In the United States, inflation continues to rise, making everyday life more expensive for many, especially older citizens. To help with this, the government uses something called the Cost of Living Adjustment (COLA).
It is meant to increase Social Security payments so people can keep up with price increases. But according to The Senior Citizens League, this system is falling short, especially for retirees.
What is COLA and How Does It Work?
COLA stands for Cost of Living Adjustment. It is a tool used by the Social Security Administration (SSA) to raise social benefits each year based on inflation. The goal is to make sure people who receive Social Security payments — like retirees, disabled individuals, and others — don’t lose their spending power due to rising prices.
COLA is calculated using a number called the CPI-W, which stands for the Consumer Price Index for Urban Wage Earners and Clerical Workers. This index looks at the spending habits of working-age people to measure inflation.
SSA compares the average CPI-W from July, August, and September of the current year to the same period of the previous year. The percentage increase becomes the COLA for the next year, which takes effect in January and lasts the full year.
Why COLA Doesn’t Work Well for Retirees
The main problem with COLA is that it uses data from younger working people and doesn’t reflect the spending patterns of retirees. For example, in the first half of 2025, the CPI-W rose by 2.4%. But for retirees, housing costs went up by 3.9% and health care costs by 2.8% — both much higher than the average inflation rate.
This shows a gap between what COLA adjusts for and what retirees actually spend money on. So, even when COLA increases payments, it still doesn’t fully cover rising expenses. As a result, older Americans find it harder to afford their daily needs.
Other Problems Affecting COLA Accuracy
Another issue is a hiring freeze in federal agencies ordered by former President Donald Trump. Because of this, there are fewer workers collecting data for inflation surveys.
Experts, including The Wall Street Journal, say this could make inflation numbers less accurate. And if inflation data isn’t correct, then the COLA based on that data won’t reflect real costs either.
Experts predict that the COLA for 2026 might be between 2.6% and 2.7%. But even this increase may not be enough to help most retirees, given their rising costs for housing, health, and basic needs.
Retirees Feeling Financially Unsafe
A growing number of retirees are feeling financially insecure. Surveys by the Employee Benefit Research Institute show that only one-third of retirees feel very confident they will have enough money to live comfortably for the rest of their lives. The rest feel unsure and worried about the future.
The U.S. Social Security Administration (SSA) will release the official COLA figure in October. Until then, retirees and experts alike are waiting to see if there will be any improvement. Meanwhile, older Americans continue to face financial challenges in a time of rising prices.
The rising inflation and weak COLA adjustments are leaving American retirees behind. While Social Security was meant to protect them, the system needs updating to reflect the real expenses retirees face, especially for housing and health.
With uncertainty around future payments and growing living costs, many older citizens are left feeling insecure. The government must act to ensure that retirees can live with dignity and stability during their golden years.
