benefits today and ensuring the system’s solvency for tomorrow.